The BIG ELEVEN Risks You Need Public Liability For

In New Zealand, Public Liability means the risk a business or owner or principal of a business is exposed to, if they, through their activities, sites, or equipment, etc, cause personal injury or property damage to a member of the general public.

 So thats a lot of accidents waiting to happen…

In some cases, there is a legal requirement to have Public Liability insurance in place..think people who do work for government, corporates or other large institutions – you don’t have to be a large company yourself to be taking on your customer’s risk, and in many cases you won’t get the work with those organisations if you don’t have cover in place.
In many cases though, the risk is to normal small and medium sized businesses doing unexceptional work in the course of their usual activities at a regular customer site..typically small accidents that cause big unintended consequences: a builder leaves a heater on at a client’s site, which causes a fire resulting in loss of a clients premises, or a water pipe is damaged leading to a leak which closes down an office building for a week…the incidents are often relatively small, but consequences can be large for the customer, leading to legal action being taken against the company providing the goods or service.

What exactly needs to be covered?

 When looked at from the point of view of the law in New Zealand, the definitions of “Personal Injury” and “Property Damage” are very broad. “Personal Injury” , as well as actual bodily injury can also include mental injury and defamation. “Property Damage” can also include loss of use of property even if it isn’t damaged. To avoid taking on personal liability for losses, any business owner needing Public Liability Cover should aim to ensure it includes at least the following:

1. Damage to property in the Insured’s care, custody or control.

2. Suppliers design error where property damage or personal injury occurs.

3. Liabilities assumed by agreement.

4. Damage to leased premises.

5. Manufacture, supply or distribution of products in NZ.

6. Product exports for locations where Insureds have no physical presence there.

7. Ownership, maintenance, operation or use of watercraft up to 8 metres.

8. Exemplary damages.

9. Sudden and accidental discharge of pollutants.

10. Liability under the Forests and Rural Fires legislation.

11. Service and repair of motor vehicles.

In addition, the policies should provide for the costs of defending these claims in court, as well as any necessary investigations or negotiations.

Who is Protected?

Clearly the company owners or directors  should be aiming to cover at least themselves and their businesses, but they may also want to think about:

• Subsidiaries.

• Organisations controlled and actively managed by their business.

• Directors, employees, partners, or shareholders of the Insured, in that capacity.

• People or organisations to whom the Insured has promised to arrange insurance.

• Social or sporting clubs formed with the Insured’s consent.

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 FAQ’s:

(The answers below are broad answers to the type of questions we are often asked – the answers aren’t financial advice by any legal definition – every Client situation is a little different, contact Saffron directly for genuine qualified registered financial advice..)

 Q. Does public liability cover employees?

A. Yes.

 Q. Does public liability insurance cover negligence?

A. Yes, within reason, depending on your business activities and the terms of your policy.

 Q. Does public liability insurance cover employees?

A. Yes

 Q. Does public liability cover personal injury?

A. Yes, to third parties, when not covered by ACC.

 Q. Does public liability insurance incur gst?

A. Yes, at 15%.

 Q. Does public liability cover damage to property?

A. Yes, third party property, not your own property or property being worked on, unless your policy has been extended.

 Q. Does public liability cover negligence?

A. Yes, within reason, depending on your business activities and the terms of your policy.

 Q. Does public liability insurance cover personal injury?

A. Yes, to third parties, when not covered by ACC.

 Q. Does public liability insurance cover contractors?

A. Usually, yes, but check your policy wording.

 Q. Is public liability insurance tax deductible?

A. Insurance is treated like most other business expenses and will be deducted from your operating expenses before calculating your net profit, which is the part you are usually taxed on. Refer to your accountant to understand your tax position and obligations.

 Q. Is public liability insurance required by law?

A. No, not generally, but in some cases government bodies or other government regulated organisations are required by law to ensure suppliers have Public Liability insurance in place.

 Q. Is public liability insurance compulsory?

A. No, not as such, but keep a few million dollars spare to cover expenses in case of public liability litigation against you if you choose not to get insurance cover.

