Authored by Jakop Mphofu.
In January 2026 the English High Court held that an insurer's limit of indemnity under a structural defects policy was subject to an aggregate cap of £1,500,000 (index linked) for all flats within one continuous structure, rather than applying a separate £1,000,000 limit to each individual flat.
The insurer provided structural defects insurance in respect of a block of seven flats in Camden, London, at a total build cost of £1.4 million. The scheme administrator issued individual Insurance Period Certificates for each flat, each bearing its own policy number. The limit of indemnity wording, repeated in each certificate, will be familiar to readers: the maximum payable for all claims relating to a "Residential Property" was £1,000,000, and "the limit for all Residential Property's in one continuous structure is £1,500,000."
Following complaints of water ingress caused by defective brickwork mortar, the flat owners and leaseholders argued that each flat had its own separate insurance and that the £1,000,000 per-flat limit applied independently, yielding a theoretical maximum recovery of £7 million. They relied on the recent Court of Appeal decision in Liberty Mutual v Bath Racecourse [2025] EWCA Civ 153, in which it was held that limits of indemnity in a composite policy applied to each insured separately and that a reasonable policyholder "would not expect its own limits to be eroded by someone else's claim."
The court held that the debate over whether the insurance was a "composite policy" or a series of separate policies was a distraction from the real question of interpretation. Even entirely separate policies could be drafted to create a shared aggregate limit. The label mattered less than the language.
The court found that the reference to "Residential Property's" was plainly a typographical error for "Residential Properties" and that the £1.5 million figure was naturally read as an aggregate cap across all flats in the block. An aggregate level of cover for interconnected properties at the same location, likely to be affected in the same way by a structural defect, was commercially unsurprising. The court noted that aggregate limits appeared elsewhere in the very same policy, and that the aggregate cap of £1.5 million was unremarkable where the total rebuild cost was £1.4 million.
The court distinguished Liberty Mutual on the basis that in that case the insured businesses were entirely separate and geographically distant, whereas here the flats formed part of one continuous structure and the policy contained express wording pointing towards an aggregate limit.
The court declared that the limit of indemnity payable by the insurer was £1,500,000
Acasta European Insurance Company Limited v Eshiett [2026] EWHC 71 (Comm)