When you have staff who may be driving work vehicles you must ensure they have the appropriate current license.
Assuming the apprentice (or any employee) has a license just because they’re old enough is not good enough. It’s important for insurance purposes as it’s a condition of insurance that any driver has your consent and is legally allowed to drive it, has a current license and is not breaching any condition of their license when driving.
We had a claim recently where a 48 year old staff member crashed a work vehicle. He was also carrying a passenger and it turned out he was still on his restricted license. In these circumstances the insurer is entitled to decline the claim.
We’re also aware of situations where employees have had their licenses suspended, commonly as a result of too many demerit points, but have not informed their employer. If they are driving work vehicles this may invalidate your insurance in the event of an accident.
Checking your employees’ drivers licenses is also sensible from a health & safety responsibility perspective. According to ACC “It is your responsibility as an employer to ensure that any employee who drives any kind of vehicle is legally able to do so. That means they must have the right category of licence and it must be valid, i.e. it must not be suspended, expired or revoked.”
TRAILERS MUST BE INDIVIDUALLY INSURED UNDER A COMMERCIAL MOTOR VEHICLE POLICY
Trailers have to be insured as separate vehicles or they won’t be covered under a commercial policy. We have had three cases this month where trailers have not been insured. They are road registered, so are considered vehicles, and will not be covered under a tools & equipment or mobile assets policy. Some domestic policies may include trailers automatically, but this is not the case for commercial use/cover.
For a vehicle insurance quote contact the CBA Insurances team on 0800 237 843 (ext 2) or click here to complete our quote request form.
Tools theft is rife around the country at the moment and this has resulted in a substantial increase in claims. We urge all members to take extra precautions and ensure your tools are securely locked away, ideally out of sight from the road.
Where possible vehicles that contain tools should be garaged or parked off the roadside and alarmed. If you have a container on site where you store tools this should be fitted with a heavy duty lockbox-style steel cover to prevent the padlock being cut. Portable alarms are also recommended for on site storage containers.
Keep your asset register up to date
To make a claim under a tools & equipment policy you need to prove your loss. Make sure your tools/asset register includes:
Only your tools & equipment are covered
This means tools owned by the insured entity (eg. the company). It does not cover tools owned by subcontractors on a site, they should insure their own. Employees may have cover under their own contents insurance in some cases and also under the terms of some employment contracts. If you employ staff and contractors make sure they understand this. If you are an employee, check your contract and/or contents policy to find out.
Replacement value insurance
CBA Insurances customers benefit from replacement value insurance cover. This means the policy will replace any item for new, irrespective of its age or condition. The sum insured must be the replacement value of your tools.
$1,000 excess for theft
Our policy includes a $1,000 excess for burglary and theft, while policies from some other insurers have a $2,500 theft excess.
Fast claims service
Part of our mission is working with insurers who understand your need to get back to work quickly after an event. Early in August we were notified of a tools claim by a NZCB member. Four days later he had been paid out and was able to purchase replacement tools. This fast turnaround was possible in part because this particular builder had an up to date schedule of his tools and could supply invoices as proof.
For a tools insurance quote contact the CBA Insurances team or click here to request a quote online.
Today (4th April 2016), the Health & Safety At Work Act came into force. This legislation increases the responsibility of businesses, directors, managers and workers to manage health & safety in the workplace.
Alongside the new law, WorksafeNZ is increasing its enforcement activity, which could increase the potential for prosecution if a substantial breach is identified. Although the Health & Safety at Work Act specifically states that you can’t insure for health & safety fines, you are able to get insurance for the legal costs of defending yourself if you’re prosecuted for a breach of the law.
In addition to the new health & safety laws, the passing of the Sentencing Amendment Act 2014 has extended the ability of judges to award reparation to meet any shortfall in a victim’s ACC compensation. This will result in potentially larger reparations and more expensive defence costs. Before these changes an injured party may have faced a shortfall in what they received from ACC. Shortfalls can arise for a number of reasons:
Unfortunately, it’s a reality that sometimes, despite your best efforts, accidents can happen.
Insurance is available
Known as statutory liability insurance, it provides protection for:
We surveyed 549 CBA Insurances clients in September 2015. Here are the results.
