Indemnity Insurance - what does it mean in reality?

[bazking69]

Just wondering if someone could clarify where I stand in this situation. I'll keep it as brief and concise as poss...

Roots of a tree on council owned land have come up through my lawn and also cracked patio slabs. Reported to council.
Photo evidence sent as requested. Quotes to rectify sent to council as requested.
Constant chasing and lack of response from council as expected. Threaten legal action.
Council quickly refer matter to their 'insurers'. 'Insurers' quickly make it clear that they are merely the claims handlers on their behalf and ultimately any payment would come from their client, not via any insurance cover.
Go through photos and quote game again with third party. They constantly have to confer with their client.
Finally get an offer to cover cost of rectification, but it is approx half of cheapest quote obtained.
When questioned the difference is put down to betterment (fresh lawn and new slabs)
Obtain and submit revised quote from cheapest quoter breaking down quote into 2 parts (the bulk of the work as one quote (the part we are seeking) and the turf/slabs seperate (to be paid by myself).
Claims handlers have now come back with marginally better offer but are still well short of the quote. They are now citing that this shortfall is due to the fact this is an indemnity policy, but refuse to explain to me why.
Shutters have gone down. Thie is apparently their final offer (their last offer was their final offer...) and if I want to take it further I should seek legal advice at my cost. The claims handler is refusing to give me the contact details of their manager so I can escalate.

So as I read it and to summarise (please advise if I am wrong...)

Someone is liable, be it the council or their insurer.
Liability has been admitted by making an offer.
An indemnity policy is much like any other insurance policy. You pay a premium and someone else takes on the legal responsibility and obligation. Eitherway, this doesn't offer the person ultimately responsible from being liable to recompense for loss or damage IN FULL.

I have it in writing that the council will be bearing the costs, and that they are just handling the claim on their behalf and not the insurer liable. Hence why I am now baffled that this revelation that it is apparently an insurance policy after all has been thrown in or what bearing in has on settling in full

I have a hunch that the council have agreed the claim, in full, but that they are trying to screw me down and pocket the difference (the offer would be paid via them if i accepted and they won't give me the details of their contact at the council...)

Every aspect of their behaviour doesn't add up and when pushed, by phone or email, they clam up or are deliberately evasive.

So long and short, am I in the right to expect payment, in full (namely if I actually called their bluff and instructed legal action to recover payment in full)

Many thanks in advance

[TwigtheWonderkid]

I know a bit about insurance, although this particular thing isn't really my field, so any views offered are an educated guess and not expert opinion.

An indemnity policy is just any policy that offers direct financial compensation, with no element of uplift. For example, most people insure their house contents on a new for old basis, because if they get burgled, they don't want to only get enough money to buy 2nd hand furniture and tv etc. But if you like 2nd hand tat, and you bought your furniture 2nd hand anyway, you can buy household insurance on an indemnity basis. Your sum insured is much lower, because you only have to insure the actual value, not new replacement, and the premium is lower.

But not of that matters in respect of a third party claim, which is what this is. You are the third party, claiming against the council.

Also, I wouldn't be standing for betterment. Betterment is all very well when claiming for something with a limited life span, like tyres on a car. But paving slabs can last for ever. So can a lawn. You aren't gaining by getting new slabs and a new lawn, as if the old ones would have needed replacement soon.

I'd be doing a 7 day letter demanding full settlement in line with the estimate, and then pressing on with the small claims court action against the council.

[KungFuPanda]

Sounds like the council are either self insured or have a massive excess. Companies such as Capita and Gallagher Basset handle the claims on behalf of the local authority if they don't have their own legal department.

If it were me, I'd ask the claims handler to admit liability subject to the issue of quantum and then issue Court proceedings in the small claims track stating that liability is admitted but the value of the claim cannot be agreed. Their betterment argument is bullst.

[Mr Tidy]

Oh dear, here we go!

I spent over 30 years in the general insurance claims industry, so hopefully this may help.

In insurance terms if you insure any physical property you are the 1st party, your insurer is the 2nd party and anyone else who claims on your policy is a 3rd party.

So if you were claiming on your household policy you would be making a 1st party claim, and you may well have a contract with your insurer (the 2nd party) that gives you "New-for-Old" cover, sometimes described as reinstatement cover (albeit that term is more often used in Commercial insurance).

When you, as a 3rd party, claim against another entity (in this case the local authority) you are making a claim as a 3rd party. You can't claim against the council's adjuster, they are just handling the claim on the council's behalf.

But in 3rd party claims you are only entitled to an indemnity settlement, so if the council had a defective tree that fell onto your 10 year old car their legal liability is only to pay you for a 10 year old car - not a new one! The principle of indemnity is to put you back into the situation you were in prior to the insured event.

