In a recent decision, the English Courts concluded that damage cause by a controlled detonation of a World War II bomb fell within the War Risks exclusion of an insurance policy issued 80 years later. The decision, whilst logical, raises questions over when the passage of time or other intervening factors can become the sole effective cause of a loss, which may have implications for the interpretation of war-related and other insurance policy exclusions.
In World War II, millions of tonnes of bombs were dropped across Europe. It is estimated that between 10 and 20% of those bombs did not explode. Annually, thousands of tonnes of unexploded ordnance are discovered, typically during construction or excavation works. Thankfully, most of such bombs are removed without damage to people or property.
In February 2021, an unexploded 1,000kg bomb was discovered during construction works at the University of Exeter. The bomb, nicknamed ‘the Hermann’, had been dropped by hostile German forces during a bombing raid in 1942. After careful excavation and inspection, experts from the Royal Logistics Corps established that the bomb could not be safely removed, and that a controlled detonation was the only realistic option available.
Despite the Corps’ engineers constructing a ‘sand box’ consisting of 400 tonnes of sand packed around the bomb inside a metal fence, and digging trenches to limit shockwaves, unavoidable damage was caused to university buildings. The University submitted an insurance claim for the physical damage caused to its affected buildings, as well as a claim for the business interruption losses caused by the need to rehouse students in alternative accommodation. The University’s insurance claim was declined by its insurers, relying on the War Risks exclusion contained in the University’s insurance policy.
The policy provided that any loss “occasioned by war” was excluded. It was common ground that the bomb being dropped was a hostile act of war. The Court had to determine whether this act of war in 1942 was a “proximate cause” (meaning an effective or efficient cause), of the loss in 2021 and excluded by the policy, or whether it was the understandable decision to conduct a controlled detonation (given the bomb’s deterioration since 1942), that was the sole proximate cause of the loss.
The Court held that the dropping of the bomb was the effective cause of the loss suffered by the University. The passage of time since the bomb’s release in 1942 did not lessen its causative potency, nor did the controlled detonation. As the Supreme Court confirmed in FCA v Arch, the Courts will apply a common sense analysis in determining whether an excluded act rendered the loss inevitable. The Judge held “if there had been no bomb, there would have been no explosion. The bomb provided both the explosive payload and the absolute need for detonation.”
In reaching its decision, the Court emphasised decisions including Leyland Shipping, where a ship torpedoed by hostile forces safely returned to port but sunk three days after being ordered to moor in open water to avoid the risk of the ship blocking a crucial harbour during wartime. Whilst the ship would have remained afloat if it was allowed to remain moored in the port, it would not have been in the situation but for the torpedo.
It is a long-established principle of insurance law that where there are concurrent proximate causes of a loss, one which is covered and one which is excluded, the insurers are entitled to rely upon the exclusion and decline the claim.
The Court found that the dropping of the bomb was the proximate cause of the loss. The Court went on to find that, even if the dropping of the bomb was not the proximate cause, it was a proximate cause. Accordingly, and whilst the controlled explosion (which would otherwise have been insured) was the immediate cause of the loss this did not break the chain of causation from the original dropping of the bomb. This was excluded by the War Risks exclusion, entitling insurers to decline indemnity for the claim.
The decision, and any appeal, will be of interest to War Risks (re)insurers and the wider market given current, heightened geopolitical tensions.
Instinctively, the understandable decision to conduct a controlled detonation, and the passage of time since the bomb was originally dropped (during which the damaged buildings had been constructed and/or refurbished), may lead one to conclude that it was the decision to detonate the bomb that was the cause of the loss; however, the Court stressed that the passage of time does not provide an answer on its own and that it is wrong to focus on the events immediately before the loss was suffered when conducting an analysis of the chain of causation. As the Judge emphasised: “if there had been no bomb, there would have been no explosion.” The bomb must, therefore, be at least a proximate cause of the loss, if not the cause.
Whilst the decision is logical, it does raise questions when considering the application of exclusions where there are historically remote causative events. How far does one look back? Can intervening events lessen the causative potency (say, if the bomb been excavated and moved to a landfill site 50 miles away before being discovered, with the site owner’s claim then being declined under its own policy)? How many intervening events are necessary? The Courts’ decisions in future proximate cause cases will no doubt generate much interest, although perhaps not quite as explosively.
Further reading: Allianz Insurance PLC v The University of Exeter  EWHC 630 (TCC)