HL Deb 21 October 1999 vol 605 cc1287-8

3.10 p.m.

Viscount Mountgarret

asked Her Majesty's Government:

Whether it should be a requirement for companies, small businesses and self-employed persons to have compulsory third party insurance against personal injury caused by negligence.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty)

My Lords, many third party liabilities of this kind are already covered through compulsory employers' liability insurance, compulsory motor insurance, licensing requirements, or, indeed, as a condition of membership of a trade association. Therefore, very persuasive arguments would be needed to justify the introduction of a general requirement for businesses to have third party liability insurance. Such a requirement is unlikely to be

warranted by problems which may exist in particular sectors. The burden of complying with such a regulation would be particularly difficult for small businesses.

Viscount Mountgarret

My Lords, I am grateful to the noble Lord for his reply, which surprises me a little. Is the noble Lord aware that there are many people —particularly those who are self-employed, such as electricians—who unfortunately can and do fail to carry out work properly? That can lead to serious consequences for the person for whom they are working. If those people are not insured against negligence, there is no possible way in which damages can be claimed. I happen to know that that has happened. Will the noble Lord offer me advice?

Lord Whitty

My Lords, the noble Lord's question covers a number of different situations. It is true, for example, that it would be difficult to claim insurance on a property if there were no form of insurance covering that property and if a sub-contractor or a self-employed person working on the property did not have insurance. Nevertheless, if one is concerned about such a situation it should be remembered that in many cases a requirement of membership of or registration with a trade association is that the member firm must protect itself one way or the other against such liabilities. On the other side of the equation, in many sectors the cost of general third party liability insurance would be a great deterrent to the setting up of small firms.

Lord Renton

My Lords, even if third party compulsory insurance is not feasible, surely the Government should do what they can in the interests of employees to have as much third party insurance as possible on a voluntary basis?

Lord Whitty

My Lords, I agree. Indeed, in those sectors where it is a particular problem—for example, the construction sector—we are very much behind moves to establish that on a voluntary basis among small contractor firms.

Lord Northbrook

My Lords, is it not the case that a large number of small businesses carry what are called "traders' policies"? Those not only cover stock and disruption to trading in case of fire, but also third party liability, including negligence, and also the no less important risk of product liability?

Lord Whitty

Yes, my Lords, that is true in many circumstances. As I said earlier, in some circumstances that is a condition of membership of the appropriate trade association. Therefore, in many cases there will be cover.