(Article from Insurance Law Alert, February 2026)
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Holding
The English Commercial Court held that a policy with an indemnity limit for “all Residential Property's [sic] in one continuous structure” gave rise to a single, aggregate, limit for all insureds in a block of flats rather than providing a separate indemnity limit for each individual flat. Acasta European Insurance Company Ltd v Eshiett & Ors [2026] EWHC 71 (Comm) (16 January 2026).
Background
This case concerned the interpretation of policy limits under a structural defects insurance policy that covered an apartment block in North London and seven flats within it, each of which was separately owned. The policy provided an indemnity limit of £1,000,000 for “all claims relating to a Residential Property” and a higher limit of £1,500,000 for “all Residential Property's [sic] in one continuous structure.”
The policyholders, who each had an interest in the apartment block or one of the seven flats within it, argued that the policy afforded separate cover for each flat, with an individual indemnity limit of £1,000,000 each. The policyholders contended that a separate policy had been issued for each flat (as a separate Insurance Period Certificate was issued for each, rather than one joint certificate) and each Insurance Period Certificate simply referred to one flat, so the “continuous structure” limit was not engaged. The insurer argued that the policy was a single composite policy of insurance, and that, because the flats formed part of one “continuous structure,” the limit of indemnity under the policy was £1,500,000.
Decision
The parties’ arguments focused heavily on the question of whether the insurance policy was a composite policy or comprised of separate individual policies. However, the High Court held that this was not the key question to be answered given: (i) a composite policy is effectively a series of separate contracts insuring each insured separately in all events; and (ii) entirely separate insurance policies could be drafted in such a way to create cover with a shared aggregate limit. Instead, the court held that the key question was whether the limit of indemnity wording applied in the aggregate or individually.
The High Court held in favor of the insurer, finding that the indemnity wording gave rise to an overall aggregate limit shared by all insureds. The High Court considered that the reference to “Residential Property’s” was a typographical error, and should have read “Residential Properties”, a term used elsewhere in the cover to refer to other flats. It was clear that the flats were one continuous structure, as required by the policy’s wording, and the separate limit of £1,000,000 per flat meant that the natural meaning of the £1,500,000 limit was that it applied to all flats. The court also considered it unsurprising that an aggregate level of cover would apply in respect of interconnected properties at the same location that were likely to be impacted in the same way by a structural defect.
Comments
This case follows a series of COVID-19 related business interruption cases, such as Corbin & King Ltd v Axa Insurance UK Plc [2022] EWHC 409 (Comm) and Liberty Mutual v Bath Racecourse [2025] EWCA Civ 153, both of which are referred to in the judgment. Those business interruption cases concerned group policies issued to cover insureds who owned and operated different properties, such as restaurants, cafes, bars, racecourses, and golf courses, which would be impacted in distinct ways by COVID-19.
Upon interpretation of the specific policy wording, the courts in those cases held that each insured whose premises were temporarily closed due to the pandemic was entitled to a separate indemnity limit. The courts in both of those cases emphasized that these outcomes were specific to the wording of the policies in question and did not imply a general rule that a composite policy means that separate limits are applied, and the holding in Acasta further reiterates this point.