92% of customers are satisfied with us (an increase of 2 points vs 2014)
100% of clients find us convenient to use (86% find us extremely or very convenient)
88% find we understand their business extremely or quite well
88% of our clients like us (half like us a great deal)
our premiums are comparable to other brokers (some are higher, some are lower but most are about the same)
Tailored policies and responsiveness are most important to our clients
92% find us extremely or quite responsive
99% of customers find us professional to deal with
We had Compliments from our clients (thanks guys!)
What a great friendly team at CBA.
Thanks to the team in CBA.
No. Happy with my dealings thank you.
Keep up the great service.
I had a claim several years ago and was most impressed with the way it was handled. From start to finish the claim was settled in a matter of days.
Great team and great to deal with.
Nil. Keep on doing what you do.
Always brilliant to deal with.
Keep up the good work.
Having a low staff turnover rate ensures that the team understand our business and continuity of that knowledge is with held. Staff are approachable, friendly and take action quickly.
All happy thank you very much....
we had some things to work on (we're working hard on them)
One person asked for less forms to fill in
One person asked for faster call backs
3 people had frustration with claims (including the actual insurer)
One person asked for a clearer breakdown of the cost to increase liability cover
And we had some great suggestions too
More detail about each policy
Annual reviews of cover
Regular updates on relevant topics
An online contract works quoting system (we have this!)
WHAT WOULD IT COST YOUR BUSINESS IF A HEAD CONTRACTOR YOU’RE WORKING FOR GOES BUST WITHOUT PAYING YOU?
The Stonewood Homes collapse is a timely wake up call for all building subcontractors to take out insurance to protect themselves from the cost of such an event.
Subcontractors Payment Guarantee cover was introduced to the market in the wake of the collapse of Hartner Construction in 2001. In February 2013 Mainzeal Construction collapsed, leaving subcontractors out of pocket to the tune of around $70m. In February and almost three years to the day since the collapse of Mainzeal, Stonewood Homes NZ, along with its Christchurch franchise, were placed into receivership, owing an estimated $15m to unsecured creditors, including hundreds of subcontracting firms.
“Are your subbies covered if another firm they’re working for collapses? Do them a favour and let them know about payment guarantee insurance.”
These large, high profile collapses are the tip of the iceberg and dozens of firms go bust every year, leaving their subcontractors unpaid for work done. Two other regional Stonewood franchises are currently in liquidation, along with at least a dozen other building companies nationwide. “It may seem counterintuitive but there’s as much risk of a business failing during the boom times as there is during a downturn, and Stonewood is a prime example.”
Subcontractors Payment Guarantee cover reimburses 75% of a subbie’s unpaid invoices in the event that their main contractor becomes insolvent. Limits of $25,000 and $50,000 are available.
“Are you covered if your principal contractor goes into liquidation?”
Although the policy doesn’t cover retentions, these will soon be given greater protection by changes to the Construction Contracts Act, and subcontractors can always opt to provide a bond in lieu of retentions.
Contact Gwenda or Rachael at CBA Insurances to find out more and get a quote.
It’s fair to say that when something goes wrong, how well your insurance responds can be the difference between a good result and a nightmare. Having represented many members when it comes to liability claims, we suggest a number of ways to ensure the process goes as smoothly as possible and the outcome, while perhaps not always the one you hoped for, is prompt and fair.
Liability claims are not black & white
Liability policies cover broadly defined risks such as “accidental damage”. It’s impossible to list all the scenarios where accidental damage could occur and certain, often broadly defined, situations are excluded also. This makes it hard to say whether a particular situation will be a claim without first investigating it. As a result there are grey areas, where something could be a claim depending on a person’s interpretation of the situation and the policy wording. This makes the assessment process critical.
A builder was installing insulation in a roof space when he accidentally put his foot through the ceiling. Is this a public liability claim? Answers at the end.
Understand what your policy covers in the first place
Probably the most common reason for dissatisfaction with the outcome of a liability claim is because the insured party has assumed the policy will cover something that it is not intended to. No-one expects you to be an expert in the wording of your insurance policy, but it is important that you do spend some time getting a handle on the cover it provides. Read the policy and speak to your insurer or broker when you take it out and again at renewal. That way, when something happens at least you’ll be in a better position to assess if it is prima facie (on the face of it) a valid claim or not.
An excavator preparing the site for a new house damages an underground cable, causing a power outage. Would this be covered by the contract works insurance?
Make sure you take due care
This is obvious, but a momentary assumption on site can backfire when it comes to a claim being accepted.
A builder putting up a heated towel rail puts a screw through a hidden water pipe. Is this accidental damage?