So their offer is based on the premise that you will get a new lawn and paving slabs, and since you probably can't source worn lawn and slabs they have made a deduction for "betterment" as you will end up with a better lawn and slabs.

But to be fair a 50% deduction seems excessive, because the labour will be the same regardless of the age of the materials used - could you get a breakdown of costs? I'd want all the labour paid, but could live with 50% of the cost for materials.

Anyway more importantly I'd want to know what they are going to do about the tree - if they just leave it you'll have to go through all this again!

Good luck getting a sensible offer!

[dacouch]

Are your quotes to replace all the slabs in the garden and also relay the entire lawn or just the affected areas?

[Red Devil]

Mr Tidy said:

- could you get a breakdown of costs?

I think you missed this bit.

bazking69 said:

Finally get an offer to cover cost of rectification, but it is approx half of cheapest quote obtained.
When questioned the difference is put down to betterment (fresh lawn and new slabs)
Obtain and submit revised quote from cheapest quoter breaking down quote into 2 parts (the bulk of the work as one quote (the part we are seeking) and the turf/slabs seperate (to be paid by myself).

OP, before going all legal or giving up in frustration, you have nothing to lose by getting your ward councillor onside.
It makes no difference whether or not you voted for him/her at the last local election (or at all).
You won't know whether he/she is a useless windbag until you try.

[Tomo1971]

Mr Tidy said:

Oh dear, here we go!

So their offer is based on the premise that you will get a new lawn and paving slabs, and since you probably can't source worn lawn and slabs they have made a deduction for "betterment" as you will end up with a better lawn and slabs.

Surely this would be true if it were a car in your example, the 3rd party (OP) just wants the garden to be back to how it was before the issue. In the case of a car, a similar car would be available. Its not the OP's fault that 2nd hand slabs and grass isnt available is it?

If the council had maintained the tree's correctly, this wouldnt of happened, so is there not an element of negligence. I am sure that we all realise that there is an element of cost saving with the council and I personally hate the ambulance chasers (there is another thread on PH just now where someone has slipped on grass cuttings that the council left) but I have known councils to cut down/manage older tree's on footpaths for decades. Its not something new tbh.

Edited to add - wouldnt it make sense for council to get their staff or contractors to fix the tree and fix your lawn at the same time? I know that there is a bit of a 'reputation' there but councils do this kind of work on their land (landscaping) every day of the week, labour is at 'cost' and materials would be discounted due to bulk buying power of the council and again, be at cost price. Be clear to them that you are not looking to make money from this, nor get a whole new landscaped garden, you just want it back as it was with the minimum of fuss.

Edited by Tomo1971 on Saturday 7th April 09:40

[bazking69]

Thank you all for your prompt responses. Between you I think you have answered my questions and confirmed my suspicions.

Having obtained the departmental managers email via another channel (along with the CEO's email whom I intend to CC in) i've sent a firm and final request to resolve within 7 days, for the full value of the revised quote (less the new turf/slabs) or I will be refering to the small claims court (which will be cheaper than even one solicitors letter...)

Hopefully i can get it wrapped up without having to go further legally, or at worst once they receive the claim and realise their bluff has been called...

[TooMany2cvs]

bazking69 said:

JSomeone is liable, be it the council or their insurer.
Liability has been admitted by making an offer.

Not necessarily. It might be made as a goodwill gesture without any admission, simply because paying something is a cheaper and simpler way of making you go away than trying to argue.

[bazking69]

KungFuPanda said:

Sounds like the council are either self insured or have a massive excess.

If it were me, I'd ask the claims handler to admit liability subject to the issue of quantum and then issue Court proceedings in the small claims track stating that liability is admitted but the value of the claim cannot be agreed. Their betterment argument is bullst.

I agree. I suspect that they are either trying to pocket the difference or more likely they are under instruction from their client to minimise the claim by trying to wear me down to accept the lesser offer, knowing full well many people will threaten legal action but not actually persue it.

As for admitting liability, as they've made an offer legally is that not admission of liability?

As for betterment, i've already agreed to accept a lesser offer and cover the new turf/slabs in a bid to meet them 'half way'. In reality this cost is approx 15% of the claim. On that basis i'd say i've been more than reasonable and willing to work towards resolve. The issue is that even having stripped out anything that could be classed as betterment from the claim (the rest is labour, machinery and disposal) their offer is still not even close.

[anonymous-user]

TooMany2cvs said:

bazking69 said:

JSomeone is liable, be it the council or their insurer.
Liability has been admitted by making an offer.

Not necessarily. It might be made as a goodwill gesture without any admission, simply because paying something is a cheaper and simpler way of making you go away than trying to argue.

I agree with this.

