General question on third party damage to shared property

wearyexplorer

I've read a few cases of disputes between neighbours when a third-party causes damage to both properties and was curious as to who is left holding the bag so to speak. Here is a hypothetical example cobbled together.

Neighbour A runs a business from their home. A customer in their carpark loses control of their vehicle and crashes into a shared wall between Neighbour A and Neighbour B. Neighbour A alerts their insurance, and to complicate matters in the example, it turns out the driver of the offending vehicle is not insured and the damage to the wall seems considerable. Neighbour A says they are hoping to sort the matter quickly through their own insurance, but concerned that it will take a long time to process, may opt to get someone in to fix the wall in the meantime.

Neighbour B at this point also alerts their insurer, who wish to schedule a loss adjustor to explore. At being approached for policy details to progress this, Neighbour A says to Neighbour B not to worry about it for now, that they would prefer to sort it out and expect their own insurer to cover and not put Neighbour B to the bother of involving their insurance.

I guess what I am trying to ask in the above example is whether going the route of involving insurers is always required. I would also be curious as to legally in the example what sort of exposure Neighbour B would have in terms of Neighbour A demanding a contribution at some point in the future, if they didn't involve their insurer.

My own thoughts on this example is that it seems unlikely in the first place that Neighbour A's insurer would not seek to reduce their loss by drawing another insurer in when it is a shared wall. I would also think Neighbour B would have no control over the final quality of the restored wall, or might have potential exposure with their own insurance company if a wider problem presented with parts of the wall that did not seem affected initially, later down the line.

Many thanks to anyone who wants to wade in. Such a complicated area. Any book recommendations to read up on this specific area of law would also be appreciated.

Kings Inns or bust

Claus Press: Neighbours and the Law may be of some use, I've not actually read it as although displayed prominently in a nice shiney case, there is not, as fair as I know - my investigations stopping at their usual level of looking for the book for 7 seconds before googling whatever I was after - a copy in the Library.

AFAIK Neighbour A's insurer will involve MIBI which will eventually result in some sort of action against the driver. I'm probably miles off...

4ensic15

Kings Inns or bust wrote: »

Claus Press: Neighbours and the Law may be of some use, I've not actually read it as although displayed prominently in a nice shiney case, there is not, as fair as I know - my investigations stopping at their usual level of looking for the book for 7 seconds before googling whatever I was after - a copy in the Library.

AFAIK Neighbour A's insurer will involve MIBI which will eventually result in some sort of action against the driver. I'm probably miles off...

All parties are obliged under the terms of their insurance policies to notify their insurer of any potential claim as soon as possible as they become aware that there may be a claim. If they don't the insurer may refuse to pay up on what may have been a perfectly valid claim. Neighbour B doesn't know if Neighbour A or his customer or any insurance policy they might have will settle the claim. Compulsory motor insurance and therefore the MIBI only operates in public places. Whether Neighbours property is a public place for this purpose is another reason Neighbour B should use his own insurance. There will be a subrogation clause in the policy under which the insurer can try and recoup its outlay from Neighbour A or his driver.

wearyexplorer

Thanks for the responses both. Interesting to contemplate.

It would seem Neighbour B is taking on a lot of risk by doing nothing. Even with the presumed excess they would pay for making a claim (would their insurance go up the next year? Probably), that pales in comparison to being hit with a bill or counter-claim down the line. There doesn't appear to be a benefit for Neighbour B in going along with Neighbour A's suggestion, and indeed one might be leading the other astray in the example.

4ensic15

If I was neighbour B, I would be hiring a loss assessor and informing my buildings insurer pronto. If neighbour A sorts it out or gets his insurance to sort it out well and good, but I wouldn't wait around.

NUTLEY BOY

This reads like an exam question ! Here is my answer ;

OWNERSHIP.

A shared wall can mean two things. It might be a party wall or a boundary wall.