 Q. Is public liability insurance the same as professional indemnity?

A. No, Public liability is to cover you for damage to third party property or their personal injury, Professional Indemnity provides cover for wrongful advice, errors and omissions. It is highly recommended that you place these two policies together as there are grey areas between them. Both policies should be placed with the same underwriter.

 Q. Is public liability insurance the same as general liability?

A. Yes, many insurers use the terms interchangeably, some also use the term Broadform Liability in policy wordings.

 Q. Is public liability insurance a legal requirement?

A. No, not generally, but in some cases government bodies or other government regulated organisations are required by law to ensure suppliers have Public Liability insurance in place.

 Q. Is public liability insurance the same as employers liability?

A. No. See here for Employers Liability.

 Q. What public liability insurance do I need?

A. How long is your piece of string? Varies widely depending on your industry. Businesses should get professional advice on this from a qualified professional. Every business is a little different – a good adviser will ask you lots of questions to ensure all your risks are adequately covered.

 Q. Are public liability and general liability the same?

A. Yes, many insurers use the terms interchangeably, some also use the term Broadform Liability in policy wordings.

 Q. Does public liability insurance cover volunteers?

A. Depends on the contract between the Employer and the Volunteer. Volunteers and their Employers should include this in their discussions before starting work.

Q. Does it cover food poisoning?

A. It depends on the circumstances of the poisoning, in all likelihood, more than one policy type would be involved. Statutory Liability policies could also be triggered in the event of a claim. Most insurers provide business insurance packages that include both Statutory and Public Liability policies at a cost no greater than that of taking out a single policy, so businesses should probably opt for both.

 Q. Does public liability insurance cover vehicles?

A. No.

 Q. Does public liability insurance cover consequential loss?

A. Some policies do,and some don’t, so speak to your broker and check your policy wording carefully.

 Q. Does a Certificate of Insurance need to be displayed?

A. No, but you can be asked to produce a certificate of insurance, in some circumstances and it can help win contracts. If you’ve got it, flaunt it.

 Q. Does it cover theft?

A. No, you’d need a Material Damage policy for that.

 Q. Does it cover bad workmanship?

A. There is an extension under Public Liability policies for faulty workmanship, but you need to ask for this extension, it isn’t an automatic inclusion on most policies.

 Q. Does it cover damage to property?

A. Yes, third party property, not your own property.

 Q. Does it help cover poor workmanship?

A. There is an extension under Public Liability policies for poor workmanship, but you need to ask for this extension, it isn’t an automatic inclusion on most policies.

 Q. Is public liability the same as employers liability?

A. No. See here for Employers Liability.

 Q. Is it a legal requirement?

A. No, not generally, but in some cases government bodies or other government regulated organisations are required by law to ensure suppliers have Public Liability insurance in place.

 Q. Is public liability on a ‘claims made’ basis?

A. Depends on your policy wording, some policies are, some are not. Check with your qualified broker who can advise, as well as your policy wording.

 Q. Is public liability insurance necessary?

A. You can self insure, but claim amounts can be in the millions. Very few businesses have this much cash available to set aside against such eventualities.

 Q. Is public liability and professional indemnity the same?

A. No, Public liability is to cover you for damage to third party property or their personal injury, Professional Indemnity provides cover for wrongful advice, errors and omissions. It is highly recommended that you place these two policies together as there are grey areas between them. Both policies should be placed with the same underwriter.

 Q. Is it expensive?

A. It really depends on the size of your business, the work that you do, who you do it for, and where you do it, but compared to the cost of paying claims and defence costs yourself if something should go wrong, its pretty cheap. We could quote a range from a few hundred dollars to a few hundred thousand dollars depending on whether you are a ‘one man band property owner’, or an international airline, but that wouldn’t really help. We can give an indication pretty quickly over the phone,once we know a bit more about your business – Contact.

 Q. Should my Certificate of Insurance insurance be displayed?

A. There’s no obligation but why not let the world know you run a professional business – it can help you win customers.

 Q. What insurance do I need to be contractor?

A. It depends on what type of contractor you are – a building contractor should certainly have Public Liability as a minimum, statutory liability and material damage recommended, also as a minimum, an IT contractor may be OK with Public Liability and Professional Indemnity. It all really depends on the circumstances and activities of the business in question.

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