BLOWN AWAY

Allianz Insurance rejected a claim by the University of Exeter for damage caused by the 2021 detonation of a World War 2 bomb. That decision has now been upheld in court

Insurers in South Africa are being kept busy with a plague of unexpected events. Of course, unexpected events are exactly what insurance is for, but who could have foreseen Covid, let alone public looting and arson on a grand scale, with all the legal action and claims that have followed?

At least insurers here haven’t had unexploded bombs to worry about. Not so lucky in the UK, however. In February 2021, construction workers in Exeter discovered an unexploded World War 2 bomb measuring 2.5m by 70cm and weighing more than a ton.

Experts concluded that it had to be detonated where it lay because it was disintegrating and couldn’t be made safe. There was no way to establish whether it was booby-trapped, nor could it be removed to a place where it could be dealt with via a controlled detonation.

Thousands of people were relocated for the detonation, among them students in residences at the university.

The university had to incur huge, unexpected costs to rehouse the students.

Before the detonation, a “sand box” was built around the bomb with

400t of sand, and trenches were dug to limit the shock.

Still, many buildings were damaged, some very seriously. For its part, the university assumed it could claim from its insurers. But Allianz Insurance refused the claim, saying the university’s policy specifically excluded loss and damage “occasioned by war”.

The parties eventually ended up in the technology and construction division of the high court, where Allianz asked for a declaration that it didn’t have to pay the claim.

Now the presiding judge, Nigel Bird, has found in favour of Allianz.

Dropping the bomb

The sole issue between the parties was whether the war exclusion clause meant that the damage and loss suffered by the university was excluded from the insurance cover provided by Allianz.

To answer this question, Bird had to decide on the “proximate cause” of the loss. Allianz’s counsel claimed it was the dropping of the bomb — an act of war. Alternatively, the dropping of the bomb was a, rather than the, proximate cause of the loss. If either of these submissions were correct, Allianz would be exempt from covering the loss, said counsel.

The university, however, said the proximate cause of the loss was the deliberate act of detonating the bomb rather than the dropping of the bomb all those years earlier. Allianz and the university could not have intended that the war exclusion clause would apply to historic wars, said counsel.

Bird spent much of his judgment examining what “proximate cause” actually means and what it should mean in this case.

Earlier judgments made it clear that the proximate cause of a loss need not necessarily be the cause “which stands closest in time to the loss”.

“Even if a subsequent cause is of such potency that the loss would not have happened without it, the earlier cause may still remain the proximate cause,” said Bird, adding that the proximate cause was not merely a matter of following an “unguided gut feeling”.

If he left out of account the “reasonable … act of detonating the bomb”, he had to conclude that the dropping of the bomb was the proximate cause.

“The loss was caused by an explosion … triggered by the reasonable (and … obviously correct) decision to detonate the bomb. That decision was necessitated by the presence of the bomb. If there had been no bomb, there would have been no explosion. The bomb provided both the explosive payload and the absolute need for the detonation. In my view, the dropping of the bomb was the obvious proximate cause of the damage.”

It’s not just the university suffering bomb shock: local media reports tell of homeowners still unable to repair their properties as insurance disputes continue, while a local MP said he’d be surprised if the university wasn’t considering an

appeal.