Errors & omissions indemnity or professional indemnity insurance (they are the same thing) covers your liability for mistakes you make (or someone acting on your behalf makes) that cause someone else a financial cost.
In our final article in the four part series on managing risk for trade businesses we focus on the risk of something happening to key people in the business (that means you).
Unfortunately, it is a fact that over half of all New Zealand construction businesses will have failed after just four years*. The Mainzeal collapse in 2013 served to highlight the risk that many sub-contractors face when working for a principal contractor; the danger of not getting paid for work done and/or losing retention money that has been withheld.
Construction is a risky business, more so than most, yet many builders don’t spend enough time really understanding their risk environment and putting in place strategies to manage, avoid or transfer that risk.
Construction is a risky business, more so than most, yet many builders don’t spend enough time really understanding their risk environment and putting in place strategies to manage, avoid or transfer that risk. In this second article in our Understanding Risk series, we focus on the area that is probably best understood; protecting assets from damage or loss.
Life used to be simple. It was about survival, finding enough to eat and avoiding being eaten by a sabre-toothed tiger. Modern life is much more complicated, especially if you’re a builder and run a business. There’s a lot to think about and one of the most fundamental is how to minimise risk.
Do you know if your company is solvent? If it’s insolvent and you continue to trade you could be in breach of the Companies Act. If the company can’t pay its bills, creditors could seek recovery directly from you personally.
Whether you agree with it or not, the reality for everyone in the construction sector is that ensuring workplaces are safe is not negotiable. Unfortunately, despite the best intentions of employers, sometimes things happen. If an injury occurs and a WorkSafe NZ investigation determines that it could have been prevented, you could face a fine and/or prosecution. Under the current law workplace bullying is also considered a hazard, and failure to prevent it could be a breach of the law.
The Building Act does not prevent building companies using (potentially) cheaper, lower-skilled labour for restricted building work (RBW); this must be signed off by an LBP to comply with the law. LBPs who contact us want to know what liability they’re taking on for signing off this work, and what insurance is available to protect them.
Mainzeal Property & Construction Limited was placed into receivership on 6th February 2013. A year on from that and the situation is clearer and closer to a resolution for unsecured creditors, but not by much.
Whether you’re building new or doing an alteration, extension or renovation, your contract will require contract works insurance be arranged to cover the work. The policy provides cover for sudden and accidental loss or damage to the works specified in the contract.
Public liability insurance is one of the most important policies that a tradesman should have. It is intended to protect you from the cost of accidentally damaging other people’s property or causing them injury (for example where ACC doesn’t cover you).
