should consider the following three key aspects when comparing public liability policies.

A. Consequential Loss Exclusion

“Consequential Loss” is any damage you may cause to third party property or personal injury due to negligence in the performance of your duties.

If you are a tradie comparing Business Packs, it is suggested that you look for a policy where the Consequential Loss exclusion does NOT apply to the Public & Products Liability cover.

Zurich, Vero and Calliden, for instance, have specific wording, so that the Public & Products liability cover specifically does NOT exclude Consequential Loss.#

If comparing a stand-alone Public Liability cover, it is suggested that you compare whether Consequential Loss is excluded or not.

B. Liability Section – Faulty Workmanship Exclusion

“Faulty Workmanship Exclusion” does exclude the cost of replacing the product or service provided by the Tradesman – but it does NOT exclude the consequential loss which such faulty workmanship may have caused.

This means that if the work done later causes property damage (say, a fire) then the property damage caused by the fire is covered, if the Tradesman is found to have been negligent. This is “Consequential Loss”.

What is typically not covered for the Tradesman is the cost of replacing or rectifying their own work, as insurance companies generally do NOT provide a “Product Guarantee” .

There are however a couple of exceptions where consumer statutory warranties apply.

C. Consumer Statutory Warranties

In Victoria, Plumbers have to take out a Consumer Statutory Warranty cover, which does cover the cost of repairing, replacing or rectifying faulty work for domestic consumers (not businesses).

If you are a Plumber in Victoria comparing Public Liability cover, Consumer Statutory Warranty cover MUST be included, or the cover is not suitable.

Similarly, for Electricians in Queensland there is a mandatory $50,000 Consumer Statutory Warranty that MUST be included as part of Public Liability cover.

At the time of writing # it is our understanding that the warranty schemes for Victorian plumbers and Queensland electricians are the only two statutory warranty schemes for tradesmen in Australia. They are mandatory in those states.

In all other states and for all other trades, the tradesman must replace, repair or rectify any faulty work at their own expense. General Public & Products Liability policies does NOT cover tradies for faulty workmanship.

#Current as at November 2014. Please check with your broker to see if this applies now.

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This Blog contains general advice only. It has been prepared without taking into account your particular objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

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