Water Damage to Student Accommodation Block under Construction

Our client's insured was the developer of student housing. On this occasion, they were the employer in respect of a new 22-storey student accommodation building. They appointed a well-known primary contractor to manage the build under a JCT Design and Build form of contract.

Near completion, a Sub-Contractor caused an extensive escape of water after they damaged a feed-pipe to a communal kitchen on the 19th floor. This went undiscovered until the following morning when water was found pouring through the development under boosted mains pressure.

The expected reinstatement programme indicated extensive strip-out of plasterboard finishes, insulation and various fixtures and fittings, with a timescale of circa. 7 months to undertake and reinstate. This would have delayed Practical Completion of the development, missing the key start of term dates for the new university term.

Owing to our swift attendance on site and immediate reporting to Insurers, we were able to secure agreement for policy coverage promptly.

This gave us the opportunity to discuss alternatives early on, which is the key time where decisions can have consequences in mitigating the loss.

Accordingly, we were able to consider and agree proposals to introduce additional trade persons, overtime and out-of-sequence working under Increased Cost of Working cover, avoiding a greater Loss of Anticipated Gross Revenue claim.

Furthermore, following our review of the various Sub-Contracts, where some which had been amended from standard JCT sub-contracts, we were able to identify that the offending Sub-Contractor was not a named contractor of any tier, meaning Insurers were able to pursue them for subrogation of their losses.