When frozen pipes crack legal certainty: Land Energy Girvan v Aspen Insurance

Proceedings have been issued by Land Energy Girvan Ltd (Land Energy) against Aspen Insurance UK Ltd (Aspen) which considers the interpretation of exclusion clauses within property and BI policies.

Following an estimated £4.2m loss arising from frost damage, Land Energy made a first-party PD claim which was declined by Aspen in reliance upon a frost exclusion.

The dispute brings into focus the interaction between exclusions and endorsements and demonstrates the precision required when bespoke clauses are endorsed.

Background and policy wording

In March 2023, Land Energy, a biomass energy producer, suffered serious damage at its Girvan facility in Scotland when heat exchangers froze and burst during a cold snap. The damage occurred following electrical issues with the furnace causing it to be shut down and temperatures began to drop.

Land Energy claimed under its Business Policy 2021 Comprehensive Protection, but Aspen declined cover, citing the following exclusion at 3(e)(i) of the policy: 

“Damage or Consequential Loss caused by cracking, fracturing, collapse or overheating of boilers, economisers, vessels, tubes or pipes...”.

The exclusion was, however, amended by an endorsement which crucially removed the words “Damage or Consequential Loss caused by…” and replaced the exclusion as follows:

“…but this shall not exclude:

(a) such Damage or Consequential Loss if resulting from a cause (except Accidental Damage to Contents which is excluded)

(b) subsequent Damage resulting from an ensuing cause which is not otherwise excluded.”

Aspen argued the clause excluded the damage, regardless of cause. Land Energy countered that because of the write-back, the exclusion applied only to leakage from pipes, tubes or nipples, which was not the subject of the damage or loss being claimed and did not exclude the damage in respect of the heat exchangers and consequential loss.

In addition, Land Energy argued that following the removal of ‘Damage or Consequential Loss caused by’ wording from the original exclusion, the items listed in the endorsed exclusion are themselves the damage which is excluded, rather than excluding other damage caused by the matters listed at 3(e)(i).

Aspen’s defence

Aspen’s defence introduced several independent grounds for declining cover beyond the disputed policy wording:

• It pointed to a separate frost damage exclusion (clause 3(a)(iv)), arguing that this alone bars the claim, regardless of how clause 3(e)(i) is interpreted.
• Aspen also contends the damage qualifies as “Accidental Damage to Contents,” which is specifically excluded from the clause 3(e) write-back.
• Further, Aspen denies that any ensuing or separate damage occurred beyond the pipe fractures and argues that suggestions of further damage are speculative.
• Finally, it alleges operator errors by Land Energy (such as leaving cooling fans running and failing to use a backup heat source) which may itself exclude cover or support Aspen’s position that the damage was avoidable.

Key issues for the court to determine

Causation vs. damage type

Does the exclusion apply because the pipes cracked or because of how they cracked (i.e. frost)? Removal of the phrase “caused by” suggests a type-based approach raising clarity concerns.

Ambiguity and contra proferentum

Land Energy argued that frost-triggered damage to “contents” should be covered under carve-outs. The classification of the heat exchangers affects whether exclusions and carve-outs apply, highlighting the need for precise policy definitions aligned with real world use.

Ensuing loss

Even if pipe damage is excluded, Land Energy claims the resulting heat exchanger failure qualifies as covered “ensuing loss”.

Comment

Pleadings have been filed by both parties and we will keep an eye on how the claim progresses. Aspen argues frost damage is excluded; Land Energy maintains it is not. The outcome may influence future drafting and enforcement of such exclusion clauses used by property insurers.