What public liability insurance covers is one of the most common questions Builtin gets asked by tradies – and one of the most important topics to be aware of. This is equally true for landscapers, because there are things public liability doesn’t cover you for and you need to know what they are!
What does public liability insurance cover, in its broadest sense? This is known as the ‘insuring clause’. Cover under a public liability policy starts out quite broad. It covers:
your liability to someone else for accidental damage or loss of their property.
This includes the loss of use of property that isn’t physically damaged. It can also cover your liability for personal injury (except to employees) that isn’t covered by ACC.
It includes resultant damage, or downstream losses, such as the lost income to a restaurant that had to close because their power was knocked out by someone digging up an underground cable. Or the damage to carpets and walls from a leak caused when installing a skylight.
Some policies also cover damage caused by faulty workmanship. This is often excluded but is a valuable extra cover for landscapers and other tradies. There’s one insurer that even claims to cover liability for faulty workmanship, even if there is no physical damage to property.
The policy will also cover legal defence costs related to the claim.
The triggers for a public liability claim to make it in the front door
For a claim to have a chance of success, it must meet some basic criteria first:
The damage happened during a period you were insured.
A third party (not you) has suffered a loss (eg, your client, a neighbour, a utility company).
That loss is due to physical damage to (or loss of use of) their property.
You’re responsible for that damage (allegedly).
So, if something has happened, ask yourself those four questions. If the answer is yes to all four, you have a good shot at a successful claim (as long as it’s not otherwise specifically excluded).
What doesn’t it cover?
This was probably the second most common question we are asked! And it’s equally important. The policy doesn’t cover:
Things that aren’t physically damaged, or where there is no loss of use (unless it’s for the personal injury side).
Your own products.
Events you’re not responsible for.
Where there is no loss to a third party.
Damage that happened outside the policy period.
In addition, there are specific exclusions noted in the policy to take out things that insurers don’t intend the policy to cover. Some common examples are:
Water penetrating the building envelope (be very careful when fixing to or making openings into buildings).
Mould, rot, gradual deterioration.
Fines and penalties (covered both other insurance).
Anything related to asbestos.
Defective materials and design.
Professional advice or service (covered by professional indemnity).
Liability from using a road-registered vehicle (covered by the vehicle’s policy).
Common issues
Scratching glass while cleaning it is a common claim. Insurers mostly require that the correct cleaning process is followed before a claim will be accepted. There is an NZ Standard and plenty of information available on the internet. So, be very careful if you get concrete splashes onto expensive windows.
Hot work is another area where you will be expected to follow best practice. The recent Sky City fire is a timely, if extremely costly, example of what can go wrong. If you’re doing any torch-on, welding, grinding or other hot work, make sure you’re following all the rules.
Underground services. A claim related to damaging these, such as fibreoptic cables, pipes or electrical lines, must show that you did your due diligence before digging – eg, checking first with the local council or using specialist detection. You will be expected to take all reasonable steps to minimise the risk of hitting underground services.
Concrete that is aesthetically poor or looks bad to the eye may not rise to the level of a claim if there is no actual damage to it (such as cracking). If it was the mix itself that was the problem, that may be considered ‘defective materials’ and not covered.
What if there is no physical property damage but I’m still being held liable?
Landscaping contractors are also exposed to the risk of mistakes that don’t result in physical damage, but certainly have a cost that the contractor could be held liable for. Think about:
Misinterpreting plans (or someone following an old set of plans).
Misreading a specification (or having to interpret it yourself for lack of detail).
Workers on site failing to execute agreed variations.
A surveyor you’ve engaged marking out a site wrong.
Using the wrong materials.
Not correctly following the manufacturer’s guidelines.
These examples are very unlikely to be public liability claims, as they don’t meet the trigger of ‘physical property damage’. Where a client has suffered a financial-only loss, they can still hold you liable and in that case you need professional indemnity insurance.
In a nutshell
Public liability covers your liability for damage to someone else’s property. Some things are excluded, and others are only covered if you have followed the right practices. Many public liability policies don’t cover faulty workmanship, so you should check how yours operates and make sure you have a policy that is tailored for construction trades. In addition to public liability, landscaping contractors should also have professional indemnity insurance for those claims where the mistake has not caused physical damage.
This article is not exhaustive and you should conduct your own assessment of your specific needs, perhaps along with an insurance/risk management professional adviser. There are other policies to cover different risks. Individual policy wordings from different insurers may vary. You should refer to the specific exclusions in your own policy wordings and discuss them with your insurance adviser if you are unsure.
Builtin are New Zealand’s Trade Insurance Experts. For more information visit builtininsurance.co.nz, or contact us at hello@builtin.co.nz or 0800 BUILTIN.