Do not admit liability
Even though it might be obvious to all involved that you were responsible for the damage, if you intend to make an insurance claim then the insurer (and ultimately the courts) decide who is responsible, you cannot make this call on their behalf. Do not promise that your insurer will sort it out, simply say that you will contact your insurance company.
Tell your insurance company ASAP
The quicker you put in a claim the faster it will be sorted out, and the less likely it is that other subsequent actions might jeopardise the claim. In some cases it may be faster for an owner to claim with their house insurer (or material damage insurer for commercial property), which may then seek to recover their costs from you (via your insurance). Either way, don’t delay making the call to your insurer.
Depending on the type of claim they will probably appoint an independent assessor to investigate the situation, determine liability and the likely cost and recommend a course of action.
Complete the claim form in full and with as much supporting evidence as you can
If the insurer has to come back to you for more detail this will inevitably result in delays. They will expect:
Claims assessors and loss adjustors are experts at sniffing out inconsistencies and if something doesn’t add up they’ll keep digging. The best approach is to answer their questions as fully as possible and allow them to make their decision based on all the facts.
A broker is on your side at claim time
If you have a broker you should expect them to help you prepare the claim and represent you to the insurer. This is where a good broker who is experienced in construction industry claims earns their money. If your claim falls into one of the grey areas of the policy then having an expert on board could be the difference between it being accepted or declined. If you deal directly with an insurer or through their agent, it will be up to you to argue the case. It’s not that insurers decline claims unfairly, in our experience this is not the case in the New Zealand insurance industry. However, when it comes to claims that fall into that grey area, and plenty of liability claims do, which way the decision falls could be down to the claims manager’s interpretation of both the events and the policy wording. That’s when you need someone with expertise, experience and relationship to argue the alternative point of view.
In a nutshell
Liability claims are often not straightforward, and liability policies open to interpretation. Don’t admit liability, get on to it straight away, cooperate with the assessor and supply information fully and frankly and ideally have someone with expertise on your side. This will increase your chances of a swift and successful outcome.
1. Maybe. It depends on your insurer’s wording and their interpretation of the incident. Was the ceiling the “property being worked on”? Was the house a new build and could therefore be considered “the builder’s product”? If the answer is yes to the above questions (in the insurer’s view) then, depending on the policy in place, a claim could be declined.
2. No. The underground services are “existing structures” and “third party property” and not part of the contract works. As such they will be outside of the cover under a contract works policy. They may however be covered by public liability insurance, under an “underground services” extension. In that case, to avoid jeopardising a potential claim, the policy may require that action to locate any existing cables and pipes be undertaken first.
3. That depends. Should a builder, who ought to know this was a possibility, have checked first? If he didn’t is it faulty workmanship? What you might consider to be an accident could be interpreted by a claims assessor as defective workmanship and subject to an exclusion or higher excess.
Tips from your broker - THINK YOU HAVE ERRORS & OMISSIONS COVER UNDER YOUR GENERAL OR PUBLIC LIABILITY POLICY? THINK AGAIN.
Unfortunately, not all Errors & Omissions cover is created equal. If your public liability insurance includes a clause called Errors & Omissions Liability you need to read what it actually covers. More than likely this simply refers to a standard clause for free advice you give, or medical treatment you might give in an emergency. All policies have it, just under various names.
It is NOT the Errors & Omissions Indemnity (E&O) cover you may have heard about and that builders should have. E&O covers your liability for mistakes, or breaches of your duty of care, that you’re held responsible for and that cause clients (or other third parties) a financial loss. If in doubt, call us.
E&O is equivalent to Professional Indemnity insurance that other professionals have, including your architect, engineer, accountant & lawyer. And in our view it’s now needed by builders too.
For more information on E&O cover visit: www.cbainsurances.co.nz/eando.
Here's the crux of it: IF YOUR COMPANY DOESN’T HAVE A CONSTITUTION ITS INSURANCE COVER MAY NOT PROTECT YOU AS A DIRECTOR OR EMPLOYEE.
More than likely your company has a number of insurance policies, including public and statutory liability, that state they also cover directors, officers and employees of the company for their liability. Great, you may think, if I’m pulled into a legal case in my position as director, the company’s insurance will also cover my liability.
