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Blog: Array UK

Insurance Disputes in Construction: A Growing Strategic Risk

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Insurance and indemnity disputes are increasingly central to UK construction litigation. As projects grow in complexity and risk, contractors and developers are relying on layered insurance programmes—Construction All Risks (CAR), professional indemnity, public liability, latent defects cover—to protect against financial exposure. 
 
But when claims arise, coverage is often contested. Disputes between contractors and insurers now routinely involve: 
 
  • Scope of coverage under CAR policies 
  • Triggering events and timing of damage 
  • Responsibility for post-handover defects or latent conditions 
In Sky UK Ltd & Mace Ltd v Riverstone Managing Agency Ltd [2024] EWCA Civ 183, the Court of Appeal provided authoritative guidance on CAR policies, clarifying the definition of “damage,” the recoverability of investigation costs, and the mechanics of aggregation and deductibles. The case underscores how policy language—and its interpretation—can determine millions in exposure. 


Policy Complexity: Endorsements, Exclusions, and Ambiguity 

Construction insurance policies are notoriously complex. They often include: 

 

  • Multiple endorsements and schedules 
  • Ambiguous exclusions and carve-outs 
  • Interlocking indemnity clauses across contracts and subcontracts 
In disputes, legal teams must reconcile policy language with contractual obligations, project timelines, and factual evidence. This requires deep technical understanding and meticulous document review. 

The challenge is compounded when policies span years, involve multiple brokers, or contain bespoke amendments. A single misinterpreted clause can derail a claim or trigger costly litigation. 

 

AI-Assisted Review of Policy Language 

Artificial intelligence is transforming how legal teams approach insurance disputes. AI-powered platforms can: 

 

  • Extract and compare key clauses across policies and endorsements 
  • Flag inconsistencies in coverage scope, exclusions, and deductibles 
  • Identify relevant communications between brokers, insurers, and contractors 
Natural Language Processing (NLP) enables the system to understand insurance terminology, detect subtle variations, and surface patterns that may not be obvious to human reviewers. 

This accelerates early case assessment, strengthens negotiation positions, and improves the defensibility of claims—especially in high-value disputes involving latent defects or professional negligence. 

 

Faster, Defensible Outcomes = Reduced Project Risk 

Delays in resolving insurance disputes can stall projects, trigger financing issues, and damage reputations. Legal tech enables: 

 

  • Rapid triage of policy documents and correspondence 
  • Consistent coding across privilege, responsiveness, and issue tags 
  • Audit trails that support enforcement, arbitration, or settlement 
In a sector where time is money, faster resolution means reduced risk. Legal teams equipped with AI-assisted review can respond more decisively, defend more credibly, and protect commercial interests more effectively. 

Strategic Implications for Legal Leaders 

General counsel and heads of litigation in the construction sector must now treat insurance and indemnity disputes as strategic litigation risks. This means: 

 

  • Embedding AI into policy review and dispute workflows 
  • Partnering with providers who understand construction insurance structures 
As the UK construction sector faces tighter margins, stricter regulation, and rising litigation, legal teams with modern review capabilities will be better positioned to manage risk and deliver results. 

Sources:

[1] K&L Gates: UK Appeal Court Provides Authoritative Guidance on Construction All Risks Insurance Policies  
[2] Kennedys Law: The UK Construction Sector – What’s on the Cards for 2025?  
[3] My Commercial Lawyers: Construction Disputes in 2025 – What Contractors and Developers Need to Know 

 

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