This week’s product safety recalls include:
This week’s product safety recalls include:
One of Steve Manning’s early YouTube vlogs (video blogs) explained why it was important for all of us to have contents insurance. He explained it was not just to cover you for the loss of your household contents but to both his and my mind, it is the public and personal liability coverage that you have with the policy, typically $20 million. To view the video please go here.
Just how important this coverage is was brought home to me in the recent Queensland Court of Appeal decision of Silwood v Chandler  QCA 273.
Here a visitor to the defendant’s home slipped on a step which had been washed down that afternoon and not dried. It appears that was no sensor lighting in place and due to the time of night the step and the fact it was wet was not visible to the visitor. The visitor slipped and put their arm through a glass window sustaining a very nasty gash to their arm. The full extent of the injuries I am not sure but they do sound quiet serious.
The home owner argued, without success that some allowance should be made to the award to the fact that the visitor had been drinking. The amount was not disclosed.
The 3 judges involved, Atkinson J, McMurdo P, and Gotterson JA upheld the trial judges decision to award $650,000 to the injured party. Can you image trying to fund that plus the costs of both the first trial and the court of appeal yourself. This is where a few hundred dollars to purchase contents insurance does not sound that bad now does it!
Remember, insurance ain’t insurance, to make sure you have the right coverage to protect you, please speak with an insurance broker.
First of all, I need to explain that I am now receiving so many questions from all around the world, each and every day, including weekends, that I am struggling to keep up and so there may be a delay to some of you, particularly as I travel around delivering my training sessions.
The team at LMI are helping me as much as they can and I thank them for this but there can be delays as there is with this one which came in earlier this month. Sorry Anthony in my response to you in answering your important question which I reproduce below.
Long-time no see.
As usual, us brokers, annoying you with the technical beauty of insurance!
Question: Under the attached wording, would you be advising the client they need to purchase Products Liability run-off cover?
Background: Client is a rubber manufacturer (rubber goes into seals on buss doors and pipes etc)
Policy Period: 31.10.15 to 31.10.16
Date of Sale of Business: February 2016 (past liabilities were not purchased by the purchaser and the legal entity remains with my client)
My conventional training is there is an exposure for past sales and a policy needed to be in force at the time of the “Occurrence”.
I will say, my view is the policy doesn’t make this position overly clear.
The definitional I thought would apply are below:
The verbal advice the Underwriter provided, is that essentially any sales that occurred during the insurance period 31.10.15 to 31.10.16 are covered into the future.
The underwriter confirmed the “Occurrence” date of the claim would be deemed where such sold products were “relinquished to others” as stated more fully in definition 1.19 Products Liability below and with reference to definition “1.14 Occurrence”
I will say, my view is the policy wording doesn’t make this position overly clear.
The definitions I thought apply are below:
Love to hear your views if you have the time.
Anthony [surname and email provided]
In this case I disagreed with the underwriter and advised that Run off cover was required for this client. Here is my response and reasoning:
Sorry for the delay Anthony. I have had a punishing schedule and have got more than a bit behind. The issue is in the Cover clause 2.1 above which clearly states that cover is afforded for “2.1.1 personal injury, and/or 2.1.2 Property Damage happening during the period of insurance”.
This means it does not matter when the negligent act was committed or the issue in the product occurred, cover is only provided if the personal injury or property damage occurs during the period of insurance.
I therefore disagree with the underwriter and believe that the client definitely needs run off cover and it is my understanding that products liability has always required run off cover as does client’s relying on protection under a public liability, or financial lines coverage where the business ceases but there is an exposure of a loss or some sort, in the case of public or products liabilty physical injury or property damage occurring after the policy lapses.
I hope this helps explain the situation.
As you all know, I have worked strongly over the years looking at getting the Australian government to abolish all tax on insurance, namely the Fire Service Levy, from all states. We have been successful in many areas, the New South Wales government is currently phasing out the Fire Service Levy there.
Last month however I could not believe that while Australia has almost got rid of Fire Service Levy in all states, the New Zealand government elected to increase it by a staggering 40%.
What has been proven in Australia, time and time again is that to impose tax on those prudent and risk adverse enough to insure is a disincentive, causing people to not insure or if they do to under-insure themselves, ie insure for less than their total sum insured.
The latest spate of earthquakes should be a stark reminder to the government of New Zealand that it is in everyone’s interests, individual insured’s, communities and the national economy that people are fully insured in the event of a standalone fire or a major catastrophe such as an earthquake.
As we have reported so many times now, everyone in the community benefits from a fully funded and highly trained emergency service and as such all of us in the community should pay for it, not just those that insure.
