The Home Office has published a draft Riot Compensation Bill to modernise the way in which the public can claim compensation for loss caused by riots. The draft Bill will replace the outdated Riot (Damages) Act, which was written in 1886 and remains unchanged. The draft Bill proposes:
allowing higher value settlements by providing “new for old” replacements for destroyed or damaged goods;
introducing a cap on the amount of money that can be paid out in any single claim, thereby reducing the burden on the tax payer;
increasing the time limit in which people can make claims applications;
allowing people to submit claims electronically, thereby speeding up and simplifying the process; and
providing limited cover for motor vehicles for the first time.
Policing Minister Mike Penning said: “The draft Riot Compensation Bill will replace an Act which is no longer fit for the 21st century with a system that is practical, flexible and will meet the needs of any future compensation claims. Small and medium-sized businesses are at the heart of their communities and it is right that the Government supports them when they suffer unexpected loss or damages.
“This draft Bill will provide a safety net for businesses and individuals should the worst occur while also protecting the public from picking up the bill for very large compensation claims.”
The draft Bill follows public consultation and, previously, an independent review of the Riot (Damages) Act by Neil Kinghan, who was commissioned by the Government to assess whether the Act was fit for purpose after London and other English cities were affected by rioting and looting in August 2011.
Meanwhile the Government’s response to the consultation on reform of the Riot (Damages) Act has also been published.
ABI view
Mark Shepherd, Manager of General Insurance at the Association of British Insurers (ABI), said: “We are pleased that the Government has listened to the views expressed in the consultation to bring an outdated Act into the modern day, and made a sensible move forward from an arbitrary turnover cap on the type of businesses that can claim, to a £1m per claim limit. The ABI highlighted that the previous proposals would have left all but the smallest of firms able to claim compensation and could have created problems for businesses taking out riot cover as part of their property insurance.
“Although riots are rare, they can have a devastating impact on communities and take years to recover from. This is good news for commercial lines insurers who want to be able to help businesses have riot cover as a normal part of their insurance.”
The insurers’ trade body raised two concerns:
The draft Bill does not appear to cover loss of trade for businesses, loss of rent for landlords, or alternative accommodation costs as a result of a riot. This could have an impact on businesses or residents that have had to cease trading or move out of their homes because of damage to their property, the ABI said.
And the draft Bill outlines that Police and Crime Commissioners (PCCs) will decide if a disturbance constitutes a riot; however, given PCCs are essentially liable for the cost of damage, this appears to create a conflict of interest. A more independent determination of when a disturbance is a riot may avoid this, the ABI suggested.
On motors, the ABI pointed out that the Government could have gone further. For example, the draft Bill will only cover motor vehicles if their insurance does not provide for riot damage. For the ABI view in full visit their blog – http://blog.abi.org.uk/2015/03/reading-the-new-riot-act/
