New Zealand businesses operate in a risky and complex environment. Relationships with customers, clients, contractors and suppliers can be challenging and difficult to navigate, even more so if they are offshore. Businesses have a range of statutory obligations, such as under the Health and Safety at Work Act, and they may owe duties to a range of parties as a professional. Like it or not, opting for legal action to settle disputes is more common in New Zealand than in the past.
Businesses can face allegations or legal action even if they are not actually responsible for the loss. Dealing with these issues can be very difficult and expensive, taking focus away from the business. Getting the right package of liability covers is extremely important and can help businesses deal with the costs of legal action, including the costs of legal representation and investigating and defending a claim.
Public and products liability (broadform)
This policy can provide cover for injury to other people or damage to other peoples’ property, that you may become legally liable for if you or your employees were negligent. This legal outcome can be substantial, sometimes much larger than the value of the product supplied, or work done, and it can arise in a range of ways depending on the business:
- This may arise from the products that a business may import, manufacture or sell, or from the work that a business undertakes.
- While ACC picks up much of the exposure in NZ for accidental injury, businesses that export have no such protection.
- ACC does not cover everything in NZ, for example many food poisoning exposures are not covered by ACC.
- Businesses that work on, or store, other people’s property can be liable for any damage to that property.
When properly tailored for a businesses’ specific needs a Broadform Liability policy is designed to provide protection for these risks. In some cases, the allegation may be without basis, but where necessary Broadform policies can provide defence costs and cover the cost of experts and lawyers
This covers a range of fines and defence costs if a business is prosecuted for unintentional breaches of a range of New Zealand statutes. This includes cover for defence costs and reparations under the Health & Safety at Work Act. Insurers are not allowed to cover fines under the Health & Safety at Work Act. However, there are several other laws that can affect a business, including for example the Fair Trading Act and the Building Act, which are covered by Statutory Liability.
ACC covers the medical costs associated with most injuries in NZ, but there are gaps, for example around some stress related conditions and if you are ordered to pay punitive or exemplary damages because of an employee suffering an injury at work. Where a business has employees, Employer’s Liability can provide cover for this liability as well as the associated defence costs.
Crime and fidelity
Unfortunately, most loss to a business from fraud is often caused by someone that you employ or someone who is related to one of your employees. A fidelity policy can protect against loss from theft by an employee. A crime policy offers broader cover and covers theft by an employee but also covers criminal acts perpetrated by a third party.
If your business offers professional advice or services, this policy protects against an allegation of a breach of your professional duty. It covers legal expenses to defend a claim against you and any compensation awarded against you. Solutions are available for a range of professions including lawyers, accountants, engineers, architects, real-estate agents, management consultants and medical and health workers.
Directors and officers
Directors and senior managers must make tough and complex decisions when running a company and those management decisions could result in a director being sued personally. The cost of defending a claim can be a significant financial burden on a director. This policy covers legal liability to pay damages and covers legal expenses in defending a claim.
This policy protects trustees from personal liability resulting from their decisions and actions while carrying out duties performed for the trust. It covers legal liability to pay damages and covers legal expenses in defending a claim.
Information technology liability (professional indemnity and general liability)
The cover is designed to help meet the specific needs of businesses in the information and communication technology sector. Combining professional indemnity and public liability insurance in one policy, it provides cover for legal liability for errors in ICT related advice or services. It also covers liability for physical damage caused by technology products where ICT services have been provided.
This policy is designed for incorporated societies and community associations (organisations that fall outside the Companies Act). The policy covers the officers for liability to pay damages and legal expenses in defending a claim for wrongful acts while carrying out their duties on the board. The policy covers the association and its board and committee members, employees and any volunteers acting on its behalf.
Body corporate committee liability
This policy is aimed at strata title or unit title properties governed by the Unit Titles Act 2010. This type of title is generally in an apartment type development and is administered by a body corporate committee. The policy covers committee members for liability to pay damages and legal expenses in defending a claim for wrongful acts while carrying out duties as a committee member for the body corporate.