In National House Building Council v Peabody Trust [2025] EWCA Civ 932, the Court of Appeal has clarified the trigger for the cause of action under Option 1 of the NHBC’s Buildmark cover. This provides cover “if you [the insured] have to pay more” to complete a construction project “because the contractor is insolvent”. The Court of Appeal has affirmed the decision of Andrew Mitchell KC at first instance that the cause of action accrues not on the insolvency of the contractor, but when the insured has to pay more as a consequence of that insolvency.
This is an example of a case in which the insured peril (and thus the trigger for time to start running for limitation purposes) is defined by reference to the financial consequences of an identified event.
The NHBC had argued that the insured peril was the insolvency, and that the reference to the insured “having to pay more” was a reference to the loss suffered as a consequence. The Court of Appeal rejected that argument, holding that on the clear wording of the policy the financial consequences of the insolvency were an integral part of the insured peril. The standard approach under property damage policies (where the insured event is distinct from the manifestation of the loss) did not apply.
N.G. Casey KC and Mek Mesfin (of 4 Pump Court) were instructed by Mark London, William O’Brien and Alicia Ogborn of Devonshires for the Peabody Trust (the successful respondent).
