What Is Public Liability Insurance NZ?

Public Liability Insurance in New Zealand provides financial protection for businesses against legal liabilities arising from injuries to third parties or damage to their property. It covers legal defense expenses and compensation payments if the business is found responsible for incidents. This coverage is also known as general liability or broadform liability insurance. It helps manage financial risks from unforeseen events.

Scope of Protection

Public Liability Insurance typically covers costs for personal injury or property damage incurred by non-employees. This includes scenarios like a customer slipping on business premises or a contractor damaging a client’s property. Coverage extends to legal defense costs, settlements, and awards. For instance, if a business’s operations cause a third party injury not covered by New Zealand’s Accident Compensation Corporation (ACC), the insurance can cover medical expenses and other compensation.

The policy also addresses damage to third-party property, such as accidental harm to a client’s fence or hired tools. It covers compensation for personal injury or death, and costs to repair or replace damaged property. Some policies also include product liability, protecting against claims from products manufactured or sold by the business if they cause injury or damage.

Businesses That Benefit

Many types of businesses in New Zealand can benefit from Public Liability Insurance, especially those that interact frequently with the public or operate on third-party premises. This includes small and medium-sized enterprises (SMEs), from sole traders to larger companies. Businesses where customers visit the premises, such as retail stores, cafes, or beauty salons, face risks like a customer slipping on a wet floor. Tradespeople like plumbers, electricians, and builders often require this insurance due to their work on client sites, where accidental damage or injury can occur.

Event organizers also find this insurance valuable, responsible for attendee safety and potential claims. Even home-based businesses or consultants visiting client locations can benefit from public liability coverage. While not legally mandated for all businesses in New Zealand, Public Liability Insurance is often a contractual requirement for certain industries or before entering specific worksites. Without it, a business might be unable to secure certain contracts or leases.

Standard Exclusions

Public Liability Insurance policies in New Zealand have specific exclusions. Professional negligence is typically excluded, requiring a separate Professional Indemnity Insurance policy for financial losses from errors or omissions. Injuries to employees are also excluded, as these are primarily covered by New Zealand’s Accident Compensation Corporation (ACC) scheme. While ACC covers personal injury costs, Public Liability Insurance addresses liabilities not covered by ACC, such as property damage.

Damage to the policyholder’s own property is excluded, as Public Liability Insurance focuses on third-party claims. Liabilities from intentional acts, contractual disputes, or punitive damages are generally not covered. Other common exclusions include claims related to asbestos, acts of terrorism, nuclear radiation, and war. Some policies also exclude incidents in North America (USA and Canada) due to higher legal costs and larger awards.

Policy Basics and Claim Process

Public Liability Insurance policies define key elements like the sum insured, the maximum amount the insurer will pay per policy period. Policy limits vary, often from $1 million to $20 million, with some contracts requiring minimum coverage. An excess, or deductible, is the amount the policyholder pays before the insurer contributes. The policy’s premium is influenced by the business’s industry, turnover, number of employees, and past claims history.

If an incident occurs that may lead to a claim, the policyholder must notify their insurer promptly. Gather all relevant information, such as incident reports and photos of damage. Businesses should not admit liability, as this can prejudice their position. The insurer will assess the claim’s validity and, if covered, manage the process, including legal defense and compensation. The claim should be made under the policy in place when the damage occurred, even if filed later.