what we learned from christchurch taking the risk out ... - PlaceMakers

BUILTIN NZFEATURESWhat PLI doesn’t cover (Part 2)Public liability insurance (PLI) is one of the most important policies a tradesman shouldhave. It’s intended to protect you from the cost of damaging other people’s property and,in some cases, causing them injury – but it’s important you know what it doesn’t coverLike any insurance policy, thereare exclusions to make clear thethings not covered. Last month,we started off with the more genericand obvious ones that have becomestandard in most insurance policies.This month, we delve more into somethat are more likely to affect buildersand tradespeople.BUILDING DEFECTS, MOULD, ROT,GRADUAL DETERIORATION ANDWATER PENETRATIONAs a result of the leaky homes crisis, manypolicies from general insurers now excludecover from the effects of water penetratinga building envelope. As the multi-billiondollar cost of the crisis became clear,insurers decided that the cost of futureleaky building claims was too high forthem to bear and amended their policiesto exclude it. Separate policies that protectbuilders from claims of financial lossrelated to leaky homes, such as Builtin’sE&O Indemnity, are available. Leaksfrom internal pipes and water systems arestill covered by public liability insurance.ERRORS IN PROFESSIONAL ADVICEYou are generally not covered fordamage that results from bad advice,or where you haven’t given advice thatyou should have, if you’ve chargedfor it. As an expert, your clients areentitled to rely on what you say; ifyou get it wrong, they can hold youliable or the cost of this mistake. Ifyou gave the advice for free thenyou may still be covered. In somepolicies, you can add this cover backfor a modest additional premium.WHAT’S THAT ALL ABOUT THEN?DEFECTIVE DESIGNCosts arising from a defective design orspecification are excluded from cover.You should be wary of doing any design,whether that’s architectural, engineering,the whole house or a specific detail, unlessyou have separate professional indemnityinsurance that specifically covers this.YOUR PRODUCTS, MATERIALS ANDTHE PROPERTY YOU’RE WORKING ONProducts that you own, supply, install orconstruct are excluded under most policies.This becomes tricky for tradespeoplebecause of the way insurers define what‘your products’* are. Along with the obvious,‘your product’ may also include any propertythat you have been, or are, working on.When it comes to claims from builders, thehouse you’re building has been interpretedas ‘your product’ and therefore is notcovered because of this exclusion. However,some policies make it clear that buildings,or separate components of a property, willstill be covered. As a builder, these are thepolicies you want.*The definition of ‘your products’ is oneof the most important aspects of yourpolicy and we strongly recommendthat you switch to a policy with a morebuilder-friendly definition.Next month we look at exclusions forliability you’ve contracted into, loss of use,defamation, defective workmanship andproperty you’ve hired or are looking after.NOTE: This article is intended to clarifysome of the exclusions contained withinmost general/public liability policiesavailable from major insurers inTEST YOUR KNOWLEDGE!The multi-billion dollar cost of the leaky home crisis resultedin many policies from general insurers excluding cover fromthe effects of water penetrating a building envelopeNew Zealand. Some exclusions can beremoved by purchasing an extension toyour policy, so it’s important that you check.The specific wording from different insurerswill vary and you should seek the adviceof a professional if necessary. This articleis not comprehensive and should notbe relied upon as legal advice. Insurerswill interpret and apply their own policywording depending on the specificcircumstances of each individual claim.About BuiltinBuiltin New Zealand is a specialistin construction liability insurance, withpolicies tailored to meet the needsof builders & tradespeople. For moreinformation visit www.builtin.co.nz/Insurance or email Ben Rickardat ben@builtin.co.nz or call him on(07) 579 6259 or 0275 212 014.16) a b c17) a b c18) a b cWhen might you be covered for damagethat results from your advice?a) When you’re sure you’re right.b) When you gave the advice for free.c) When your advice was meant asa joke.What leaks are covered by publicliability insurance?a) Those from internal pipes and water systems.b) Those caused by water penetratinga building envelope.c) Those caused after a heavy night of drinking.What do insurers usually include underthe term ‘your products’?a) Anything you own, supply, install orconstruct.b) Your kids.c) Your sperm bank deposits.NB: The questions and answers in this section have been produced by the publisher and do not necessarily reflect views or opinions of the contributing organisation. 17