Dealing with potential and actual liability claims

The liability section of your policy typically provides cover for third parties (Public Liability, PL) and employees (Employer’s Liability, EL) for injury or illness caused by the negligence of the policyholder (the business in the case of commercial insurance).

A claim is only regarded as such when made formal by the policyholder receiving a letter or email, normally from a legal representative of the plaintiff (alleged injured person) that sets out the reasons and extent of the injury.

What to do when you suspect a claim with be forthcoming or actually received

• Notify your broker as soon as any incident you feel would give rise to a claim has occurred. This allows the broker to offer any pertinent advice and forewarn the insurer that an official claim may follow.
• Do not attempt to respond to any written claim as this could prejudice the insurer’s position when negotiating settlement or rejecting the claim.
• Have any relevant evidence ready that might help your insurers defend your position. This might include CCTV footage, the accident book, witness statements taken at the time, any warnings given to this person for previous near misses etc.
• Be ready to provide information to the claimant’s solicitor pertaining to their employment in the case of an EL claim. This is mandatory.

Managing your expectations

• Policyholders cannot decide to opt out when faced with a claim as for some time now the EL policy is compulsory and claimants have a legal right to make a claim sometimes many years after the policy has expired. The policy is lodged centrally within the Employer’s Liability Tracing Office allowing access for claimants, with or without the knowledge of the policyholder, to present a claim.
• Do not expect to be informed of the progress of the claim by your insurers. This is often a very complex process with a great deal of negotiation, investigation and discussion between the legal teams for the insurer and the plaintiff. It is preferable for a resolution to be found outside the courts as this will often save many thousands of pounds.
• Whilst negligence normally has to be shown for a plaintiff to receive compensation, the law states that there only needs to be a 'balance of probability’ in their favour. The policyholder owes its employees and the public a duty of care and if the event that gives rise to the injury could be reasonably foreseen and avoided then the law would be on the side of the claimant.

Will my premium increase following a settlement?

• This will depend on the insurer and the cost and circumstances of the case. Where a policyholder has been negligent and has no taken health and safety of the public or their employees seriously an insurer might see this as a risk factor and apply premium loadings.
• If there have been other incidents with have gone against the insured or even near misses an insurer may also see this as a risk factor and load premiums.
• If the case is clearly a one-off and the previous record for the insured is good, then it is more likely the insurer will look at this more favourably and the broker can help here as well.

Our advice

Naturally, we would always recommend that our clients demonstrate that they have the safety and protection of the public and their employees at heart when running their business. Regardless of how tight a ship you run there will be occasions where the unforeseen happens.

An insurer when deciding on how to treat a claim for injury will bear in mind the good practice their policyholder deploys within their operation. This might be excellent training, robust HSE policies, thoughtful interiors with residents in mind, great working practices and employee benefits. All of these factors would indicate that this claim is unique or at least unusual and this will inevitably influence their defence of the claim or help in their mitigation of the eventual cost.

A business that continues to present claims and/or has numerous near misses or smaller scale injuries recorded in its accident book and does not address this will place their insurer in a much more difficult position. Even if the large claim has not yet presented itself, this would suggest one may be on the horizon. However, a company who looks at the data and takes remedial steps to improve things thus reducing the risk of further incidents will also find favour with an insurer.

How can Quality care Group help?

QCG is not just an insurance broker but a complete care broker. We work with a number of partners enabling us to offer a suite of services relevant to the sector including help with risk management, building valuations, recruitment, CQC conflicts and assessment, energy, wealth management (plus refinancing), HR and much more.

If you feel you have a need in any of these or other areas we are here to help, please do not hesitate to call us on 01273 424904 or see more about our risk control services here.