Your Business and your Insurance Contracts Don’t let each other down

There are two burning issues which if not clearly understood can seriously affect any business. It is imperative that OAMPS, as insurance and risk advisers, do not turn a blind eye to potential exposures simply because an underwriter’s costing at the time of renewal is attractive. GRANT STILLMAN from OAMPS reports.

THE ISSUES IN QUESTION

Our concerns are the lack of understanding of the exposures under Victorian law of incidents involving unregistered vehicles. This, together with the aggressive attitude of WorkCover in recovery actions relating to WorkCover claims has us all walking a tightrope.

Whilst we all work towards an incident-free environment and have come a long way in safety management, when something does go wrong insurance needs to be reliable. Adequate protection is where reality and assumptions collide.

The unregistered equipment dilemma

In Victoria more than 50% of vehicles and mobile equipment are not registered. OAMPS are continually asking the authorities for usage definitions and some of the answers continue to be vague and confusing. The following are examples of queries raised:

• What public areas are deemed as public thoroughfares
• Why is there so much confusion relating to registration requirements whilst loading and unloading
• What is the position if unregistered equipment in a permit zone accidentally moves outside the area
• What is the definition of restricted transit

OUTCOMES

To protect a business the answers are simple however not practical. Many contractors are taking cost-saving risks. They are not prepared to listen to advice that when in doubt, registration or permits solve the problem. If clarity is not sought insurance policies in many cases may not respond.

The result is an even bigger disaster when a contractor believes they are doing the right thing and their insurer will not provide the expected protection. Some policies exclude all unregistered equipment on a public thoroughfare, therefore without the protection of compulsory registration insurance the business can be left stranded.

Whilst OAMPS and the CCF continue to lobby for more cost effective outcomes, we recommend that you at least seek advice.

A poor decision could cost you your business. Ignorance of the issues is not a defence.

WorkCover recovery action

This is more a time bomb than a dilemma and must not be underestimated. In half the states of Australia, when a Workers Compensation claim is paid the authority will attempt to recover the worker’s payments and costs from anyone they may deem as negligent.

If the offending business or person has adequate public risk insurance they may be protected.

THE PROBLEM

• Some public risk policies exclude labour hire and contractor’s employees
• There is a lack of understanding relating to workplace responsibilities to labour hire staff, especially relating to workplace compliance and pre-existing disabilities
• Many employers do not realise there can be massive penalties under public liability policies for WorkCover recoveries. Excess payments of up to $250,000 are not uncommon
• Off-shore insurers often distort market pricing by not being aware of potential long-term recoveries. When the going gets tough they will often abandon the marketplace. This has been common over many years in our market
• Lack of positive defence to flimsy action by weak insurers
• The potential cost explosion created by underwriters can affect everyone, not just a poor risk

THE SOLUTION

• Avoid workplace incidents!
• Government legislation limiting the opportunity to recover outside the Statute Act (we are dreaming)
• Pay extra insurance to limit exposure (flow-on effect not desirable)
• Do not use labour hire
• Report and have all incidents investigated by your public liability insurer

OAMPS takes our relationship with your industry and association seriously. We will continue to advise, educate and work towards realistic solutions.

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