Latent Defects Insurance: The $250M Safeguard in the Charles de Gaulle Airport Collapse

On May 23, 2004, a catastrophic structural failure occurred at Paris's Charles de Gaulle Airport when a 30-meter section of the steel roofing at Terminal 2E collapsed. This tragic event resulted in the deaths of four individuals and injuries to several others. Investigations revealed that the collapse was due to a combination of faulty design and workmanship.

Terminal 2E, an elliptical tube constructed of 30-centimeter-thick reinforced concrete rings, had been operational for only nine months before the incident. The French Commission for the Administrative Investigation identified structural engineering defects as a possible cause, including poorly placed reinforced steel, insufficient structural supports, and weak outer steel structures and concrete support beams.

Following the collapse, the damaged structure was demolished and replaced with a new light steel construction. The terminal reopened to the public in March 2008, with reconstruction costs amounting to €150 million (AUD 250 million). These expenses were fully covered by Decennial Liability Insurance (DLI), also known as Latent Defects Insurance (LDI).

LDI is a first-resort, strict liability policy that provides building owners with a long-term warranty against material damage caused by structural defects. Unlike standard property insurance policies, which typically exclude coverage for inherent defects, LDI offers protection without the need to establish fault or liability.‍

The Charles de Gaulle Airport incident highlights the importance of LDI in managing financial risks associated with structural failures. By ensuring that reconstruction costs are covered, LDI provides building owners with peace of mind and underscores the necessity of stringent design and construction standards to prevent such tragedies.