Concrete issues but little chance of a concrete claim

Reinforced Autoclaved Aerated Concrete (RAAC) may not mean much to you. However, you have probably heard how concrete used in building construction works from the 1950s to 1990s is now deemed so dangerous that it has led to schools having to evacuate buildings, leaving pupils working from prefabs. This concrete is RAAC.

This was a lightweight, bubbly textured concrete containing no coarse aggregate, with a lifespan of 30 years. With this period having passed, alerts have been raised. It follows some sudden collapses of buildings without warning, where this relatively weak material was used within masonry blocks and structural units, such as roof planks, walls, and floors, and often coated with a bituminous or cement coating to prevent corrosion.

Flat-roofed buildings, on which rainwater can pool, are seemingly particularly susceptible to cracking and failure. However, RAAC’s air bubbles encourage water ingress, causing decay and structural instability in any building. RAAC issues can also be more significant in air-polluted areas.

While school’ issues have dominated media headlines, many other types of buildings used RAAC as a quick-build solution. This includes public buildings, hospitals, private high-rises with flat roofing, retail units, offices, and even hotels. Many buildings now urgently require surveys by qualified experts and swift remediation works. Some insurers are identifying buildings requiring RAAC works using an AI tool that has speedily analysed risk engineers’ previous documentation.

Therein lies the issue: Who will pay? RAAC was not a defective product; it was just a material with a limited lifespan. On that basis alone, trying to lodge a claim against the original construction company would be difficult. They might also no longer exist.

The limitation period to lodge any claim against a construction company has also long passed in most instances. Even though the new Building Safety Act 2022 (BSA) introduced an extended 30-year period for retrospective claims, RAAC was not inherently unsafe. It has simply passed its end-of-life cut-off date.

The problem could impact various stakeholders—landlords, tenants, employers, property owners, and local councils—to name just a few. The only action anyone with responsibility can really take is to review contracts and leases and assess where obligations for remediation may lie.

A chink of light may exist for any building that underwent renovation or repairs, as it may be possible to claim the contractor should have highlighted the issue. The same might be true if a surveyor surveyed the property for a valuation or sale. Here, a claim on a Professional Indemnity insurance policy might be considered.

A property insurance policy will not pay for the remediation work required to make buildings safe.

Property insurance does not cover wear and tear and anticipated deterioration in properties over time, just unexpected events that cause damage, so the deterioration of a product with a 30-year life was easy to predict.

In AXA UK Plc’s opinion, nearly all UK commercial property policies also contain a standard exclusion for cracking and collapse. These insurance policies do not cover material damage for RAAC-related issues, and that same material damage exclusion means that most Business Interruption (BI) policies will not offer any cover.

If this optional cover were added to a BI policy, the only exception might be a claim under a non-damage denial of access clause where a recognised authority has stated that occupancy of the building is not possible, forcing a move elsewhere. According to the policy wording, the additional costs of working in the new location, and possibly some business interruption costs, might potentially be included in a valid claim.

For help with this, talk to L Wood Insurance Brokers so we can examine your situation and individual policy. Otherwise, unfortunately, it will be hard to find any other means of recouping the costs of the necessary remediation works.