Distress and inconvenience claims
Property Insurance Aware 3
When a policyholder incurs damage to their property as a result of an incident caused by a third party, they often experience disturbance in their daily routine and have to undertake additional work to re-instate the property to its original form
Therefore, when an opportunity arises to pursue the targeted third party, policyholders often want to make a claim for the distress.
In most circumstances, the policyholder will not claim that they have psychological illness but will, however, describe the additional difficulties which have arisen as a result of the incident. On occasion, policyholder’s expectations of the sums recoverable can be unrealistic and there is a real need to manage their expectations.
Is distress and inconvenience a recoverable head of loss?
The general position was affirmed in the House of Lords case of Farley v Skinner  UK HL 49. In this case, the claimant instructed a surveyor to conduct a survey of a property in order to establish the extent of noise pollution from a nearby airport. The surveyor incorrectly advised the claimant resulting in him bringing a breach of contract and negligence claim against the surveyor.
The court considered each claim separately.
Breach of Contract
The House of Lords held that defendants were not liable for distress and inconvenience as a result of a breach of contract unless:
- The contract was to provide ‘pleasure, peace, relaxation, peace of mind or freedom of molestation’ and the actions of the defendant provided the contrary; or
- The stress and inconvenience was directly related to the breach of contract and it was foreseeable. For example, a limited amount of compensation would be awarded for any distress and inconvenience suffered by a claimant for the duration of the repair works.
It was decided that this particular case fell within the first sub-category. The surveyor was specifically instructed to provide the claimant with the ‘peace of mind’ that he would not be disturbed by the noise emanating from the airport. The surveyor was found to be in breach of contract.
The House of Lords also affirmed the principle that losses arising out of stress and inconvenience were not recoverable in negligence claims as the reaction to the incident is considered to be a natural human emotion to loss which would not attract compensation in most circumstances.
Therefore, the overall decision of the court was to compensate the claimant for distress and inconvenience as a result of a breach in contract but not negligence.
How much is paid?
There is no hard and fast rule in respect of how much will be paid for distress and inconvenience claims.
The level of damages awarded by the court is generally determined by the specific incident circumstances, the extent of inconvenience suffered by the policyholder and the duration of the inconvenience.
As general guidance, an unofficial tariff for distress and inconvenience was suggested in the case of Wallace v Manchester City Council  30 HLR 1111 to range from £1,000 to £2,750 per year.
It is important to note that damages are awarded to put the claimant back in the position they would have been if the incident and resulting loss had not occurred. Therefore, a strict view is generally taken when assessing distress and inconvenience so that the claimant is not considered to be in a better position.
This was exemplified in the case of Watts v Morrow  1 WLR 1421. A couple made a claim for distress and inconvenience against a surveyor whose report did not identify the extent of defects in a newly purchased property. The court of appeal awarded them £750 for distress and inconvenience which equated to 18.75% of their original claim of £4,000. The court limited payment for distress and inconvenience to the eight months taken to complete the remedial works which they calculated to be in the region of £750.
Overall, policyholders should be advised from the outset of the court’s strict approach when expressing an intention to claim for distress and inconvenience, ensuring they are aware of the realistic prospects of recovery.
Tips for insurers when pursuing distress and inconvenience claims
- A claim for distress and inconvenience is likely to be successful for the following reasons:
- There has been a breach of contract; and
- The contract intended to provide ‘pleasure, peace, relaxation, peace of mind or freedom of molestation’; or
- The distress and inconvenience suffered by the claimant is a direct result of the breach of contract and is foreseeable.
- The amount recoverable for distress and inconvenience is limited and depends on the incident circumstances;
- In most claims, the amount of money recoverable for distress and inconvenience will be limited to the time period for any remedial works to be completed and the level of inconvenience caused during the same timeframe.