Insurance and the contractor in the age of blame Ian Heathwood | Principal BA LLB (Hons) Grad Dip LP

This information is only of a general nature, should not be applied to individual situations without seeking further specialised advice, is focused on particular issues and is not intended to be an exhaustive representation of the different legal issues. We are not providing any accounting, taxation, financial advice – you should seek advice from the appropriate professional.

A cultural issue Class actions and do-gooder/greedy lawyers A whole new legal industry and growing Thanks America

Series of implied warranties For the benefit “consumers” Consumer – what you think plus commercial under $40,000 Liability for manufacturer, importer, your supplier, you as installer Australian Consumer Law

Consumer can force you to replace And pay for repairs Can you actually recover? –in Australia? –solvent? –appropriate insurance? –exclusion clauses (if over $40K)? Australian Consumer Law (cont.)

Check all supplier contacts Check all supplier insurance Don’t deal with tin-pot suppliers Have your insurance in order Back it up with real asset protection What you should be doing…

Public Liability Insurance WorkCover Professional Indemnity Insurance Business Interruption Insurance Directors and Officers Insurance Product Recall Insurance Product Guarantee Insurance Basic types of cover

Covers damage to third party as a result of your business activities Not claims by employees unless "Employer's Liability cover“ Often not negligent advice Does it cover: – – interruption of third-party business – legal and court costs Public Liability Insurance

– damage to underground services and resulting damage – damage due to faulty workmanship – covered if negligence is by your subcontractor – unregistered vehicles – e.g. trailers – tax audit costs – damage to goods in transit Public Liability Insurance (con’t)

Injury, death or economic loss due to:- – bad design – wrong advice – incorrect contract administration resulting in loss – sometimes breach of contract Liability possible even if no charge Protects business, directors and employees (not fraud or crime) Professional Indemnity Insurance

Does not cover company Covers senior management staff Liability for their actions and decisions as a company officer/manager Defence legal costs – civil, criminal and regulatory Employment risks? Extremely complex policies – many exclusions Directors and Officers Insurance

Injury or property damage caused by supply, service or repair of products Covers legal defence costs Product Liability Insurance

Often not covered by product liability insurance Defective DC Isolators; solar panels; pumps Product Recalls by ACCC and others

Covers injury or property damage from product failure to perform for intended purpose Might be in Public Liability policy Product Guarantee Insurance

Contractual liability – from indemnities – other events – e.g. damage from weather Very common Rarely insurable Case study 1

DC Isolators – Foreign manufacturer – good luck suing in China/Vietnam Beware the two dollar company importer/supplier – importer – no product liability insurance – contractors – no recall or product guarantee insurance – importer insolvent – multiple claims – unsustainable – “restructure" only option – correct structure before problems – only real answer Case study 2

Right, Australian, solvent and insured suppliers Right insurance for you Have a good broker But… a broker is your agent, not the insurer’s! Have broker confirm contractual liabilities covered Legal advice where any doubt Have proper asset protection in place Conclusion