Why do you need to ensure your Property Owners Liability is sufficient?
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Why do you need to ensure your Property Owners Liability is sufficient?

The cost of claims is continuing to rise and it only takes a single injury claim from a member of the public who requires ongoing care for cover to be exceeded.

A main cause of the increase in the cost of claims is due to the Ogden rate. This rate is set by the Lord Chancellor and it is a calculation used by courts to quantify how much insurance companies should pay out to claimants who have suffered life-changing injuries.

The Ogden Rate was previously set at +2.5% but on the 20th March 2017 this changed to a rate of -0.75% which ultimately means that the cost of serious injury claims has increased.  

Case Examples

To provide an example, a 30 year old man who earns £25,000 net per annum is seriously injured in an accident and is now unable to work. He will require nursing care for the rest of his life at a current cost of £75,000 per year. Under the old rate, an insurance company would need to pay out £2,791,000 to cover the care costs that he would need annually for the rest of his life. Under the new rate, the same settlement would cost £6,325,000.

Similar to this, further examples include a property owner who received a claim of £7 million after a by passer received serious brain damage when a ‘For-Sale-Sign’ hit his head and a 21 year-old suffered permanent paralysis when he was struck at the base of the neck by a falling branch. He required 24 hour care for the rest of his life resulting in a £20.9 million claim.

So what does it mean for you?

Looking at the outlined examples, we now have a situation where a £5 million property owner’s limit may be inadequate to deal with a severe injury claim. An insurer will not pay more than the limit that is provided by the policy so if a court awards damages to a claimant that are more that the limit under the policy then the remainder of the claim will be falling to yourself to pay, which can be millions of pounds. Therefore you can see that to prevent the limit being exhausted, a larger liability such as £10 million is recommended.

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