A fire destroyed a Scottish warehouse and its insurer voided the whole policy. Now a court is working out who left the owner uncovered.
The decision, issued by the Outer House of the Court of Session on July 29, 2026, is a clear guide to how insurance cover can fall away before a loss ever happens.
Bellshill Property Limited owned a large warehouse at Bellshill Industrial Estate - about 3,000 square metres, with an 800 square metre mezzanine. It leased the unit to Tradebe Healthcare National Limited, which processed clinical waste there. In July 2021 the building burned down. The court found that one of the gas-fired dryers used in that processing started the fire.
The owner's broker, Borland Insurance Limited, had arranged cover through a Luxembourg insurer, Builders Direct SA, starting December 7, 2020. The policy carried two conditions that would later matter. It was written on the basis that there were no composite or sandwich panels at the unit - yet the building, once a cold store, was lined with them almost from floor to ceiling. And fire cover depended on the electrical systems being inspected within two months, by February 7, 2021. That inspection never took place.
When the fire hit, the insurer refused to pay and later avoided the policy from the start. The owner sued for £5,256,904.11 - the £4,599,000 insured value plus £657,904.11 in lost rent - and pursued the broker, the tenant, and the company that had guaranteed the tenant's lease obligations.
For insurers and brokers, the real question was causation. The tenant argued the claim against it should be dismissed. Its reasoning: fire cover was already gone by February 7, 2021, when the electrical-inspection deadline lapsed, and the whole policy was later voided over the undisclosed panels - and neither of those had anything to do with the tenant.
The court largely agreed on that point. By March 2021, when the tenant switched from steam sterilisation to gas-fired burners to dry the waste, there was already no fire cover, because the electrical-inspection condition had not been met. Cover for fire damage, the court found, "ceased on that date, and that was one of the reasons advanced, correctly, on behalf of the insurer in declining liability."
The judgment is worth keeping for the way it reads several standard clauses.
The insurer had relied on the fair-presentation clause and the Insurance Act 2015. The court accepted the insurer was entitled to void the policy over the undisclosed composite panels, which were the subject of a specific endorsement stating that unless noted and agreed, there were none at the premises.
But the court rejected the idea that the tenant's undisclosed gas burners justified voiding the policy. The burners were not in use when the policy began, and no renewal or variation had happened before the fire.
The court then looked at the non-invalidation clause in the property section. It says the insurance "shall not be invalidated by any act or omission or by any alterations in respect of any portion of the Premises hereby insured not occupied by the Named Insured whether constituting an increase in risk or not unknown to the Named Insured." Had fire cover actually been in place, the court held, that clause would have protected the owner against the tenant's undisclosed burners - so long as the owner did not know about them.
The court also refused the owner's attempt to turn the heating-process exclusion against the insurer. That clause bars damage "to that part of the Property" caused by fire from "its" undergoing a heating process. The court read it narrowly: it excludes the item being heated, not fire that spreads beyond it. The example given was a window frame stripped with a blowtorch - if the frame burns, that is not covered; if the fire spreads to the building, that is.
The court was candid about the policy drafting, describing the wording as a booklet "compiled to provide general wording apt to cover a wide variety of circumstances," and noting the drafter seemed to have "a serious aversion to punctuation of any kind." It also pointed out that the policy named the wrong property altogether - a different unit, with a different owner and postcode, elsewhere on the estate.
So where does the tenant stand? The court found the tenant did not cause or contribute to the absence of cover under the actual policy. But it left one narrow door open. Under the lease, the tenant could not use the premises for any purpose that might make an extra premium payable without first agreeing to pay it. Switching to gas burners, the court thought, at least arguably triggered that duty - and the tenant may have breached it by starting up without checking. Proving that any such breach actually caused the owner's loss, the court said, "seems unlikely to be easy."
The takeaway for the market: an unmet condition precedent can wipe out cover well before a loss, and a voidance for non-disclosure can operate from the policy's inception - so a later act by a tenant may make no legal difference to whether the policy responds.
No final liability has been decided. The case will proceed to a full hearing on the evidence, where the court will determine whether the broker, the tenant, or both are responsible for the owner's loss.
