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buildings insurance: damage to underground pipes made from pitch-fibre

what is special about underground pipes made from pitch-fibre?

Underground pipes made from pitch-fibre were often used in the 1950s and 1960s, and are now often said to be inherently defective. They frequently have a much shorter life than pipes made from clay or heavy-duty plastic, and they tend to distort and/or collapse.

A Review of Existing Private Sewers and Drains in England and Wales published in July 2003 by the Department for Environment, Food and Rural Affairs said:

The pipes [made from pitch-fibre] were relatively inexpensive and easy to handle and install. However, it became apparent that these pipes were susceptible to the delamination of their inner surface, ruining the integrity of the pipes. It was also discovered that, under normal conditions, they were susceptible to collapse under applied loading sooner than pipes made of more rigid materials.

how does this affect insurance claims?

Most household buildings-insurance policies cover accidental damage that has occurred to underground water and drainage pipes that serve the insured buildings, provided the pipes are the policyholder's responsibility. But these policies often contain a number of exclusions - either generally or specifically in relation to accidental damage - including wear and tear, gradual deterioration (or gradually operating causes) and faulty workmanship or design.

Some insurers may refuse to pay claims where it turns out that the underground pipes were made from pitch-fibre. They may say that damage to pipes made from pitch-fibre is not covered under the policy, because it:

  • does not fall within the definition of accidental damage; or
  • is excluded as the damage was caused by wear and tear or gradual deterioration or another reason covered by an exclusion in the policy.

But the policyholder may only have realised that the underground pipes are made from pitch-fibre when there is a blockage or some other problem and the pipes are inspected.

our approach to disputed claims

This section of our website sets out our approach to disputed claims for damage that has occurred to underground pipes made from pitch-fibre. It includes our approach to whether or not the insurance claim is:

  • covered by the definition of accidental damage; or
  • excluded by some of the common terms of household policies.

Taking account of changing policy wording, our approach has been the same for many years.

However, where policy wording has changed with the intention of excluding claims arising from the collapse of pitch-fibre pipes, we consider the implications of these changes and how they were brought to the attention of the policyholder.

We take the view that the policy terms should be applied where:

  • they are fair, and written in plain, intelligible language; and
  • they were adequately brought to the policyholder's attention.

It does not matter if an exclusion clause is a general one covering the whole policy, or a specific one relating to underground pipes only, provided it is written in such a way that the ordinary consumer can be left in no doubt that it applies to all sections of cover, or at least to accidental damage to underground pipes.

accidental damage must have occurred

Insurance does not usually cover events that are inevitable or anticipated - nor preventative work (such as general maintenance or the cost of stopping damage occurring in the future). So a policyholder who discovers that they have underground pitch-fibre pipes that might collapse - but have not already distorted/collapsed - cannot usually expect the insurer to pay for them to be replaced under the accidental damage cover.

Most policyholders will not know they have underground pipes made from pitch-fibre. But there may be exceptional cases where an insurer can show that the policyholder ought reasonably to have realised the pipes were liable to fail - for example, because of a pre-emptive CCTV inspection, or because neighbouring pipes had already failed and the housing estate where the policyholder lives was generally known to contain defective (or potentially defective) pitch-fibre pipes.

In these cases, the policyholder who does nothing to prevent the pipes from deteriorating or failing may be unable to show that the damage was unexpected when a blockage eventually occurs.

duty to act in good faith

Buildings-insurance policies do not automatically cover everything that might happen to a property. It is for each insurer to decide - as a legitimate exercise of its commercial judgement - what risks its policies cover and what risks they exclude.

But the law treats insurance differently from other types of contract. It implies a duty of "utmost good faith" from both the policyholder and the insurer. We take this into account in considering any provision in the insurance policy, on which an insurer seeks to rely, which is specially designed to exclude (or restrict) its liability for damage to underground pipes made from pitch-fibre.

We are likely to consider that it would not be fair and reasonable for an insurer to rely on this kind of provision, unless it has taken appropriate steps to ensure that the significance and effect of the provision in the policy is clear to the average consumer to whom the policy is being offered. The potential problems with this type of pipe are (or should be) well-known to insurers and insurance intermediaries - but are not well-known to the average policyholder.

Insurers and intermediaries may have information that particular properties or housing estates are likely to have pitch-fibre underground pipes. We would take into account what the insurer or intermediary did to share that information with affected consumers at the time the policy was taken out or renewed, so that the significance and effect of an exclusion could be understood.

if the insurer says the damage is not accidental, as defined in the policy

Some insurance policies define what they mean by "accidental damage" to the insured property. A typical definition might be that it means the damage must occur suddenly and as a result of an external, visible and violent cause (or words to that effect). So damage to an underground pipe by, say, a worker drilling into the ground above would clearly be a case of accidental damage under such a definition.

The way the definition is communicated to the policyholder is important - especially where the policy uses familiar-sounding words in a way that does not coincide with their ordinary, everyday meanings, or where the effect on the insurance cover is equivalent to a significant and/or unusual exclusion. Just as it is good practice for attention to be drawn to such exclusions, we take into account how clearly attention was drawn to the definition and its impact.

We are likely to agree that it is fair and reasonable for an insurer to reject a claim for damage/blockage to the pitch-fibre pipe - on the grounds that it was not accidental damage - where an insurer can show that:

  • the policy clearly defines, in plain and intelligible language, what it means by accidental damage; and
  • the definition or its effect was adequately brought to the policyholder's attention; and
  • the circumstances of the claim fall outside a fair and reasonable interpretation of the definition.

if the insurer says the damage is not accidental, but that is not defined in the policy

Other policies do not define what they mean by "accidental damage". Where this is the case, we give the term its ordinary, everyday meaning. Our long-standing approach is that, where the insurance policy does not contain a clear definition to the contrary, we are likely to regard damage to pitch-fibre underground pipes following ordinary usage as accidental damage.

