High Court construes limit of indemnity in composite policy and finds structural defects policy subject to a single aggregate limit

In Acasta v Eshiett [2026] EWHC 71 (Comm), the High Court held that a structural defects policy covering a seven‑flat apartment block was subject to a single aggregate limit of £1.5 million. The Court found as a matter of construction that the limit of £1.5 million which applied to "all Residential Properties in one continuous structure” was an aggregate limit for all claims relating to the single apartment block.

The Court contrasted this case with that of Liberty Mutual v Bath Racecourse [2025] in which the Court of Appeal also construed a limit of indemnity in the context of a composite policy insuring multiple insured entities with separate businesses at multiple locations.  Here the Court found it uncontroversial to find that an aggregate level of cover existed in respect of interconnected properties at the same location that were likely to be impacted in the same way by a structural defect.

BACKGROUND

The case concerned a development in London comprising a block of seven flats (the Apartment Block) and a separate house (the House). 

A structural defects insurance policy (the Policy) was arranged for the development and provided by Acasta European Insurance Company Limited (the Insurer). The policy provided cover to “Plots 1–8”, covering both the Apartment Block and the House, and a single premium was payable.

The Policy provided cover against physical damage caused by structural defects in the completed property. This cover was conditional upon an Insurance Period Certificate (IPC) being issued in respect of each "Residential Property" which was done once qualified building surveyors had completed all their inspections. Individual IPCs were issued for each flat in the Apartment Block and the House.

The limits of indemnity under the Policy were expressed as follows:

• a £1 million limit for “all claims relating to a Residential Property”; and
• a £1.5 million limit for “all Residential Property's [sic] in one continuous structure”.

Defects subsequently emerged, predominantly involving water ingress and mortar failure, and the Insurer sought a declaration as to the extent of its liability under the Policy. For the purposes of the proceedings, the Insurer accepted that it could be assumed that there had been “Major Damage” which would trigger the Policy.

The central issue was whether the limit of indemnity in the Policy applied in the aggregate or to each individual flat. 

The Insurer argued that there was one aggregate limit of indemnity of £1.5 million for all claims relating to the Apartment Block. It argued that the Apartment Block was "one continuous structure" and the seven flats were all "Residential Properties" within "one continuous structure" (as per the wording of the second limit of indemnity). 

The Defendants, who all had an interest in the Apartment Block or one of the seven flats, argued that that there were separate insurance policies for each flat and if the Insurer had intended for the limit of indemnity to apply to all the flats collectively, it ought to have issued a single (as opposed to multiple) IPCs.  Since the IPCs each referred only to one flat, they argued that the "continuous structure" limit was not engaged. 

DECISION

The Court held that the Policy wording had two limits:

• a £1 million limit for claims for loss in respect of each individual flat, and 
• a £1.5 million overall aggregate limit. 

It held that the Insurer's total liability for all claims arising from defects in the Apartment Block was limited to £1.5 million – the aggregate limit applied.

The Court gave various reasons for its decision as follows:

• Relevant factual matrix: The Policy was intended to be in a standard form that would be for the benefit of all purchasers of the flats, their mortgagees and successors in title (i.e. people who could not know the insurer–developer background). The Court emphasised that in this scenario there may need to be a greater emphasis on the Policy wording itself, with less relevance given to the parties' commercial dealings of which future purchasers would have no knowledge.
• Use of the term "Residential Properties" elsewhere in the Policy: The Court accepted that there was a typographical error in the phrase “all Residential Property’s” and that this should read “Residential Properties”. This term was used elsewhere in the Policy to refer to other flats in the Apartment Block and the Court noted it would be unlikely for the term to have one meaning in one part of the Policy and a different meaning in another. The natural reading of the second limit was for this to be an aggregate limit of £1.5 million given all of the flats were in one continuous structure.
• Coherent policy structure: The Policy used aggregate limits in other sections of the Policy which were consistent with an aggregate limit under the part for structural defects cover. Accordingly, the Court did not consider it controversial to find that an aggregate level of cover existed in respect of interconnected properties at the same location that were likely to be impacted in the same way by a structural defect.
• Aggregate limit was consistent with rebuild cost: The rebuild cost for the whole development was stated to be £1.4 million in the documentation provided prior to inception of the Policy, making an aggregate limit of £1.5 million consistent with the Insurer’s risk exposure.
• Context different from cases where separate limits applied: the Court drew a distinction with the Liberty Mutual case, where the Court applied separate limits to the different insured entities who had entirely separate businesses in different locations (see our blog post on this case here). Here, by contrast, the flats formed one physical structure with shared exposure to the same building defects. An aggregate limit in this situation was, the Court said, "unsurprising". The Court also noted that whilst in Liberty Mutual the Court regarded it unlikely that an insured would expect their level of cover to be eroded by claims made by others, in this case there was wording to indicate the contrary.

COMMENT

It is clear from Acasta (and the distinctions drawn by the court with the Liberty Mutual decision) that the court will construe a limit of indemnity by looking closely at the particular policy wording in question and the commercial context in which the policy is written.

For multi‑unit developments, the case is a reminder to policyholders and lenders that they should be mindful of the fact that there may be aggregate limits in policies that may materially dilute the quantum available for each insured where there is systemic or common damage that affects each policyholder individually. This may be particularly relevant in the context of structural defects, cladding and similar claims which commonly affect an entire premises rather than individual units. Accordingly, gaining a clear understanding of the cover (and any limits of indemnity), including coordination between individual policyholders, will be essential in circumstances where multiple claims exist for the same premises.