Vibration, Weakening and Removal of Support


On cleared land, adjacent to the boundary of several residential homes, a 4 meter deep excavation commenced. It would eventually become a basement carpark for a multi-storey building.

The contract value was around $6,000,000. The geology was predominately stiff clay for the depth of the excavation. No ground water was encountered and there had been a long dry spell preceding the excavation. An engineer was consulting on, and overseeing the excavation work.

What happened

As the excavation neared completion, rainfall was experienced. It was not unusual in amount or concentration for that time of the year. The vertical side of the excavation adjacent to the residential homes began collapsing. The homes were damaged and their structural integrity was compromised.

The tenants in the homes were evacuated.

Investigation Findings

The vertically cut sides of the excavation were unable to support the weight of the buildings when the clay soil became damp and unstable. Although one side had a supporting “earth block” installed (earth piled-up against it), it was not the side supporting the homes.

Other than the earth block, no retention system had been installed to support the land and prevent it from collapsing. It is thought that the engineer may have assumed (gambled?) that the dry spell would continue beyond the period it took to excavate and install the concrete basement shell.  Thus the considerable expenses of an engineered retention system was unnecessary.

What remediation was required?

  • The authorities ordered that the excavation be filled-in with gravel to provide immediate stabilisation, at a cost of around $300,000.
  • The homes had to be strengthened and partially rebuilt at a cost of around $500,000 (including relocation costs of the tenants).
  • An engineered retention system had to be installed around the perimeter of the basement excavation, at a cost of approximately $400,000.
  • The gravel had to be excavated at a cost of approximately $350,000 before building could recommence from the point it was at before the collapse occurred.
  • The uninsured consequential loss and delay costs amounted to some $300,000.
  • The legal costs were around $250,000.

The total known costs involved are close to $2,100,000.

How the policy responded

Section Two of the policy indemnified the legal liability aspect to third parties;

  • remediation work of the homes and tenant relocation $500,000.
  • It also indemnified the cost of stabilisation gravel $300,000 as this prevented further damage to third party property.
  • The legal costs of $250,000 were indemnified as well.

The installation of the engineered retention system, which was required before excavation commenced and which could have prevented all loss and damage was not indemnified.

The most difficult aspect to consider was the re-excavation of the stabilisation gravel. As a Section One item, the exclusion for defective design was clearly influential. The principle of indemnity (i.e.  to return the insured to the position it was in prior to the loss) was considered.

It was finally considered that although the policy was not obligated to pay the $350,000 re-excavation costs, in this instance it would be indemnified on the basis that it was a temporary safeguard to prevent further damage and there was therefore an obligation to remove it.

The policy indemnified $1,400,000 for the claim.


It is expected that a full recovery of the $2,100,000 insured and uninsured costs will be obtained from the engineer’s PI insurers. To save $400,000 in retention systems, the engineer gambled and lost $1,600,000. (Note: the $400,000 retention system costs were always a building cost component of the owner’s account).

In the MECON policy Vibration, Weakening and Removal of support is covered to the full limit of liability in the policy (unless otherwise specified).  Whilst the subject of an exclusion when the simple criteria is met then it’s insured to the full limit of liability specified in the policy. The above case study demonstrates the degree of cover available under Vibration, Weakening and Removal of support and how the cover responded to this particular circumstance.

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Latest update from Glenn Ross

Dear all Firstly a word to the wise: If you have been following the media relating to the construction industry, you will know that your clients