That is because the damage was unexpected and unintended. An ordinary policyholder would not expect underground service-pipes to be sub-standard and consequently to fail. And it is not something that the policyholder could know or do anything about until it is too late. In these circumstances, we are likely to treat damage as accidental, even if the underlying cause occurred gradually - for example, as a result of "de-lamination" of pitch-fibre pipes, encroachment by tree roots or the passage of heavy vehicles.

Accordingly, if an underground pipe made from pitch-fibre unexpectedly collapses or becomes blocked, we are likely to consider it fair and reasonable to treat the collapse and its effects as accidental damage.

if the insurer says the damage is excluded as wear and tear

We will want to understand how the loss or damage occurred, where an insurer can show that:

  • the policy contains a clearly-worded provision excluding loss or damage caused by wear and tear, either generally or in relation to underground pipes; and
  • the provision was adequately brought to the policyholder's attention.

If the pitch-fibre underground pipes have failed following ordinary usage, we are unlikely to be persuaded that this is sufficient to establish that the failure arose as a result of wear and tear - unless there is clear evidence of this.

This is because the failure is often due to an inherent flaw in the structure of the pitch-fibre pipes - a defect that was not known at the time they were manufactured and/or installed. In these circumstances, we are unlikely to agree that it is fair and reasonable for an insurer to reject a claim for damage to pitch-fibre pipes on the basis that it was caused by wear and tear.

if the insurer says the damage is excluded as gradual deterioration

We are likely to accept that damage to, or the collapse of, pitch-fibre underground pipes can often be attributed to gradual deterioration. That is because an inherent flaw in the structure of the pipe causes a gradual deterioration in the pipe. So where we accept that the pipes failed unexpectedly, we need to consider any provision in the policy that the insurer argues clearly excludes the effects of gradual deterioration or "gradually operating causes".

Where the damage that led to the insurance claim is likely to have resulted from a process that has taken effect gradually over many years, and an insurer can show that:

  • the policy contains a clearly-worded provision excluding loss or damage caused by gradual deterioration (or gradually-operating causes), either generally or in respect of underground pipes; and
  • the provision was adequately brought to the policyholder's attention.

it is likely that we would agree that it is fair and reasonable for an insurer to turn down a claim for damage to pitch-fibre pipes - on the grounds that it was excluded as the claim resulted from gradual deterioration (or a gradually operating cause).

if the insurer says the damage was caused by faulty workmanship

Where an insurer can show that:

  • the policy contains a clearly-worded provision excluding loss or damage caused by faulty workmanship, either generally or in respect of underground pipes; and
  • the provision was adequately brought to the policyholder's attention; and
  • the damage which led to the insurance claim resulted from faulty installation (rather than from an inherent flaw in the structure of the pitch-fibre pipes);

it is likely that we would agree it is fair and reasonable for an insurer to turn down a claim for damage to pitch-fibre pipes - on the grounds that it was excluded as faulty workmanship. However, we have seen very few complaints about loss or damage to underground pitch-fibre pipes in which insurers have been able to show that the loss or damage arose as a result of faulty workmanship.

if the insurer says the damage was caused by faulty or defective design

We will want to understand how the loss or damage occurred, where an insurer can show that:

  • the policy contains a clearly-worded provision excluding loss or damage caused by faulty or defective design, either generally or in relation to underground pipes; and
  • the provision was adequately brought to the policyholder's attention.

If the pitch-fibre underground pipes have failed simply as a result of an inherent flaw in the structure of the pipes - that was not known at the time they were manufactured and/or installed and did not become apparent for many years - then we have not been persuaded that this is sufficient to establish that the failure arose as a result of faulty or defective design.

In these circumstances, we are unlikely to agree it is fair and reasonable for an insurer to reject a claim for damage to pitch-fibre pipes on the basis that it was caused by faulty or defective design.

if there is a specific exclusion concerning pitch-fibre pipes

Some newer household buildings-insurance policies contain a provision specifically excluding loss or damage caused by the failure of pitch-fibre pipes.

Because these clauses are still unusual, and have a significant impact on the nature and scope of cover, we are likely to consider it fair and reasonable to apply the exclusion only if it was drawn to the policyholder's attention before the policy was sold (or renewed, if introduced as a change to an existing policy) - and the exclusion was written in such a way that an ordinary policyholder can be left in no doubt about its effect.

If the insurer did not highlight an exclusion for pitch-fibre pipes, we are unlikely to consider it fair and reasonable for the insurer to rely on it.

However, it is likely we would agree it is fair and reasonable for an insurer to turn down a claim resulting from the failure of pitch-fibre pipes, in cases where:

  • the policy contains a clearly-worded provision excluding loss or damage to underground pitch fibre pipes; and
  • the provision was adequately brought to the policyholder's attention.

if the insurer does not bring a provision to the policyholder's attention

Other than in cases where there is a specific exclusion concerning pitch-fibre pipes - where an insurer cannot show that adequate mention was made of a provision that ought to be drawn to the policyholder's attention, we are unlikely to agree it is fair and reasonable for the insurer to turn down a claim by relying on that provision - if we are satisfied that the policyholder:

  • would probably have acted differently had they been told about the provision; and
  • would have been in a better position as a result.

This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.

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contact our technical advice desk on 020 7964 1400

image: pitch pipes
  • The law requires us to decide each case on the basis of our existing powers and what is fair in the circumstances of that particular case.
    We take into account the law, regulators' rules and guidance, relevant codes and good industry practice at the relevant time.
    We do not have power to make rules for financial businesses.
    Our current approach may develop in the light of circumstances disclosed by further cases we receive.
    We may decide that fairness requires a different approach in a particular case.