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Employers Liability and Bankruptcy

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  • Employers Liability and Bankruptcy

    I would appreciate some thoughts on the following scenario....
    A sole trader (SC1)with public and employer liability insurance, carries out agricultural contracting work with another agricultural contractor(SC2) essentially as a joint venture. A farm worker is engaged as a subcontracted manual labourer by the other agricultural contractor to work on a particular job.
    In a nutshell it was SC2 that was running the job for one of his customers, and the farm worker he engaged had an accident involving a piece of farm machinery and was hurt quite badly and required an operation to fix his arm, and was off work a few months but is back in full time work.
    The question here isnt so much about who is responsible etc as this is currently being thrashed out in court, but (SC1) is being held fully accountable and is having to fight his corner through his insurers. Howver, the incident resulted in him going bankrupt as he could not get his liability insurance renewed. The big issue and question I have is that his insurers solicitors have now served him a bill for the £1000 excess due on the policy. Surely this would be subject to the bankruptcy, but they are insisting it is not and if he does not pay it then the insurers will not pay out and he will be personally liable?

    This doesnt appear to make any sense to me at all. The rights and wrongs of whether he should be held accountable are a different issue, but he already lost his business and was forced into bankruptcy, to now be faced with a £1000 bill for the excess seems both wrong and unfair, but the solicitors have told him the bankruptcy is irrelevant.

    Thanks for any light anyone can throw on this.
    Tags: None

  • #2
    des8 maybe ( insurance excess included in bankruptcy ?)
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    Comment


    • #3
      I assume that the policy was combined Public Liability and Employers Liability.

      Surprised he was unable to obtain cover.
      PL is not compulsory so he could continue in business without that.

      Employers liability Insurance is compulsory.
      I assume the claim was made under this section of his cover.
      As it is compulsory there can be no excess (unless this is a policy which is in excess of a primary policy which is most unlikely at this level and the primary policy would have no excess anyway)

      Suggest there is a reading of the policy schedule, and the solicitor's attention is brought to bear
      Remind him of the relevant legislation Employers’ Liability (Compulsory Insurance) Act 1969 and
      The regulations The Employers' Liability (Compulsory Insurance) Regulations 1998

      The specific regulation is 2 (2) (b) "For the purposes of the 1969 Act there is also prohibited in a policy of insurance any condition which requires–
      (a)a relevant employee to pay; or
      (b)an insured employer to pay the relevant employee,
      the first amount of any claim or any aggregation of claims."

      Comment


      • #4
        Should have added that where excesses do apply to a claim, it is normal for them to be deducted from the indemnity which is then paid.
        I can't recall a policy wording where the policy requires an excess to be paid to the insurers at all, let alone before a settlement figure has been agreed and certainly not before liability has been proved.
        It is usual that where a third party makes a claim against an insured the insurance company will dispute the claim on behalf of their insured if they feel that is the correct position. No excess would be payable unless the claim was paid.

        Any chance we can have a link to the relevant policy wording

        Comment


        • #5
          Well, there's a tangle. It must be a matter of fact whether the policy had an excess on this part of the cover. The requirements of the Act mean that any excess rendered the policy not fit for purpose, however it wouldn't automatically cancel out the excess.

          However, let's assume the insurers knew their business, in which case they would not have issued a poilcy with an excess for employer liability, and presumably the solicitor has misread the policy.

          Am I right in recalling that any liability the OP has in respect of liability for personal injury would not be cancelled out by the bankruptcy?

          Comment

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