Why it’s important to review liability indemnity limits
We live in a litigious society with evolving risks and ever increasing costs & awards.
Businesses and individuals have an increased awareness of their legal rights, coupled with the relative ease of accessing the UK legal system to pursue a compensatory award where negligence is alleged.
The costs attached to the claims themselves are being driven ever higher, with previous awards used as a basis for future settlements.
Since the changes to the Ogden Personal Injury Discount Rate (the tool used when calculating compensation when someone suffers a serious life changing injury), there is potential for even higher personal injury settlements.
The following are examples of real claims dealt with by insurers that PIB work with and highlight the levels of awards that can easily be reached:
- Public Liability - A child was severely injured by a vehicle on a construction site. The contractor responsible for traffic management was found to be negligent. The claim was originally reserved at £9 million. However, the change in Discount Rate alone increased the reserve to £20 million
- Public Liability - A painting contractor working on a National Trust property using a blow torch caused significant fire damage amounting to £23.5 million
- Employers Liability – A claimant aged 19 suffered an accident at work, which caused tetraplegia. The claim was reserved at £20.1 million. The policyholder’s limit of indemnity at time of incident was only £10 million
What do we recommend and why?
As the legal and economic environments continue to change, and when taking into account the examples above, PIB recommend that serious consideration is given to purchasing increased indemnity limits for Employers, Public and Products Liability, of no less than £30 million.
What should I do?
PIB strongly recommend that you take time to review your current liability indemnity limits, whilst also reviewing any customer &/or supplier contracts you have in place - these may require you to carry a minimum level of liability cover. Please get in touch with your usual PIB contact should you wish to clarify current limits or discuss any specific concerns. It is unlikely that we will require any additional information from you, and we will be able to advise you on the most cost-effective solution.