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Archive for 2011

Theft of metal – The risks are growing

Tuesday, December 20th, 2011

Property owner insuranceIn August this year, Transport for London reported that nearly £300,000 worth of metal had been stolen from the system in the last year and is being sold for scrap. This includes £143,000 of material taken from bus stops over the last year. In addition, £291,000 was stolen from the Tube, DLR, Over-ground and Tramline making this a nightmare for commuters’ journeys as the cable theft has become a common cause for delay.

Thieves are going to even greater lengths to harvest various different metals, risking life as well as long prison sentences. Non-ferrous metals such as lead and copper are very desirable and they are not only costly to replace but the theft can interrupt the running of your business causing even further costs. Metals are often used in roof coverings and theft of these can lead to water damage in the building. In addition attractive amounts of cables and piping are often stored on construction sites and their loss can be very costly and delays build schedules which in turn lead to increased staff costs on projects.

Most commercial property owner insurance policies will include theft cover but cover may be restricted to theft following forcible and violent entry to or exit from the building – this may mean that theft of lead, piping etc. from the outside of the building may not be covered under the policy. Some insurers may consider removing these restrictions though payment of an additional premium may be required. Alternatively, some insurance policies will specifically include an extension to cover theft of metals.

In addition to ensuring you have adequate insurance cover in place it is important to be aware of the increased risks and the security measures a business may require to help protect it. You may want to consider improving physical security to the perimeter of your premises such as installing security cameras and security lighting to protect the perimeter of the site of your building.

Reduce ease of access to roofs by keeping ladders locked and hidden away and any scaffolding secure. Also remove items such as waste bins, tall trees and the like that may provide a boost for a burglar to climb on to the building. You could consider putting anti-climb paint on drain pipes etc (but do not forget the deterrent warning signs!).

Injury not caused by repetitive strain.

Thursday, December 15th, 2011

A recent county court case demonstrates the importance of employers recording and maintaining records of risk assessments and health and safety training.

The claimant in the case was employed by the defendant as a manual parcel handler for just less than two years. He resigned when back pain made him unable to continue in his job. He brought proceedings against his employers alleging that a previously asymptomatic back condition had been exacerbated by his work. He claimed that the work was repetitive, had not been subject to sufficient risk assessment and that his employers had failed to provide a safe system of work.
The defendant denied liability on the basis that the job was a simple and straightforward one, had been properly risk assessed and was not repetitive. There was no previous history of any injuries arising from this work. It was accepted by both parties that the work could not have been done mechanically.

The records showed and the judge accepted that the claimant had received a significant amount of training including on manual handling and that this had been updated. There was not a formal system of breaks in place but employees could and did cover for each other on an ad hoc basis. There was inevitably some element of repetition but the injury had not been caused by this but by the claimant’s posture and his twisting while lifting, both of which he had been trained to avoid. The judge found that the defendant could not have done more to protect the claimant from injury and dismissed his claim.

For information regarding employers and public liability insurance please see the main website.

Three year old’s death – Wall Designer charged

Tuesday, December 6th, 2011

A man who designed a wall which collapsed on a three year old girl, killing her, has been charged with gross negligence manslaughter. The Crown Prosecution Service (CPS) decided the designer of the wall, which was also constructed by his company, Parcol Development Ltd, should be charged in relation to the death of the little girl on 26/7/2008 in Prestatyn, Wales.

Parcol Developments Ltd, of which the charged man was a director, was also charged with an offence under section 3 of the Health and Safety at Work at 1974 which requires all employers to conduct their business in a way that ensures, so far as is reasonably practicable, that others are not exposed to risk.

There are several types of insurance that may help pay defence costs if you or your company were to find itself in the difficult situation of facing prosecution. If necessary these could also help to compensate any victims. These include public liability insurance, product liability insurance, professional indemnity insurance and directors and officers liability insurance.

In addition to the above policies providing indemnity to you for sums which you may be legally liable to pay as compensation, including claimant’s costs and expenses, some policies will also pay for legal costs and solicitor’s fees in defending a prosecution brought for breach of Health and Safety at Work Act 1974. Most of the policies will exclude any fines or penalties imposed.

From the design and build perspective of any project, quality control and safety are important concerns which should be addressed and documented at the planning stage. Having a proper risk management structure in place, in addition to a complete health and safety policy, may reduce the number of conditions which may lead to the cause of an unfortunate event (such as a faulty design leading to a wall collapse).

