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In many cases, ‘damage’ will be defined in the policy. In other cases, where damage is not defined, the question falls to be determined by reference to previous cases.

Blue Circle v Ministry of defence concerned a pond that had been contaminated by water containing radioactive material. The Court of Appeal held that this did constitute damage to the insured property (the land) on the basis that there was an alteration in its physical characteristics that rendered it less useful or valuable. This was because the radioactive material had intermingled with the land and could not be removed, short of excavating the contaminated soil.

The Court of Appeal in Hunter v Canary Wharf considered dust ingrained in carpet to be physical damage for similar reasons,