Household policy liability

There are many different liabilities that can arise under a household policy. When looking at household insurance it is important to consider the cover afforded as well as potential liabilities.

Extent of cover?

Cover for legal liability is provided under both the building and contents sections of the household policy.

The building section

This provides cover for any amount that the policyholder becomes legally liable to pay, as owner of the house or land, for injury or damage resulting from any accident, in or around the premises. Cover is also provided for liability arising under the Defective Premises Act.

The contents section

This section provides cover to the policyholder or members of his family for any loss, damage or injury resulting from liabilities arising as occupier of the house.

Cover is also provided on a worldwide basis (though possibly excluding the US and Canada) for his personal liability to others, including domestic staff.

Typical exclusions

• Liabilities arising from the use of mechanical vehicles or garden implements (though motorised wheelchairs and golf caddies are often covered)

• Damage arising through exercising any profession, occupation or business

• Injury or losses sustained by a member of the insured’s family

• Costs of rectifying faults

• Liability resulting from contractual agreements that impose a liability that otherwise would not have existed.

Cover under the household liability insurance policy provides:

• Money to pay the compensation due to the injured person for his injury or for his damaged goods, which would otherwise have to be met by the insured

• The legal costs incurred in dealing with the claim for compensation.

How liability arises

A person can incur a legal liability as a result of either a breach of criminal law or civil law.

Criminal law deals with the control of behaviour that harms or threatens the peace and stability of the community. A breach of criminal law leads to proceedings being taken by the state. It is not possible to insure against the con-sequences of being found guilty of a criminal offence.

Civil law deals with relationships between individuals. When there is a breach of civil law, the injured party can:

• Seek compensation for injury or damage caused to him or his property (a slate falling from a roof and injuring a passer-by)

• Seek an injunction to stop the breach of civil law (a person seeking to stop another pestering them by playing persistently loud music)

• Recover property (this would apply where stolen property has been sold on and, although perhaps bought in good faith, the eventual owner is not entitled to keep it).

Contract and tort

Civil law has a number of subdivisions, two of which are important when considering insur-ance; the law of contract and the law of torts.

A contract is a legally-binding agreement between two or more people, made with the intention of creating legal relations.

A tort is a civil wrong – a breach of a duty that the law imposes on everybody.

As we have seen above, the liability cover included in a household policy excludes any liability arising from an agreement unless it would have existed in the absence of the agreement. In effect, the only liability covered is one that arises from a breach of a duty in common law – a tort.

Types of tort

Nuisance

Nuisance is interfering with another’s right to enjoy his own property or land.

Examples of nuisance include noise pollution, damage cause by blocked drains, emission of smells and encroachment of tree roots.

The remedy is often an injunction to stop the nuisance which, except for the legal costs involved, would not give rise to a claim under a household policy, though if the nuisance causes damage, the cost of repairing that damage would be recoverable.

Trespass

Trespass is unlawful encroachment on another person, his land or property.

It also includes allowing animals to stray on to someone else’s land.

Negligence

This tort arises if an individual does not behave reasonably to others and as a result causes injury to others or damages their property.

The definition of negligence was laid down by the courts more than a century ago as: “The omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do.”

For an action in negligence to succeed three things must be present:

1) The defendant must owe a duty of care to the claimant.

Donoghue v Stevenson in 1932 established the neighbour principle with the judge stating: “You must take reasonable care to avoid acts or omissions that you can reasonably foresee would be likely to injure your neighbour.”

2) There must have been a breach of the duty of care by the defendant.

3) The claimant must have suffered damage as a result of the breach of duty.

Damage here includes death or bodily injury, damage to property and economic or financial loss, usually following directly from damage to the claimant or his property. The claimant must show that the injury or damage was proximately caused by the actions of the defendant, and that it was reasonably foreseeable. The onus is on the claimant to prove this causal link.

Normally, for a tort to have been committed there will have been a deliberate or negligent act that involves fault – the negligent party bears responsibility for the injury or damage caused.

Strict liability

Strict liability is where a legal liability arises and there is no need to prove fault (indeed there may be none), just cause and effect. The main applications of strict liability that are important for household insurance are:

• Liability for the escape of fire or similar dangerous item

• Liability for animals.

Liability for the escape of fire

The key case on this topic was Rylands v Fletcher. For strict liability to operate:

• The occupier of the land must bring a dangerous thing on to their land and allow it to accumulate there. For example, running water flowing naturally through land is not an accumulation, whereas a reservoir is. Animals likely to cause damage are also included

• The accumulation must be artificial rather than natural

• The dangerous items must have escaped beyond the boundaries of the defendant’s land.

The key principle here is that a person, who for his own purposes, brings on his land anything likely to cause damage if it escapes, must keep it at his peril. He is answerable for all the damage caused by the escape, whether or not there has been any fault on his part.

