What PLI doesn’t cover (part 3)

Like any insurance policy, exclusions make clear the things not covered. This month, we look at exclusions for liability you’ve contracted into, loss of use, defamation, defective workmanship and property you’ve hired or are looking after.

Defective/faulty workmanship

Some polices won’t cover the cost of fixing any workmanship that causes damage. Others exclude cover for faulty workmanship only if it results in water penetration of the building envelope (see the explanation of the Building Defects exclusion in last month’s article). ‘Downstream’ damage that occurs as a result of faulty workmanship may still be covered, however. Specialist insurers, such as Builtin, allow you to purchase an extension to cover your liability from faulty workmanship.

Note: The issue of faulty workmanship is one of the trickiest areas of liability for builders and specialist tradespeople. We recommend that you understand how your policy covers you for faulty workmanship and switch to a policy with a more ‘builder friendly’ wording and options.

Liability you’ve contracted into

The policy is not intended to pay for things that you promised to do in a contract but then failed to do – that’s your problem. So unless you would be held liable for it under the law anyway, any liability you contract into is excluded from cover.

Loss of use

The policy won’t cover you if a client can’t get into their house (or use any other property) because of a delay or product failure that you’re responsible
for. They may hold you liable for extra rental, hotel and travel costs for example, but these can’t be claimed on your policy.

Defamation

You are not covered if someone takes you to court because you said or published things about them that were untrue and damaged their reputation. Can be included in cover as an option.

Property in your care

Any claim related to your property (tools you own), property you’re being paid to look after (maybe you’re storing the homeowner’s garden furniture in a portacabin, while work is being done) or property you’ve hired (such as scaffolding) is excluded.

Note: This article is intended to clarify some of the exclusions contained within most general/public liability policies available from major insurers in New Zealand. This article is not comprehensive and should not be relied upon as legal advice. Insurers will interpret and apply their own policy wording depending on the specific circumstances of each individual claim.

About Builtin

Builtin New Zealand is a specialist in construction liability insurance, with policies tailored to meet the needs of builders & tradespeople.
For more information visit www.builtin.co.nz/Insurance or email Ben Rickard at ben@builtin.co.nz