A boundary wall is usually owned only by the property owner who erected it. Such a wall is usually the sole responsibility of it's owner.

A party wall is one owned jointly by two or more parties. Such a wall is the joint responsibility of it's owners.

In some instances there may even be a formal written party wall agreement between the parties (or their predecessors in title) that would set out clearly who is responsible for what.

That would be the first issue to sort out as it would determine principally what follows thereafter.

INSURANCE.

IF IT'S A BOUNDARY WALL.

If this is A's boundary wall he can commence repairs with the prior agreement of his insurers. A has a general duty to minimise losses. It would also be a good idea to photograph the damage before anything is touched.

If this is B's boundary wall A has no right to do anything with it.

Same principles apply if this is B's boundary wall.

IF IT'S A PARTY WALL.

If this is a party wall the next thing to be checked is that both policies operate i.e. do A's and B's material damage policies cover impact damage ?

If "no" to the preceding question that is messy. The wall still needs to be repaired. The absence of material damage insurance cover for either A or B does not alter their legal liabilities for their proportion of the repair costs of a party wall.

If neither policy covers impact damage A and B just repair the wall and share the costs.

If both policies cover impact the respective insurers will probably only pay their proportion of the loss. Say the repairs are €5,000 and A and B are equal owners. I would expect their respective insurers to only pay €2,500 each. This would be based on the insurance law concept of contribution as per the classical King and Queen Granaries case (North British & Mercantile v. Liverpool & London & Globe (1877) ).

If one party decides not to involve their insurers that party is still open to a liability to pay their proportion of the loss. It would be foolish not to involve your insurers especially when you see the first estimate for repairs

RECOVERY.

As already pointed out by 4ensic15 the car park may not be a public place. Therefore, the MIBI will have no involvement.

The general concept of a public place for present purposes would be that the location is accessible to the general public as of right. There are refinements on that but the broad principle is that of access.

The absence of insurance does not inhibit recovery of damages from the negligent motorist if they have the funds to pay. Otherwise it is a waste of time and money.

If you really have time on your hands and want a day trip around the issue of car parks and insurance cover and the MIB look at this 1998 case from the House of Lords http://www.bailii.org/uk/cases/UKHL/1998/36.html.

The basic thrust is that a car park is not a public place for purposes of compulsory motor insurance.

Mr. Incognito

I guess what I am trying to ask in the above example is whether going the route of involving insurers is always required.

Yes. Unless you have agreement to repair between the neighbours without recourse to insurance. If so- why are you paying insurance?
I'd also have a look at the Insurance clause carefully. House insurance usually covers house and contents not boundary walls.

I'd be very very very suprised if either insurers offer to pay up. My real world experience of insurance on house is they are very slow to pay a penny trying to fob it off to the party at fault etc.

I would also be curious as to legally in the example what sort of exposure Neighbour B would have in terms of Neighbour A demanding a contribution at some point in the future, if they didn't involve their insurer.

None. Unless they agree written terms.

Also, I know it's off topic but if A is running a business from their home a visitor to that business would not be covered under a domestic house insurance policy Another reason the insurers will seek to deny the claim.

NUTLEY BOY

Mr. Incognito wrote: »

Yes. Unless you have agreement to repair between the neighbours without recourse to insurance. If so- why are you paying insurance?
I'd also have a look at the Insurance clause carefully. House insurance usually covers house and contents not boundary walls.

I'd be very very very suprised if either insurers offer to pay up. My real world experience of insurance on house is they are very slow to pay a penny trying to fob it off to the party at fault etc.

SNIP SNIP

Two observations ;

Have a look at the definitions in the house insurance contract.
Many of them will define the buildings as including , inter alia, walls all within the boundary of your home.

If an event is an insured peril under the contract then you should know your rights and push accordingly. You need to know your contract. I get the point about slowness to pay and obfuscation. Quite frankly, some of the standards of claims handling that I have encountered with certain insurance companies has been perfectly appalling.