Liability for animals

Strict liability for animals arises under The Animals Act 1971 and covers five main areas:

Liability for dangerous species.

Dangerous species are defined as:

• Species not commonly domesticated in the British Isles

• Species with characteristics that are likely, unless severely restrained, to cause severe damage, or that the damage the animal may cause is likely to be severe

• The person responsible for any animal that falls within this definition is strictly liable for any injury or damage caused.

Non-dangerous species

This category is concerned with the characteristics of the specific animal rather than with the species as a whole. The person responsible for animals that do not belong to a dangerous species is strictly liable if the animal has a propensity to cause injury or damage, and the person responsible is aware of this.

Worrying of livestock

There is strict liability for damage caused by a dog killing or injuring livestock, when not on the land where the dog resides.

Liability for straying livestock

Where livestock strays on to land owned or occupied by another, the owner of the livestock is strictly liable for damage caused to the land or property of the other person.

Animals straying on to the highway

This is the only area under the Act where the liability is not strict and negligence must be proved. Where animals are negligently allowed to stray on to the highway, the owner is responsible for any injury or damage caused.

It is worth noting here that there are some situations where the Animals Act 1971 will not apply because there hasn’t been a breach of any of the specific provisions of the Act. In such cases, while the person responsible for the animal may not be strictly liable, he may still be legally liable for any injury or damage caused under the rules of negligence, nuisance or trespass.

The personal liability section of a household policy covers the insured’s legal liability as owner of a domesticated animal. Many policies do not cover other animals and a more specialist policy will be required. Most policies also exclude legal liability arising out of ownership of a dangerous dog as defined in the Dangerous Dogs Act 1991.

Parent’s liability for children.

Contrary to what many people believe, a parent is not vicariously liable for the acts of their children. A child is responsible for its own torts. The degree of care required by law is less, for a child, than that required of an adult because they are less able to foresee or appreciate the hazardous outcomes of their actions. The test is the degree of care that one would expect of a child of that age.

However, parents can be held liable for their own acts of negligent supervision. In deciding whether the parent is liable, the following will be taken into account:

• The age of the child

• The mental capacity of the child

• The instruction given to the child.

Occupiers’ liability

The responsibility for ensuring the safety of visitors generally falls on the occupier of a premises rather than the owner.

The Occupiers’ Liability Act 1957 deals with liability to lawful visitors, that is, anyone who has been expressly invited on to the premises. The Act requires the same duty of care be shown to all visitors present on the land of another, who are not trespassers.

The Occupiers’ Liability Act 1984 deals with liability to other visitors – trespassers. This Act extends the duty of care to apply to trespassers and other uninvited guests. It is now the responsibility of the occupier to ensure that the visitor, be they invited or uninvited is reasonably safe in using the premises.

For liability to attach under the 1984 Act:

• The occupier must be aware of the danger

• The occupier must know, or have reasonable grounds to believe, that the entrant may be in the vicinity of danger

• The risk is one against which the occupier may reasonably be expected to offer the uninvited visitor some protection.

As with the 1957 Act, warning signs can be displayed to transfer the risk and responsibility to the uninvited visitor. The occupier can display a ‘beware of the dog’ sign which transfers the risk and responsibility to the visitor. However, where young children are concerned the courts will take into account that a warning may not be acceptable as the child may not understand it.

Defective premises

The Defective Premises Act 1972 applies in England and Wales only, and concerns liability for newly-built, converted, or adapted homes. It does not apply to buildings used as commercial or industrial premises.

This legislation modifies the common law duty and imposes duties on the following:

• Builders and developers – the Act imposes duties to build and repair dwellings in a pro-fessional manner, and to use proper materials so that the dwelling is fit for habitation

• Vendors and lessors – both now owe a duty of care where work has been carried out, which is defective. The cover provided under the buildings section of a household policy usually includes these liabilities for a period of up to seven years after sale of the home

• Landlords – the landlord is now liable to the tenant if he is under an obligation to repair and maintain the premises, and know or ought to have known of a defect. This liability extends not just towards tenants, but to all people who might be affected by any defects.

Limitations of actions

When a person feels he has a claim for either a breach of the law of contract, or that a tort has been committed against him, he has a limited time in which to start the legal process.

After this period, the claim becomes known as ‘statute barred’. To allow unlimited time would be unfair to the defendant since the possibility of legal action would hang over him indefinitely and a fair hearing could be more difficult as time passes, as evidence becomes unclear or less easily available.

The following limits are contained in the Limitation Act 1980. The limitation period begins on the date on which the cause of action accrues – this is usually the date of the breach of contract or commitment of the tort.

Claims for personal injuries, libel or slander are limited to three years while most other actions, including property damage are limited to six years.