Public Liability Insurance - Mandatory for small community land owner/company?

Bod_1234

So let me set the scene.  We are a handful of freehold properties that many years back, collectively bought some additional land from the original developer.  This land is a private car park for us, and some green space, grass, hedges, a few trees (none close to houses).  The only shareholders our ourselves. We don't have any employees (other than the director and secretary, who are both freehold property/shareholders).  We are registered on companies house, we have a AGM every year, and decide to set our own fees (which are really low, and basically cover maintaining the green space, and keeping a slush fund for any repairs or other sundries).

We don't currently have any public liability insurance.  We have some signs up that say we don't accept claims for negligence. 

One of the houses are currently selling, and the solicitor is insisting we have public liability insurance, and that the sale won't go through without it.  Obviously this is a cost that would then have to be shared out amongst all the other shareholders.  I don't think it's actually needed, it might be advisable, but not required.  Is that correct?

Sadly, we live in a world, where solicitors are paid by the hour, and the more they string out a property purchase, the more money they make, it's not in their interest to get the job done quickly.

As you might have guessed, as a small company, we also don't have any solicitor "on the books", and because it's only 1 property that is selling up, there will be resistance to everyone paying for one, so we (our own management company) can get a solicitor to help out with the 1 property that wants to sell up.

Interestingly, this particular issue has never arisen in any of the other previous purchases, which further pushes our belief that this is just lame solicitor cash-in.    We do however need to respond to them.

We are thinking of pointing out that:

• It's not UK law to have public liability insurance
• We don't have employees to protect.
• We have signage that negligence claims will not be accepted. (not sure personally this does very much, or means very much).
• We will raise the issue at the next AGM, and ask all shareholders if they are willing to pay for this going forward.

If this sale does go through, if I were the new neighbour, I would horrified to find out my solicitor made all my new neighbours pay for a bunch of stuff that wasn't really needed, and that I was responsible for initiating.

Anyone got any advice/experience?

Thanks.

user1977

Bod_1234 said:

we live in a world, where solicitors are paid by the hour, and the more they string out a property purchase, the more money they make

Nope, the vast majority of conveyancing transactions are done for a fixed fee. Besides, it's not up to the buyer's solicitor whether their client ought to accept the position, all they're doing is advising their client. At the end of the day it's up to the buyer whether they "string out" a transaction for this reason.

• It's not UK law to have public liability insurance

I think that's correct in this instance, but is anybody claiming that it is in fact mandatory? They're allowed to ask for things which aren't mandatory.

We don't have employees to protect.

Is that relevant? It's public liability they seem concerned about rather than employer liability.

We have signage that negligence claims will not be accepted. (not sure personally this does very much, or means very much).

It may even be counterproductive, if it is read as suggesting that you're actually aware of some sort of hazard. On whose advice did you put up the signs?

AdrianC

If you are at a very low public liability risk, then the premium will be very cheap.

If the premium is expensive, then that indicates that insurers think they're likely to have to pay out, which means you'd be mad not to have it... right?

I can see several situations where PLI may well be cheap. Let's say one of those trees loses a branch which hits somebody or something. Or somebody does a wheel and tyre on a pothole in the car park. Sure, it may be unlikely, it may be without merit... But do you want to fight that legally yourselves, or just hand it to your PLI?

Bod_1234

I think that's correct in this instance, but is anybody claiming that it is in fact mandatory? They're allowed to ask for things which aren't mandatory.

"We will require such insurance to be placed on risk prior to exchange and a copy of the policy schedule provided."

This is the exact wording from the solicitors.  So far, my opinion of them is pretty low, they appear to have the inability to even read plain English, and just skim read everything and make everyone else do their work.

user1977

Bod_1234 said:

I think that's correct in this instance, but is anybody claiming that it is in fact mandatory? They're allowed to ask for things which aren't mandatory.

"We will require such insurance to be placed on risk prior to exchange and a copy of the policy schedule provided."

This is the exact wording from the solicitors.  So far, my opinion of them is pretty low, they appear to have the inability to even read plain English, and just skim read everything and make everyone else do their work.

That's what their client requires (or at least, is currently asking for) in the context of their purchase from the vendor. It doesn't mean anybody thinks there's a general mandatory requirement for such insurance to be in place.

Bod_1234

I think the way out of this, is to hand the problem back to the seller.  If they want to sell, they are welcome to pay for 1yr cover, and the "company" will discuss whether to continue with the cover in the following years AGM, the new buyer will be a shareholder then, and can have their own input, it might be different when it's coming out of their own pockets rather than someone else's.

user1977

As AdrianC suggests, either it's going to be cheap (and less hassle just to get something than have this argument periodically), or it's expensive (in which case the insurers seem to know more about the actual risks than you do). Has anybody bothered checking?

GDB2222

Suppose for a moment that someone is severely injured, as a result of negligence of the land-owners/occupiers. (Ignore the notices. They are meaningless.) 

The victim wins a multi-million settlement in court against the ltd company and its directors. Maybe, none of the home owners would be too fussed over the loss of the car park and green space, but are the directors happy to have personal liability without any insurance cover? I think this solicitor has done you a huge favour - assuming you are one of the directors. 

Bod_1234

user1977 said:

either it's going to be cheap

It's over £200 a year, and the online application didn't look at any risks whatsoever, just some blanket questions.  Will every household be prepared to double their current payments?  That's going to be a hard sell.  There are surely thousands if not tens of thousands of similar privately owned land, small companies in this country, and I suspect very few bother with this.

GDB2222

Bod_1234 said:

user1977 said:

either it's going to be cheap

It's over £200 a year, and the online application didn't look at any risks whatsoever, just some blanket questions.  Will every household be prepared to double their current payments?  That's going to be a hard sell.  There are surely thousands if not tens of thousands of similar privately owned land, small companies in this country, and I suspect very few bother with this.

I'm not surprised at the premium. You need £10m cover, and, even if the incidence of large claims is very low, the insurer needs to arrange reinsurance and have capital reserves to cover very large payouts.   The directors are being rather decent taking on this liability themselves, so as to save the other householders a few pounds a year. A big claim would wipe them out, I assume.

AdrianC

Bod_1234 said:

user1977 said:

either it's going to be cheap

It's over £200 a year, and the online application didn't look at any risks whatsoever, just some blanket questions.  Will every household be prepared to double their current payments?  That's going to be a hard sell.

How many households?
Five?
£40/each/year, or 80p/week.

If that's a hard sell, gawd help you if ever that parking space needs resurfacing.

"Hi, Dave next door. Umm, as you know, Tony's selling number 3, and his buyer's solicitors have flagged up that we don't have PLI for the shared space. No, I never even thought about the risk, either. Yes, if ever we sell it's probably going to be an issue then, too. I've got a quote, and it's only going to cost you 80p/week to protect you from having to pay out if anything goes wrong... Yep, definitely better that we find out this way."

If t'were me, I'd be leaping at that.

There are surely thousands if not tens of thousands of similar privately owned land, small companies in this country, and I suspect very few bother with this.

You're right... There are lots of naive people who are penny-wise, pound-foolish...

Right up until the point at which they find out £200/year would have been very, very cheap.