Commentary on provisions of Act Claims for compensation Section 8: Amount and payment of compensation
Subsection (1) imposes a new compensation cap of a maximum payment per claim of £1 million. This can be changed by regulations (see subsection (9)).
	Subsection (2) makes it clear that the amount of compensation shall not reflect any consequential loss resulting from the loss or damage to the property with the exception of losses specified in subsection (3). Other types of consequential loss that are not covered include (but are not limited to) loss of productivity, loss of profit, loss of income and loss of rent.
	Subsection (3) allows for compensation to be paid when a claimant incurs additional costs as a result of requiring alternative accommodation (i.e. expenses over and above their normal rent or mortgage payments, such as letting agent fees, or the cost of temporary accommodation). This provision is limited to affected individuals and does not permit subrogation by insurers.
	Subsection (4) specifies that the Secretary of State may make regulations which set out the particular factors to be taken into account by decision-makers when determining claims. These may include setting a maximum time period for alternative accommodation costs under subsection (3) to be covered.
	Subsection (5)(a) allows the regulations to prescribe in detail the basis upon which compensation will be calculated. This will include a new entitlement enabling property to largely be replaced on a new-for-old basis. There will be exceptions to this where indemnity or depreciated value will be paid, the aim being consistency with the insurance industry. See Example (8).
	Subsection (5)(b) makes clear that the regulations may require local policing bodies to take account of what has been paid out on any related insurance claim when deciding the level of compensation that is fair and reasonable. This is to ensure propriety and to prevent double recovery in relation to claims made to the relevant local policing body that arise from inadequate insurance.
	Subsection (6)(a) specifies that regulations may allow the decision-maker to award increased compensation to allow claimants to recoup costs or expenses. This may include recovery of the costs incurred by successful claimants who have engaged their own loss adjusters to provide further evidence for the local policing body.
	Subsection (6)(b) will allow the regulations to provide the ability for local policing bodies to make a deduction equivalent to an excess which could be applied to claimants who make a claim under the scheme.
	Subsection (6)(c) makes clear that the regulations may set out what will be the effect of the claimant's conduct on the calculation of compensation. See Example (8).
	Subsection (6)(d) states that regulations will provide a mechanism for decision-makers to refuse a claim where they believe (on balance of probabilities) that fraud has been employed in connection with the claim. The regulations may also give the decision-maker the ability to refuse other claims brought by the same individual even where fraud is only found to have occurred in another claim. See Example (8).
	Subsection (7)(a): in order to be consistent with insurance claims, it is intended that the regulations will provide a time limit by which claims will lapse if the claimant has failed to provide the requisite evidence or has simply not maintained contact. Insurance policies typically state this to be six years in line with the statute of limitations.
	Subsection (7)(b) refers to provision to be made in regulations allowing local policing bodies to make an interim payment on a claim. This may be helpful to a business in, for example, circumstances where there has been a difficulty in establishing one element of the claim, but where the rest of the claim is not in dispute. A payment could be made on the settled aspects of the claim, which might assist the business to continuing trading.
	Subsection (7)(c) is an additional mechanism to subsection (6)(b), by which the regulations may provide that the relevant local policing body or a riot claims bureau may release money in instalments. This reflects general insurance industry practice in total loss claims where money is often released in stages as building work progresses.
	Subsection (7)(d) points to flexibility that may be provided in regulations to allow local policing bodies to use approved repairers instead of providing financial settlements. The intention of this is to speed up resolution of minor damage claims.
	Subsection (7)(e) permits the regulations to deal with the administrative requirements that must be satisfied before money may be released or repairs carried out. This may include the need for obtaining quotes from a number of different repairers and for claimants to sign an agreement on a settlement offer before money is released.
	Subsection (8) requires the local policing body to pay the compensation decided upon, taking into account the requirements of the Act and the regulations made under it.