With the recent introduction of licensing, many builders and specialist tradespeople are wondering what additional liability they now face. They also want to know what liability insurance is available to protect them. Building professionals are beginning to appreciate that in today’s world, liability insurance is a cost of doing business. This has always been the case for architects, engineers, surveyors, lawyers, accountants, insurance brokers and other professions, and the cost is built into their rates.
PUBLIC LIABILITY
Provides protection from damage to third party property or bodily injury. Public Liability (PL) insurance is essential for builders and sub-contractors, preferably cover that is specially tailored to meet their needs, such as that provided by Builtin New Zealand. A common example of a claim would be if someone accidentally screws through a pipe, and this results in water damage. Builtin’s policy also allows you to add the following extensions:
- FAULTY WORKMANSHIP EXTENSION (DELETES THE EXCLUSION FROM PL)
Provides cover for damage caused by faulty workmanship. This is usually excluded from most public liability policies, although resultant damage is covered.
- PROFESSIONAL LIABILITY (DELETES THE EXCLUSION FROM PL)
Provides cover for damage arising from professional advice or services provided by the builder. Again, this can be an exclusion from some public liability policies, but can be a source of claims by builders and tradespeople who are giving professional (paid for) advice to homeowners.
STATUTORY LIABILITY
This provides cover for legal costs and fines for some breaches of Statute, such as the Resource Management Act, Building Act, Fair Trading Act, and the Consumer Guarantees Act. Occupational Health and Safety legislation means you can’t insure against OSH fines. A common example is where the builder is fined by the local environment agency for pouring left over paint into public drains (even if it was done by a sub-contractor or apprentice). Your policy should include cover for fines and penalties levied by the Building Practitioners Board.
LBP PROFESSIONALS INSURANCE
A number of insurers have introduced separate cover to pay the costs of defending your license, and any fines, if someone makes a complaint to the Building Practitioners Board. Depending on the insurance company, this cover may only be available if you sign up to their PL and/or Statutory Liability insurance. You should check whether license defence cover is already included in your existing PL and/or Statutory liability policy, as it is with Builtin’s. LBP Insurance may also include cover for costs resulting from errors in the Records of Work documentation that LBPs are now required to keep.
ERRORS AND OMISSIONS (E&O) INDEMNITY (PROFESSIONAL INDEMNITY)
Provides cover for legal costs & damages if you, your company or employees are taken to court for allegedly causing someone a financial loss, as a result of something done or said (or not done or said) in the course of your work. If you are worried about your 10 year liability under The Building Act, or getting caught up in a leaky homes case, you should consider E&O. Builtin’s E&O includes LBP license defence costs and covers the cost of replacing lost documents, such as Records of Work.
EMPLOYERS LIABILITY
If you employ staff this insurance will provide cover for your liability for personal injury (not already covered by ACC) to any of your employees. An example of this is where an apprentice working in a dusty environment develops a lung infection and is unable to work. The employer was found liable for not providing adequate ventilation and masks. Cover includes legal defence costs.
EMPLOYMENT DISPUTES INSURANCE
Provides protection to employers for personal grievance actions taken by employees and prospective employees as a result of unjustified dismissal, discrimination or other disadvantage.
DIRECTORS’ AND OFFICERS’ LIABILITY
Provides protection for directors and officers for wrongful acts committed within their capacity as a director or an officer. This could include trading while insolvent and failing to meet your health and safety obligations. Cover includes defence costs.
SHOULD I GET MY OWN INSURANCE OR AM I COVERED BY MY EMPLOYER’S POLICY?
Maybe (an answer you will get a lot when it comes to liability insurance). If you are an employee then yes, you will usually be covered by their insurance. If you are an LBP you should check that they have adequate cover in place to protect your license in the event of a complaint. However, if you would prefer to take out your own license protection policy, you can do so by contacting Builtin.
If you’re a contractor, you may be deemed an employee if you work exclusively for one company. In that case their policy may cover you. Again, check that they have cover to protect you if someone makes a complaint to the Building Practitioners Board. In general we recommend that contractors and sub-contractors arrange their own liability insurance. This means that if you’re ever doing work for someone other than your employer you will have cover in the event of a claim.
WHAT SHOULD I DO NOW?
Here’s what you can do to make sure you have suitable liability insurance protection:
- Read your policies very carefully, paying particular attention to the exclusions. Seek professional advice if you are unsure about any clauses.
- Contact a company that specialises in insurance for builders and tradespeople, such as Builtin, and ask them to review your current liability policies.
FIND OUT MORE
Builtin New Zealand specialise in insurance specially designed for builders and tradesmen, so they cover the things you’re most likely to claim for. This includes cover for accidental damage to the building you’re working on and damage caused by faulty workmanship (as an optional extra). You can get an instant quote via Builtin’s website and also apply for immediate cover.
If you would like to know more about what insurance you need as an LBP, contact Ben Rickard at [email protected] or freephone 0800 284 584.