The tax ought to be immediately removed from insurance and placed on property rates so that every single person in the community whether they are a home owner or renter, contributes towards the fire services.
It is now time for the New Zealand government to have a close honest look at Fire Service Levy’s and do the right thing in removing it from insurance.
This is the question put to me:
If a storm damages a truck on site, does the Insured have recourse for the hire cost through their AICOW [Additional Increase in Cost of Working] cover under their ISR [Industrial Special Risks] policy having successfully claimed under their motor policy for the damage?
Jorge [surname and email provided]
My response was short and to the point.
On the face of it, the answer is yes as a result of the following memorandum found in the Mark IV version of the ISR policy
“REGISTERED VEHICLES AND / OR TRAILERS
Notwithstanding the provisions of Property Exclusion 5, this Policy extends to include loss resulting from interruption of or interference with the Business occasioned by Damage to registered vehicles and/or trailers whilst such vehicles or trailers are at the Premises owned or occupied by the Insured; provided always that this Policy does not cover loss resulting from physical loss, destruction of or damage to such vehicles and/or trailers whilst they are being used on any public highway or local thoroughfare.”
What this means is that despite the ISR policy specifically excluding registered vehicles, there is nonetheless coverage for business interruption losses, including Additional Increase in Cost of Working cover following from damage to a vehicle. The vehicle needs to be at a named situation and there is no cover for road risk. But in your case, storm damage while the vehicle is parked at the Situation and/or Premises will trigger the coverage.
This same coverage is available in good quality business packs as well.
An excess may apply to the ISR policy.
Gary Everdell an old friend from my days at General Accident and now with Aon wrote knowing my interest in drone technology to warn me that some drones are being attacked by birds. Here is a link to the ABC article: http://www.abc.net.au/news/2016-11-17/wedge-tailed-eagles-bring-down-drones-in-goldfields/8033056
Simon Hooper from QBE Aviation, who is one of the pioneers of insurance for drones (more correctly unmanned flying vehicles [UAVs]), and the insurer we have entrusted with our insurance, explained that bird attacks are a common problem in spring. I think every cyclist or school child who still walks to school probably knows this but you may not have thought about it if you are flying a drone.
It is a good reminder though to be careful this time of the year, particularly flying around parks and rural areas that your drone may get some unwelcome attention.
With our LMI Drone we have elected to self insure the hull as the cost is not great but we would not fly it without the protection of aviation liability coverage.
Two of our team completed their CASA training last week and I am just waiting for their certificates to come in the mail before I make a splash and officially congratulate them. Watch this space but also watch for eagles, magpies and other aggressive bird species.
Thanks Gary and Simon for your sharing your thoughts.
A number of insurance brokers have contacted me of late concerned that unit holders and body corporates are obtaining quotations from comparator sites and some new entrant direct insurers on their body corporate or their individual unit.
This of course is a nightmare situation as the cover afforded under a home building policy is totally different from a residential strata complex.
Issues such as common areas, liability coverage and a raft of others are specifically addressed by a strata insurance policy and provide much better coverage tailored to this form of accommodation.
I know of a number of complaints that have been lodged with ASIC on this issue, however it still remains unresolved. In the meantime, my strong advice is to only insure residential body corporate units under a residential strata policy.
If you are on the management committee you may well find yourself personally liable if the insurance does not adequately cover all the unit holders, not only for your own unit but the others where the unit holders have entrusted you to get it right!
Not all Directors and Officers Insurance coverage provides protection for inappropriate or inadequate insurance. Think of the personal risk to you not some perceived and possibly illusory saving in premium.
I share an update provided via Hayley Enders of Belle Property Carina. Thank you Hayley.
“Queensland homes will be required to be fitted with photoelectric, interconnected smoke alarms in all bedrooms, as well as hallways as part of legislation passed in parliament this week. All houses being built or significantly renovated will need to comply with the smoke alarm legislation upon completion after January 1, 2017.
“All houses leased or sold will need to meet compliance after five years and all owner-occupied private dwellings will need to comply with the legislation within 10 years. Any smoke alarm being replaced after January 1, 2017 must be a photoelectric alarm. Fire and Emergency Services Minister, Bill Byrne said the legislation followed recommendations handed down after the 2011 Slacks Creek fatal house fire. “The absolute tragedy we saw at Slacks Creek where 11 people died is an incident we never want repeated and this legislation ensures people will be alerted to house fires as early as possible,” Minister Byrne said.
