What the Rome II treaty means for public liability cover
Recent reports have shown that many expat landlords are woefully uninsured meaning that they could be leaving themselves open to public liability challenges in the UK courts after the Rome II legislation came into affect earlier this month. The legislation designed to clear up any gray areas when it comes to which national law should take precedent in cases with an international dimension. This now means that any British property owners renting property to other Brits abroad will now have to look into increasing their public liability cover greatly to cover themselves if a claim was brought against them.
The reason for the Rome II legalisation according to the House of Lords is “in cases involving, for example, non-contractual obligations such as a civil claim arising from a road traffic accident or the discharge of effluent into a river or a defamatory statement in a newspaper or a claim for the recovery of money paid by mistake, there are no Union-wide choice of law rules. The courts of each Member State apply their own national choice of law rules for cases having a foreign element. In some areas, such as torts, each Member State is likely to have well established rules to determine the applicable law—that is certainly the case in the United Kingdom. But in other areas there may be little in the way of legislation or case law to assist the court and the identification of the proper law to apply may be a complex task.”
Put simply there was believed to be a need for a set rule for incidents occurring in foreign countries which have conflicting legal systems
The new Rome II legislation means that British laws apply when an incident between two British parties occurs in a foreign country. For property owners this now means that if a British tenant suffers an injury in a British owned home then the case can be brought to the UK where settlement are historically much higher than those on the continent.
This now means that many landlords who had public liability cover may now be woefully under insured. Liability cover in popular ex pat destination like Spain or Portugal tend only to reach around 100,000 to 160,000 Euros where on average if the case was brought to the UK the settlement may be a lot higher meaning that the insurance company will not be able to cover and the landlord will have to cover the difference.
“In our experience we have seen the consequences of inadequate policies and Tonic was created to fill that gap,” said John Newman, chairman and chief executive of Tonic. “The liability cover for Spain and Portugal is often extremely low, frequently in the region of €100,000 to €160,000. This would leave a client very dangerously exposed as any meaningful claim would potentially exceed this limit. It is for this reason that Tonic provides £5million limit of indemnity.”
The Rome treaty now means that many British landlords renting abroad will have to look to increase their public liability cover or face the risk of being out of pocket because they are under insured.
Updated on 1/28/2009