A tree grows. It's a fact of life.

In terms of the process - it's highly likely that a council has a deal with an insurer that means the council pays the first X in the aggregate for all claims. They will have a claims administrator (probably outsourced). The insurer will pick up the tab when the limit is reached.

I would think they are offering you a pre set amount over which they will defend all cases.

It could be worth going down the legal route as the court will decide the matter on the day based on the facts as presented - plus the council may not turn up or they may mess up.

[bazking69]

Red Devil said:

OP, you have nothing to lose by getting your ward councillor onside.
You won't know whether he/she is a useless windbag until you try.

I already know that all three of them are a waste of organs having had heated discussions with them on other subjects previously...

They avoid and ignore me now. I may struggle to get them on board...

[bazking69]

dacouch said:

Are your quotes to replace all the slabs in the garden and also relay the entire lawn or just the affected areas?

All. However this is irrelevant to the sum I seek as I am covering this cost myself.

[bazking69]

desolate said:

TooMany2cvs said:

bazking69 said:

JSomeone is liable, be it the council or their insurer.
Liability has been admitted by making an offer.

Not necessarily. It might be made as a goodwill gesture without any admission, simply because paying something is a cheaper and simpler way of making you go away than trying to argue.

I agree with this.

A tree grows. It's a fact of life.

In terms of the process - it's highly likely that a council has a deal with an insurer that means the council pays the first X in the aggregate for all claims. They will have a claims administrator (probably outsourced). The insurer will pick up the tab when the limit is reached.

I would think they are offering you a pre set amount over which they will defend all cases.

It could be worth going down the legal route as the court will decide the matter on the day based on the facts as presented - plus the council may not turn up or they may mess up.

Fair point chaps, but the difference between the cheapest quote, stripped of any betterment element, and the offer they have made is less than four figures. I could understand them being willing to go down the legal route and throwing legal teams at it if it was substantial sums involved, but for less than a grand I find it odd why they are still digging their heels in. For the time (money) they have spent disputing it they could have had it resolved and closed long ago.

[anonymous-user]

bazking69 said:

Fair point chaps, but the difference between the cheapest quote, stripped of any betterment element, and the offer they have made is less than four figures. I could understand them being willing to go down the legal route and throwing legal teams at it if it was substantial sums involved, but for less than a grand I find it odd why they are still digging their heels in. For the time (money) they have spent disputing it they could have had it resolved and closed long ago.

They probably don't think they are liable and have come up with a figure that fits within the system and allows them to settle without higher approval.

It will be a commercial decision rather than a legal one.


I'd be minded to take the cash and move on but you may get a result by sending a letter before action and going legal.

[bazking69]

Tomo1971 said:

Surely this would be true if it were a car in your example, the 3rd party (OP) just wants the garden to be back to how it was before the issue.

Edited to add - wouldnt it make sense for council to get their staff or contractors to fix the tree and fix your lawn at the same time? I know that there is a bit of a 'reputation' there but councils do this kind of work on their land (landscaping) every day of the week, labour is at 'cost' and materials would be discounted due to bulk buying power of the council and again, be at cost price. Be clear to them that you are not looking to make money from this, nor get a whole new landscaped garden, you just want it back as it was with the minimum of fuss.

Edited by Tomo1971 on Saturday 7th April 09:40

Agree. Had they opened negotiations along such a line or approached me at any point with such an offer I would have accepted it. Infact I would probably have helped them. However such a logical approach is seemingly beyond the minds of council management.

Like you have noted, all I want is the roots removed, garden relevelled and turf relaid. I'm not looking to benefit from it. Indeed i've already agreed to cover the costs of the materials myself!

[bazking69]

desolate said:

I'd be minded to take the cash and move on but you may get a result by sending a letter before action and going legal.

On the basis that I am not legally in the right to expect the full sum or that you think it isn't worth the hassle of going legal over such a sum (note genuine question asked without sarcasm).

As for higher approval, I assume you mean from internally, rather than a legal judgement?

[anonymous-user]

bazking69 said:

On the basis that I am not legally in the right to expect the full sum or that you think it isn't worth the hassle of going legal over such a sum (note genuine question asked without sarcasm).

As for higher approval, I assume you mean from internally, rather than a legal judgement?

On the second point yes internal rather than legal.

On the first point I'd be surprised if they were found legally liable for tree root growth. But each case has its own merits.

[herewego]

The roots will grow back won't they. Have they been asked to remove the tree?

I have roots from a council tree pop up in my lawn each year. The idea of expecting the council to remove them is astonishing to me.

[TooMany2cvs]

herewego said:

The roots will grow back won't they. Have they been asked to remove the tree?

Take the roots out, and the tree may well become unstable - or even die.