UK: Buncefield – The Insurance Market’s Black Cloud?

Last Updated: 10 May 2006
Article by John Hanson

Originally published in the Insurance Law Quarterly - Spring 2006 - Issue 62

On 11 December 2005, possibly the largest explosion ever to occur in Europe took place at the Buncefield Oil Depot near Hemel Hempstead. As might be expected, there was immediate speculation as to cause, with possibilities including arson, terrorism, fuel leak, storage tank failure and pipeline failure. Early estimates put the damage at £300 million; at the time of writing, some estimates have now reached £1 billion.

The Buncefield explosion made headlines around the world and cast a black cloud over much of southern England. For insurers, the consequences could be costly. BLG is already acting for over 40 separate claimants, either through insurers or directly from commercial insureds. Those claims alone look likely to be in excess of £100 million.

Experts expressed surprise that such a big bang should have been caused by a petrol leak. However, even at this early stage, it seems unlikely that the explosion was caused deliberately. This has reduced the alternative causes and suggests that a substantial leak occurred, possibly resulting in a vapour cloud which could have been ignited by any electrical spark. The progress report from the investigation board does not provide any conclusions on causation and we could be waiting some time for a final report.

Damage outside of the Depot

The explosion occurred at 6.26am on a Sunday morning. Thankfully there was no loss of life. Also, the fire was largely contained on site and it is our understanding that, at least locally, soot and smoke damage was limited - presumably, rising and dispersing over south east England.

However, very substantial damage has been caused by pressure waves – shattering windows, causing damage to building cladding, stock and other damage. There was no consistency in the damage to buildings. In one street a building was severely damaged, but in the next, very little damage has occurred - it appears to have depended entirely upon the direction of the pressure wave. Early damage estimates are at £300 million or thereabouts, although the actual claims may exceed this considerably.

Subrogation targets

Clearly, those who have suffered damage will be seeking to recover their losses from someone. The obvious subrogation targets are the joint venture operators of the Depot, namely Total and Texaco, and possibly the pipeline operator. As it may be many months before forensic scientists are allowed on site by Health & Safety, conjecture as to who is ultimately responsible will continue.

It will be interesting to see whether the operators and their insurers will wish to dispute liability for any length of time. An early admission of liability (or at least an early settling of claims on a 100 per cent basis) would certainly avoid very substantial legal costs, but is it likely in this case? No doubt much will depend upon the overall estimate of damage and the interaction between the open market insurers, the oil mutual and the joint venture partners. However, if possible, in respect of such a large and politically sensitive disaster, a market solution to property damage claims would seem to be the sensible result. Total is, of course, familiar with this type of disaster management following its involvement in the Toulouse chemical plant disaster. If such is the intention of the joint venturers then it may be sensible for their adjusters to become involved in the adjusting of the property damage claims.

Type of damage

In addition to insured losses which are likely to be based primarily on repair costs and any consequential business interruption loss, both freeholders and leaseholders may have uninsured losses for diminution of value caused by blight if it is not transitory.

Various views have been expressed that the explosion and its results may well have a permanent effect on the land use in the area, and on property values. At the time of writing this article, a homeowner’s class action has been commenced focusing on loss of value of property in the immediate vicinity of the explosion.

Legal causes of action

It is too early to speculate about causes of action; however, they are likely to include negligence and nuisance. It used to be thought nuisance required ongoing interference with a neighbour’s enjoyment of its property. However, it now seems possible to establish nuisance even where the interference happens for a limited period of time.

There is no doubt that those acting for the owners of damaged properties will also be looking at a Rylands v Fletcher claim because of its advantage of strict liability. Rylands v Fletcher (1863) provides that "a person who for his own purposes brings on his land and collects and keeps there anything likely to do mischief, if it escapes, must keep it in at his peril and, if he does not do so is prima facie answerable for all the damage which is the natural consequence of its escape."

In addition, the "purpose" must be a nonnatural and/or extraordinary use of the land. Certainly, the fuel would amount to a necessary "thing". Also, one might expect that the bringing on to a site of such vast quantities of fuel would be considered to be a non-natural and/or unusual use of the site. For example, Lord Goff said in Cambridge Water Co Ltd v Eastern Counties Leather Plc (1994) "I feel bound to say that storage of substantial quantities of chemicals on industrial premises should be regarded as the classic case of non-natural use; I find it very difficult to think that it would be objectionable to impose strict liability for damage caused by their escape."

Also, it is clear that that which escapes and does the damage need not be the thing that the defendant actually accumulated. In fire cases, for example, the thing brought on to the land does not escape itself; it catches fire and the fire escapes. Smoke damage caused by a fire has been said to be sufficient if it escapes and we see no difference between smoke escaping and pressure waves escaping from an explosion. It is clearly foreseeable that if the fuel catches fire it will explode and cause damage through pressure waves.

Therefore, at this early stage, noting the large amount of fuel on site and the severe consequences resulting from the accumulation of fuel, (as demonstrated by the explosion and its effects) this may well be a loss where, unusually, the strict liability as imposed by Rylands v Fletcher applies. If this is accepted by the joint venture operators of the Depot, then it will make it more likely that liability will be accepted at an early date.

The next step?

As BLG are representing a large number of those involved in property damage claims resulting from the Buncefield explosion, we cannot discuss specific cases or tactics in detail. However, we expect that in the near future, the various lawyers acting for property owners with claims will have met to discuss further action. We anticipate that all parties will benefit if channels of communication between the joint venturers and their insurers can soon be established with those whose property was damaged.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.