Limitation and exclusion of liability for IT Providers

Monday, November 28th, 2011

Professional indemnity insuranceAs an Information technology provider you need to ensure that you effective terms and conditions in place in order to minimise legal exposure. Many people think that if they include in their terms and conditions clauses which purport totally to exclude their liability under the contract in question, they will be safe and that they cannot be sued successfully should they be negligent in the subsequent provision of goods/services or otherwise breach the terms of the contract.

Unfortunately this is not the case and the bottom line is that, in simple terms, the chances of a liability limitation or exclusion clause being successful depend largely on whether the clause is “reasonable” when set against all the factors which make up the contractual scenario. The court will look at many factors in determining reasonableness.

It is wise to draft a whole series of different clauses which address different aspects of potential liability and to make them independent of one another. As a result of this if one or more of the clauses is found to be unreasonable, the supplier can still hope to hide behind the clause which has passed the reasonableness test.

It is thought best not to merge the provisions together into a single sub-clause but to leave them as separate sub-clauses. The rationale for this is that a court may hold certain elements of a limitation of liability clause to be unreasonable and, if so, it may delete them. If all the provisions are merged into a single clause and the court objects to one element of that clause, the whole clause may become ineffective.

Maximum Liability Clause.

This should be included to act as a last resort if the other clauses which purport to limit or exclude liability fail to stand up in court. Case law has shown from several high-profile judgments that if a supplier hopes to be able to rely on a maximum liability clause in a contract, probably the best approach is to tie this into the cap set on the professional indemnity insurance that has been taken out by that supplier.

It has been proven that a well drafted contract can help all parties involved if a professional indemnity claim is lodged against the I T Professional because:

  • Suppliers are far less likely to be sued if the contract under which they have made the supply in question has been well drafted and addresses different potential areas of liability and appropriately and reasonably imposes limits and exclusions in relation to such potential liability.
  • Insurers are far less likely to have to pay out on a claim made by one of their insured supplier clients if that client has dealt on the basis of a properly drafted contract of supply which has limited and excluded liability in a reasonable way and is therefore more likely to be upheld by a court.
  • Lawyers have a far easier time defending a case when their client’s contract of supply contains clauses which have been properly drafted to limit and exclude various aspects of potential liability.

Asbestos surveyors beware

Monday, September 26th, 2011

Asbestos surveyors need to consider carefully some of the claims that have traditionally caused problems

There are generally 5 types of claims that they can face:

  1. Claim against the building surveyor for failure to identify the existence of asbestos at all.
  2. Claim against the surveyor for identifying the asbestos in parts of a building but not others. An asbestos contractor will have been appointed to remove the asbestos, works will have commenced and then the work will be put on hold when more asbestos is found, there is a claim made for the consequent delay, including claims the under Health & Safety Act
  3. The identification of asbestos ‘type’ and advice given in respect of the treatment proves to be incorrect. A claim is made for the cost and consequences of this.
  4. Claims for distress arising out of failure to indentify asbestos
  5. Identification of asbestos within the survey report but a subsequent failure to notify contractors further down the line. Generally there are about 4000 deaths per year from asbestos exposure – mainly through failure to identify the material and ignorance of its risk to health. Most Professional Indemnity insurers exclude or restrict cover for asbestos related risks due to the insurance market’s significant exposure to personal injury claims arising from asbestos related diseases such as mesothelioma.

During the early part of this decade, reinsurers began to exclude cover for asbestos risks in order to limit their exposure to future claims. With no reinsurance behind them insurers generally are only able to offer limited cover or no cover whatsoever.

Legal Considerations

The Control of Asbestos at Work Regulations 2002 – Regulation 4

Regulation 4 applies to non domestic premises. It imposes a duty to ensure that a suitable and sufficient assessment is carried out in order to ascertain whether asbestos is likely to be present, and if so take the appropriate measures. This duty applies not only to owners and occupiers but also those with a contractual responsibility for maintenance and repair ie facilities managers, project managers. Non-compliance could result in criminal prosecution for breach of health and safety law. If injury or damage results it could give rise to civil liability for breach of statutory duty or breach of contract.

Consultants need to bear in mind that they are not able to contract out of Regulation 4 or modify their statutory obligations. However they may be able to limit the circumstances in which contractual liability could arise.

Accountants professional indemnity.

Wednesday, September 21st, 2011

Accountancy is one of the established traditional professions. Accountants are often members of a professional body such as the ICAEW, ACCA, ICAS or ICAI, but the industry is also made up of unqualified but highly experienced advisors such as former tax inspectors. Some of these professional bodies maintain rules for mandatory PI cover and also issue “Practising Certificates” without which member firms are unable to practice.

