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Construction risks - The problem with Tunnelling

27 November 2019

In this article Iftikhar Ali considers the various issues which can arise on projects involving the construction of concrete lined pressure tunnels and how these issues can be managed from a legal and/or insurance policy perspective.

Concrete has an inherent and natural tendency to crack.  When it is poured it undergoes a thermal dehydration process as it cures, which results in the inevitable cracking of concrete.  Now, cracking in itself is not a problem, but it may well become an issue for the operational performance of a particular structure.


It is unrealistic for a design to seek to eliminate all cracking in concrete – instead the more realistic approach is to accept that cracking will occur and then seek to control it to ensure the structure is fit for purpose and can function under the intended operational conditions.  Cracking of concrete can be controlled in a number of ways – for example, with the use of aggregates, steel reinforcement and even by restricting the amount of movement and thus stresses that might be induced into the structure.  By way of example, the inclusion of ash as an aggregate contributes to a stronger, more durable and more chemically resistant concrete mix and reduces shrinkage during curing. The addition of steel reinforcement also reduces shrinkage and can be used to control the extent and nature of the cracking. 

Cracking is an inherent vice for concrete much in the same way as iron rusts and wood rots – concrete cracks. Therefore, designers will try to cater for a particular design crack tolerance within the structure.  Distinguishing between cracking that is an inherent issue such as early thermal cracks from other cracks that may well be structural and constitute damage can be a challenge.  From an insurance policy perspective, project and property policies contain physical damage triggers not only as part of the insuring clause but also for those provisions that write back cover following physical damage – under clauses such as the London Engineering Group and Design Exclusion clauses. Therefore, distinguishing what is fortuitous cracking and cracking which is intended by design or an inherent component is key to determining whether coverage is afforded and, if so, to what extent.

Concrete lined pressure tunnels

It is useful to look at what particular issues can arise in respect of the construction of concrete lined pressure tunnels. First, the development of cracks in the concrete lining of a pressure tunnel cannot be prevented by reinforcing the concrete. Therefore, the main purpose of the steel reinforcement is to increase the number of cracks and to limit their width.  The purpose is to reduce the permeability of the lining and thus the water losses from the tunnel.  Reinforcement therefore prevents uncontrolled cracking of the lining and high water losses, which can cause the washing out of joint fillings and instability of the tunnel – that could lead to cracking or collapse.

Second, the design of underground concrete lined pressure tunnels relies heavily on the geotechnical survey conducted as part of the front end design package. In this front end design, the purpose of the geotechnical survey is to communicate the site conditions and the design and construction recommendations to the site design, building design and construction personnel. The survey is supposed to provide specific representative information on the subsurface soil, rock and water conditions. This data may be presented to underwriters to communicate the viability of the project and to obtain insurance cover. 

Third, in reinforced concrete structures, international codes typically seek to limit cracking to a maximum of 0.3mm widths – however for structures that are to convey liquids 0.2mm is considered the appropriate design standard. 

Fourth, deformation of the steel reinforcement within the concrete lining is typically designed into the tunnel lining structure and is intended. The designer's intention is to calculate the range of the elastic deformation of the steel reinforcement (including a factor a safety).

Legal and Policy Issues

We look at a number of ways insurance policies try to manage the risks and exposure arising from the construction of concrete lined tunnels.

MR 101

For the construction of tunnels, insurance policies will typically include the Munich Re 101 clause ("MR101"). This provides special conditions concerning the construction of tunnels, galleries, temporary or permanent subsurface structures or installations. It excludes:

  • alterations in the construction method or due to unforeseen ground conditions or obstructions;
  • measures which become necessary to improve or stabilize ground conditions or to seal against water ingress unless necessary to reinstate indemnifiable loss or damage;
  • removing material which has been excavated, or due to overbreak in excess of the design profile and/or for refilling cavities resulting therefrom;
  • dewatering unless necessary to reinstate indemnifiable loss or damage;
  • loss or damage due to breakdown of the dewatering system if such loss or damage could have been avoided by use of standby facilities;
  • the abandonment or recovery of tunnel-boring machines;
  • the loss of bentonite, suspensions, or any media or substance used for excavation support or as a ground-conditioning agent.