“The legislation specifies that every Queensland residence will need to be fitted with photoelectric, interconnected smoke alarms in all bedrooms, as well as hallways of residences. By having the alarms interconnected, it won’t matter which part of a house a fire might start in, the alarm closest to you will sound and if you are asleep, an alarm will sound in your room, even if the area is closed off to the rest of the house” Minister Byrne said. “Research shows that photoelectric, interconnected smoke alarms are the most effective on the market for alerting people to fires early. “I am proud Queensland is now the national leader on this issue, making sure we are doing all we can to keep residents safe.”
“Minister Byrne said a 10-year phased rollout of the legislation would allow ample time for everyone to have their alarms installed correctly. “Hard-wired, interconnected photoelectric smoke alarms will require a qualified electrician to conduct the installation and ensure the alarms are working as they should be,” he said. “There is an option to install photoelectric alarms with a 10-year lithium battery that have the capability to achieve interconnectedness wirelessly between alarms. This option may be more suitable for Queenslanders living in remote areas where attendance of an electrician could be difficult.” Minister Byrne said although some residents would have up to 10 years to install the alarms, everyone should take action to update their alarm system as soon as possible. “This technology is proven to save lives and the sooner it is in every Queensland home, the safer we’ll be,” he said.
“Queensland Fire and Emergency Services (QFES) worked closely with the Palaszczuk Government to develop the legislation and Commissioner Katarina Carroll welcomed today’s announcement. “This legislation is the strongest of its kind in the country,” she said. “QFES has long recommended photoelectric, interconnected smoke alarms to be hard-wired into homes and the decision to mandate this is to be applauded. “As Queenslanders make the change and update their smoke alarm system, we are also encouraging everyone to review their fire escape plans. “When an alarm sounds, you need to know what you will do. Every household should have a fire escape plan and every person should know their role in that plan. “You may have as little as 15 seconds to enact your fire escape plan, so make sure you sit down with everyone in your household and discuss your escape plan. “Once you’ve had the discussion make sure you practice your plan.
“With a well-practised fire escape plan, you’ll stand a better chance of avoiding panic and getting everyone to safety during a house fire.” QFES has a free Safehome program where Queenslanders can request a visit from local firefighters who will advise them of the best locations for smoke alarms and suggest other fire safety initiatives around the home.
“To request a Safehome visit you or your clients can call 13QGOV or visit www.qfes.qld.gov.au/communitysafety/freeprograms/safehome”
In summary – All tenanted properties have 5 years to comply with the new legislative requirements. Owner occupied homes have 10 years.
My advice is to do it sooner rather than later as these alarms have been shown to save lives and reduce the size of property losses.
Finally, please do not just go for the cheapest product or installation. We do not want to turn this into another insulation batts fiasco where a good initiative turns out to have adverse unintended consequences. This means not doing this yourself but using a qualified and insured electrician.
I received this question which led to another on Gross Rentals and Additional Increase in Cost of Working
Our client is an owner occupier of a furniture manufacturing business (as occupier they’ve setup a Pty Ltd entity, and as owners, insured the building in their personal names).
They have AICOW [Additional Increase in Cost of Workin] and Gross Rentals insured, but do not wish to insure Loss of Profits of the business.
For Section 1 we’ve applied AVALTPC4 – Co-Insurance Memorandum – Amended (B), but for section 2 what endorsement do we use to bring down the average clause to 80% without limiting the AICOW to property owners only? I.e. the aim is to be able to use the AICOW for both the business and property owner depending on where it’s required.
Ryan [surname and email provided]
My first answer below, led to a second question which I address further down.
Additional Increase in Cost of Working cover is a first loss cover limited only by the Sub-limit selected. It is not subject to co-insurance / average. Hence the reason you cannot find any endorsement.
Having said this, I strongly recommend the client reconsider their position regarding gross profit for the business. This is a vital cover for them.
The client is adamant about only insuring the Property Owner’s Gross Rental + AICOW only.
Given we’re only covering Gross Rentals + AICOW under section 2, is there any issue requesting the underwriter to note the following endorsement? Your notes advise to only use for a client whose business is principally that of a landlord.
- GRENTPC4 – Gross Rentals Specification (B) – The reason I want this noted is the 80% Co-insurance clause which is not currently present on the terms offered.
In response to this second question I answered:
Hi again Ryan,
As I understand the risk and entity that is the building owner(s) is primarily a Landlord and the furniture business is a separate legal entity. As such the use of the Gross Rentals Specification endorsement that we at LMI drafted is appropriate in the circumstances.
I appreciate the position you find yourself in with this client. You can only lead a horse to water you cannot make them drink or even get them thirsty sometimes, Having said this, I ask that you ensure you have the Insured confirm they do not want the gross profit insured in writing to protect your own Professional Indemnity program.