Why careful consideration of liability indemnity limits is of key importance
We, at Acres, often have the conversation about public liability cover when we deal with our agricultural clients and their residential properties. We recommend that they consider increased indemnity limits for public, product and employer’s liabilities from the standard ‘off the peg’ limits available for both home and commercial insurance policies.
Many online aggregators or insurers tend to include £2 million as standard. We often have to explain that, with current court judgements and individual circumstances, £2m is simply not enough. For many of our clients, a figure of £10 million may seem excessive. However, two recent unfortunate incidents involving gas explosions in homes, which have resulted in injury and serious damage to neighbouring properties, highlight this point.
The most recent (over the weekend in Lancashire) caused the death of a young boy, injury to four people (two of whom remain in critical condition), the collapse of two houses and serious damage to a third (https://www.bbc.co.uk/news/uk-england-lancashire-57132505).
A second incident (earlier in May in Kent) caused three neighbouring properties to be condemned and the serious injury of seven people (https://www.kentonline.co.uk/ashford/news/four-homes-hit-by-explosion-will-have-to-be-demolished-246704/).
Taking the incident in Kent as an example, let’s look at some of the figures…
First of all, the three neighbouring properties have been condemned and so will need to be rebuilt. If we assume a rebuild value of £250,000 each, we are already up to £750,000.
Then we consider the fact that seven people were seriously hurt, with two being airlifted to hospital. If those seven individuals were not the insured clients, this will fall into their public liability cover as well. With injury compensation and loss of earnings, the figure for this would be considerable and would almost certainly take us past the £2 million mark.
This still leaves other costs such as contents, damage to several cars, damage to neighbouring properties on the other side of the road and so on.
Taking all of this into consideration provides a valuable lesson. It is important for our clients to consider their own individual circumstances carefully when thinking about appropriate public liability cover, both personally and commercially. An Insurance Broker should advise you on indemnity limits that suit your requirements. In this age of price comparison websites and ‘off the peg’ insurance products, it can be easy to set price as the deciding factor rather than breadth of protection.
Furthermore, it is a good illustration of the value of properly tailored independent insurance advice, which is not always available in the online world.