Unfortunately, if your company does not have its own constitution the policy could be invalid when it comes to covering directors & officers. This is because the default provisions of the Companies Act 1993 will apply if you do not have your own constitution, and these default provisions prohibit the company from arranging insurance for a director or employee of the company. The Act doesn’t state what happens if you have arranged such insurance without a constitution that allows you to do so, but it could potentially give an insurer grounds to decline a claim on this basis.
Check your company’s records via the Companies Office website to see if you have a constitution filed. If not, you can buy a standard form one online, or speak to your lawyer about writing your own.
The long and the short: IF IT IS, YOUR PUBLIC LIABILITY INSURANCE MAY NOT COVER IT
Here's an example of a real claim that was declined by an insurer.
"My client is a builder, contracted to provide $400,000 of building services to a principal to complete his house. The plumber contracted by my client supplied a faulty product which leaked and caused some damage. Leaving aside the subbie's liability, the insurer has declined by client's public liability claim on the basis that the whole house is his product, and according to the policy wording there is no liability cover for damage to his product. If this is the case, every builder in the country has no cover for damage to any house he is building, even if he is building from the ground up."
And here is the response from an insurance law specialist.
"The technical position under the policy depends almost entirely on what the definition of "product" is under the policy. That definition often refers to something constructed by the insured. The key issue is that broadform/public liability insurance only covers liability for damage resulting from what the insured sold, supplied or worked on. The worth of the cover varies depending on the nature of the insured's business. On the one hand, if the insured is an electrician, the cover is meaningful when he negligently installs a switchboard in a large warehouse that subsequently burns to the ground. The switchboard is his product and liability for the damage to it is not covered. But the rest of the warehouse is resultant damage to that product and so there is potentially cover for it. On the other hand, if the insured is the head contractor that constructed the whole warehouse and negligently burns it down (ignoring contract works insurance for the moment), the whole warehouse is the insured's product and there will be little meaningful cover unless the fire spreads beyond the warehouse to neighbouring property."
What does this mean for builders?
Fortunately, CBA Insurances has been placing its clients' public liability insurance with a specialist construction industry insurer for many years, and their policy wording specifically addresses this issue. Under this policy, a house being built would not be considered the "Insured's Product" and would be covered in the event of a claim like the one above.
Some insurers have now copied this approach, so cover for builders is improving, however many builders are still unaware of how their own insurance responds in this situation, and that cover which better suits their business is available. Our advice is to read your policy wording, paying particular attention to the definition of "Insured's Product" and contact your broker or insurance adviser to seek assurance on this point.
Source: IBANZ iNavigator (www.inavigator.co.nz), published in CoverNote magazine, September 2015, abridged.
Under the Building Act builders have a "duty of care" to build something that is "fit for purpose". Duty of care is also an established principle in cases of negligence. A duty of care can be owed by:
Public liability insurance only covers claims for accidental damage to property (or in some cases injury). It does not cover you if the claim relates to an event where there isn't damage or loss of use, but there is some kind of a financial cost to someone.
Errors and Omissions (E&O) is Professional Indemnity insurance for builders and project managers. It will pay your legal bills if you or your company are held responsible for a mistake (it could even be a mistake made by a sub-contractor working for you) that has caused someone financial loss.
The policy CBA recommends, from Builtin New Zealand, has been specially designed for building contractors and project managers.
In a recent case a builder was named as a defendant in a leaky homes case, even though all he had done was correctly repair a leaky window in a property that he hadn't even built. His legal bills amounted to $40,000, just to be removed from the case.
Cases that are resolved through the Weathertight Homes Resolution Service (WHRS) are generally resulting in 80% of the liability (and cost) being apportioned to the builder! In most cases the builder doesn't have insurance to cover this (while the engineers, architects and surveyors will have Professional Indemnity cover), so the cost comes straight out of their pocket.
Give us a call for more information or to request an E&O quote, or register your interest here and we'll get back to you.
This covers your liability for accidental damage to or loss of another person's property. While resultant damage is covered, damage directly caused by faulty workmanship is normally excluded, but can be added back in with CBA. The policy we recommend also automatically includes cover for the property you're working on and has an automatic extension to cover the cost of defending LBP complaints.
HEALTH & SAFETY LIABILITY
While you cannot insure for health & safety fines, a statutory liability policy will cover your legal defense costs if you're prosecuted for a breach of health & safety legislation. It will also pay the reparations awarded by a judge to the injured person. Statutory liability will cover fines from breaches of other legislation, such as the Building Act, Resource Management Act and the Fair Trading Act.