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

This week brings another guest article from Stuart Reynolds (Cert CII) of Pi Property Insurance.  This time Stuart reminds us of the importance of Property Owner’s Liability insurance with some interesting, and not uncommon, case examples.  As always – any queries on an article of this nature should be directed to the author.  Stuart’s contact details are at the end!

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 discount rate is a calculation used to determine how much money insurance companies should pay to people who have suffered life-changing injuries, in order to cover all of their predicted future losses.  When assessing compensation awards, the courts consider the net rate of return (discount) that a claimant might expect to receive from a reasonably prudent investment of lump sum compensation. Since 2001, this rate has been 2.5%.

On the 7th December 2016, it was announced that following a review of the Discount Rate a decision was reached to reduce the discount rate by 3.25 points to -0.75%, with effect from 20th March 2017.

This was subsequently changed again & since 5 August 2019 the Ogden discount rate was increased from -0.75% to -0.25%, reducing slightly the amount insurers will have to pay to accident claimants.  These changes have had profound financial consequences and insurers have incurred significant additional costs where claims payments and reserves have increased for personal injury claims.

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.

What next?

If you have any questions about what cover is needed or how the cover can benefit you or a client, please call please call me Stuart Reynolds on 07973 790218 or Email me on  For further updates follow Pi-Property Insurance in Twitter or Linkedin.

Pi-Property Insurance, 1 Arrow Court, Adams Way, Alcester, B49 6PU.  Pi Property Insurance is arranged by Morrison Edwards Insurance Services Ltd. Authorised and Regulated by the Financial Conduct Authority, Registered office as featured, Registered in England No: 3755087