What Does An 'All Risks' Insurance Policy Cover?

This was the question before Judge Mackie QC in the case of C A Blackwell (Contracts) Ltd v Gerling Allegemeine Verischerungs - AG [2007] EWHC 94 when he had to consider whether losses caused by bad weather were covered by an all risks insurance policy.

C A Blackwell (Contracts) Ltd ("Blackwell") is a contractor with expertise in earthworks involved in motorway construction. Blackwell had successfully tendered for the earthworks on parts of the M60. Blackwell was responsible for insuring adequate temporary drainage for the earthworks. Blackwell took out a policy with Gerling Allegemeine Verichergungs ("Gerling") for the years to 31 December 1998 and 1999.

Bad weather and rain affected the works on several occasions and two incidents then caused damage to the capping layer (shale) and an area of sub-formation. The loss adjustor agreed £46,000 for the first incident and £488,975.15 for the second. Although the amount of damage was agreed, Gerling denied liability under the policy.

The Schedule of the policy described it as "Contractors All Risks". This was followed by a schedule applicable to Contractors Indemnity and Employers Liability Insurance which provides for a maximum sum of £6,000,000 subject to some excesses. The relevant...