The Rights of Light (RoL) claims insurers have been seeing over the past six months reflect some dramatic changes and mean the strategies developers might use to deal with RoL situations need to adapt.
Many developers and surveyors are becoming all too familiar with the risks associated with developments that affect third parties’ rights to light: negotiations, payments, delays and, in worst-case scenarios, injunctions that force a stop to the work or even compel the demolition of completed work.
Today, there are more claims than we’ve seen historically, driven by a new breed of company seeking to advise claimants and employing more sophisticated and aggressive tactics.
RoL insurance in the UK and Ireland is designed to provide a risk transfer mechanism whereby the insured party benefits can cap the potential liability by way of indemnity for a variety of insured losses. These include legal costs, compensation payments, loss in value, the costs of amending a scheme, costs due to delay and loss of income/profit.
As the claims landscape continues to shift, it’s worth remembering RoL policies can have different strategies for the different affected properties. Policies can be designed to dovetail with the desired tactics on dealing with the risks, allowing you to approach and proactively negotiate with some parties, while waiting for approaches from others.
For example, in a scenario where many of the injuries are not dramatic – perhaps there has been positive feedback from neighbours and any neighbourly discussions have been completed without reference to light – the policy can be designed so you simply insure the majority of the neighbouring properties and wait and see if anyone raises light. This ensures that any resulting costs and expenses are covered and premiums and excess are kept down. But, if there are specific properties with more significant injuries that have objected or that you need to approach to discuss, for example, a party wall award, the policy can allow for a proactive approach to them. Such moves can flush out any attempts to injunct and, ideally, resolve any situations well before work starts on site.
We’re increasingly using staged policies, which allow the premium to be staggered, with additional staged payments on agreed triggers such as planning being obtained. These help to make sure the premium cost is tailored to the risk exposure as the scheme develops, by ensuring you are only paying for the cover you require at the time you need it.
Against a backdrop of increasingly driven claimants, RoL insurance can put the insured in control of their negotiations with third parties while providing the reassurance of a cap on their potential liability. The insurer may cover any costs over this amount or the worst-case scenario of a successful injunction preventing, the scheme going ahead or forcing a planned, ongoing or even fully completed scheme to remove those parts that cause injury to the claimant, known as a "cutback".
For help understanding and managing the risks created by the evolving RoL landscape, please get in touch.
