The cost of a serious injury or third party property damage for which you are found liable could be more than you think. Damages for personal injury claims have increased significantly in recent years.
For example, in the case of Collier v. Norton, 2012, a record of GBP23 million was awarded to a teenager left paralysed after a road accident. (This consisted of a GBP7.5 million lump sum plus annual payments of GBP 270,000.)
The case highlights the substantial payments that can be awarded following a life-changing injury, whether on the road, in the workplace, or elsewhere, and the need to review the amount of liability insurance purchased. It also demonstrates the financial consequence of an award consisting of annual payments for the lifetime of a claimant and how this can build to a very considerable sum. The issue is not limited to death or injury – a spreading fire or the supply of a defective product could result in you being found liable for third party property damage. As an example, QBE insurance recently reported a claim where a manufacturer supplied a machine which caught fire, resulting in the complete destruction of the customer’s factory at a total cost of more than GBP80 million.
POINTS TO CONSIDER
- How many people could you have in one place at one time and therefore potentially at risk of injury? Liability insurance limits generally apply to each incident, not each individual, so it is important to consider the potential financial cost of an accident – in the workplace or other location – resulting in death or serious injury to several people.
- What impact could there be on neighbouring premises and people if you had a major fire that spread and you were found to be negligent?
- What is the nature and number of your products and end users? (The more end users, the more the potential for injury and damage claims.) It’s important to note that, in the case of products liability, all claims from injury or damage happening during the policy period are added together, even where resulting from entirely separate causes or incidents, so the policy limit can be reached more quickly.
- Do you use commercial vehicles? Typically, the standard motor third-party property damage limit is lower than for cars, so you may need to consider purchasing additional coverage.
- Does the nature of your activities or products mean there could be a potential for serious injury to celebrities or high net worth individuals? (Injury payments take a loss of earnings into account, so those with higher potential earnings may receive higher awards.)
- Is there any potential for injury to children (as payments in respect of any serious injury may be expected – as in Collier v. Norton, 2012 – to continue for a considerable number of years)?
- What level of cover is typically purchased by others in your sector?
If your unsure and need more advice from knowledgeable insurance professionals, don’t hesitate to contact either myself or our team on 0800 083 4933