Wall Collapse Caused by Adjacent Metro Excavation

The key question is proximate cause. If the effective cause was the metro contractor's excavation, the policy exclusion for damage caused by excavation applies, even though the physical mechanism was a subsidence. The insured will argue that 'subsidence' is an insured peril, but the exclusion is more specific. The engineer's warning and the shallow foundation are contributing factors; they may support an allegation that the loss was inevitable or that the insured failed to disclose a material worsening of risk. The insurer should not decide on the label alone. It needs the surveyor's report on soil movement, crack monitoring, excavation records and the sequence of events. If the excavation removed lateral support and caused the wall to move, the excavation exclusion is likely to defeat the claim. If the collapse was caused by independent ground subsidence unrelated to the works, cover may attach. On balance, the stated facts point to the exclusion applying, but the insurer must give written reasons and cannot rely on a generic 'defective design' exclusion without evidence.

The insurer should appoint a licensed surveyor and, if needed, a structural engineer. They should obtain the metro contractor's excavation method statement, monitoring data, photographs before and after, and the insured's own engineer's reports. The insurer should check whether the insured disclosed the earlier warning and the widening cracks at renewal. If the proposal asked about structural defects or notices from authorities, non-disclosure may be a defence, but the insurer must show the question and the answer. The insurer should also check maintenance records and whether the insured took reasonable precautions after the warning. The exclusion for excavation must be read against the insured peril; the insurer should avoid a blanket denial if the evidence is mixed. A reservation-of-rights letter should be issued promptly, and the insured should be asked to mitigate further damage. The insurer should not tell the contractor that liability is admitted. If cover is denied, the letter should explain the proximate cause finding and the policy clause.

Subrogation arises only after the insurer has paid the claim. If the property insurer denies cover, it has no subrogated right and cannot demand the contractor's offer. The insured remains free to pursue the contractor for the full loss. If the insurer pays, it steps into the insured's shoes up to the amount paid and can pursue the contractor, but the insured keeps the right to recover any uninsured balance. The ₹40 lakh offer should not be accepted by the insurer unilaterally if the insured has not been made whole. The insurer should obtain a written subrogation receipt, preserve the insured's cooperation, and avoid releasing the contractor without the insured's consent. If the insured wants to accept the ₹40 lakh, the insurer should confirm in writing how the recovery will be allocated and whether the insurer waives any subrogated claim. The insurer should also check whether the contractor's policy responds and whether the metro authority has any liability.