What do insurers look for?

  1. Size of practice – This is the one of the major rating factors when determining the premium to be charged. This is usually determined from the gross annual income and the number of fee earners.
  2. Qualifications and experience –If an accountant is not qualified then insurers will want to see a CV with at least 5 years relevant experience.
  3. Type of work – Insurers will be particularly interested in what type of work the proposer is doing.
  4. The Activities can be classified from a risk point of view as High Risk, Medium Risk, Low risk or variable risk.

High Risk

  • Audit, accountancy and company tax for quoted companies
  • Insolvencies, liquidations and receiverships
  • Mergers, acquisitions and disposals

Medium Risk

  • Audit, accountancy and company tax for clients other than quoted companies
  • Personal taxation

Low Risk

  • Booking Keeping and Payroll work.
    General insurance

Variable Risk

  • Financial Services -low to high risk depending on the nature of the advice given.
  • Management Consultancy- low to medium risk depending on the nature of the advice given.

Largest Fees – The Underwriters will be interested to if there is an over reliance on one client and will be particularly concerned if more than 50 % of the fee income is derived from one source.

Overseas exposure – If the practice deals with clients based overseas this can be a problem ,especially if the client is based in the USA or Canada.

Past Claims experience – If the past claims experience has been poor this is generally seen as a reflection of the quality of the practice’s work, staff, internal risk management and experience.

For further information, do not hesitate to contact us.

Beware corporate manslaughter

Monday, September 19th, 2011

In February 2011 Cotswold Geotechnical Holdings (GCH) became the first company to be sentenced under the new offence of Corporate Manslaughter. It has been fined £ 385,000 after being found guilty by a jury at Winchester Crown Court; an employee died when an unsupported trench collapsed in on him while taking soil samples.

Companies and organisations can be found guilty of Corporate Manslaughter if an employee dies as a result of management failures resulting in gross breach of duty of care. The Corporate Manslaughter and Corporate Homicide Act 2007 was designed to make all employers accountable.

Some commentators have expressed disappointment that the first case concerned such a small company which does not have the size or status of the type of corporations that the new legislation was expected to capture. GCH only had eight employees at the time of the offence.

The loss of life, a large fine and negative publicity may make a significant impact on a small company. The sentence handed down by the court demonstrates the tough stance likely to be taken against any company, regardless of size, which fails to adhere to health and safety guidance.

Employer’s have a duty of care to their staff whether it be on building sites, in factories or simply ensuring their company vehicles are roadworthy and the relevant safety checks and manufacturers guidelines for maintenance have been adhered to. In the event of a workplace death, courts will now look at management systems and practices across the organisation. If proven inadequate and at fault, the company can be exposed to a charge of corporate manslaughter. This can result in an unlimited fine or in some cases a fine equivalent to a percentage of the company’s annual turnover.

Many employers and public liability insurance policies provide cover for defence costs in respect of prosecution under both the Corporate Manslaughter & Homicide Act and the Health and Safety at Work Act. Some insurers provide cover for prosecution costs awarded against the insured whereas others believe this forms part of the punishment and therefore it is against public policy to provide insurance cover.

Under your insurance policies you may not be covered if an act is deliberate or you have failed to take reasonable safety precautions. Please speak with us to understand the level of insurance cover you have or can obtain.

Tracing old EL Insurers

Friday, September 16th, 2011

Historically individuals who wanted to make a claim against a former employer in relation to injury or disease caused during their employment may have run into difficulties. This was largely due to the nature of industrial disease, such as asbestos, which can take many years to show symptoms, by which time past employers may not be able to trace who was their Employer’s Liability ( EL) Insurer at the time.

The Employer’s Liability Tracing Office ( ELTO) is an independent body that has been formed to aid the process of tracing the insurer for an employer by recording the details on it’s Employer’s Liability Database ( ELD). This ELD improves upon the previous tracing service, which relied on insurers checking against their own records.

The ELD will record :

  • Details of new and renewed EL insurance policies that incept on or after 1st April 2011.
  • Old EL policies that have new claims recorded against them.
  • Successful traces undertaken by it’s predecessor- the ABI.

The results from the search of the ELD are not proof or insurance , or proof of liability. The ELD will hold information against employers based on their unique Employer’s Reference Number ( ERN)- which will be identical to the PAYE Reference number under which their employer’s income tax and national insurance contributions are made. Insurers may also hold this information independently if these chose.

We will be contacting all our existing Employers Liability Customers over the next year to collect their ERN, in order to record sufficient information on the ELD or their insurer’s database where appropriate.


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