There are some points worth highlighting:

  • MR101 states that it provides for a "maximum amount payable under the policy". Therefore, from one perspective it could be argued that if this provision is applicable to the loss, then by reference to a formulae it provides for the maximum limit for the compensation due under the whole policy;
  • If the geotechnical survey misdiagnoses the soil conditions and the ground conditions were not as expected then any alternative method for completing the project or repair solution for the tunnel that arises from the unforeseen ground conditions is excluded;
  • The indemnity is for expenses incurred and then only to a standard or condition technically equivalent to that which existed immediately before the occurrence of loss or damage. The aim is simply to put the insured back into the position it was actually in prior to the loss; and
  • The limit of indemnity is calculated in line with an overall percentage of the original average per-metre construction cost of the immediate damaged area.  So, by way of example imagine the percentage cap is £180% under MR101. The original cost of the tunnel is £2M for 100 metres and a 10m section of the tunnel is damaged. The original average per metre cost is £20,000 per metre.The cost for the 10m is £200,000. The sub limit cap is therefore £180% of £200,000 which equals £360,000.

LEG or DE Exclusions

How do the design exclusion clauses that write cover back into the policy operate next to the MR101?  As stated above, the formulae in MR101 produces a maximum number not a minimum. The inclusion of LEG or DE exclusions that contain some form of write back of cover is not inconsistent with the MR101 - the approach to be adopted is to apply the relevant LEG or DE exclusion with the write back of cover and then impose the cap created by the MR101 clause overall. If the write back exceeds the MR101 cap then the MR101 cap applies if not then the lower number applies.


Insurance policies should include as a condition precedent to liability, compliance with the International Tunneling Code of Practice ("ITCOP").

The ITCOP are regulations drafted by the International Tunneling Insurance Group (an association linking the British Tunneling Society – BTS – and the Association of British Insurers – ABI) which are supported by the International Tunnels Association (ITA) and the International Association of Engineering Insurers (IMIA).

The aim of the Code is to promote and ensure the best practices for the reduction and management of the risks associated with the design and construction of tunnels, caverns, wells and associated subterranean structures, such as the renovation of existing subterranean structures.  This Code establishes methods for the identification of the risks and the management and control of the same.

Some of the relevant provisions of the Code are as follows:

  • Clause 6.3 relating to the assessment and evaluations to be carried out during the project development stage relating to the geology and tunneling methodologies;
  • Clause 9.5 relating to the constructability reviews to be carried out between contractor and designer ensuring that the construction methods being employed are suitable and appropriate; and
  • Clause 9.9 which requires any changes in the design and/or method of working to be notified to insurers immediately.

The inclusion of ITCOP can be an effective way to manage exposures arising from the construction of tunnels and to ensure minimum standards are observed during the construction process.


The geotechnical survey conducted at the front end of the project should be thorough and moreover representative of the project site soil, rock and water conditions.  In any event, as the ITCOP Code prescribes, this basic design should be monitored, updated and enhanced during/after the excavation process for the tunnel based on an ongoing sampling exercise of the geological conditions.  What this ultimately means is that the design for such structures is amended on a progressive basis through the construction sequence. This does not, in the author's view, fall into the category of being an experimental design – as the computation method for reinforced concrete-lined pressure tunnels is well known – and further, classifying everything that arises during the construction sequence as a design defect does not seem the appropriate conclusion.  The particular event or issue needs to be evaluated on its own merits.

In respect cracking, it seems fairly clear that cracks within design tolerances are not fortuitous physical damage and do not engage the insuring or write back exclusions in standard policy wordings. In respect of steel deformation, this is an issue that is in part intended and expected as part of the design at least.


For more information please contact Iftikhar Ali, Partner  T+44 20 7280 8908 M+ 020 7280 8908 or email Iftikhar.Ali@dwf.law

Further Reading