Legally Liable
Sydney Morning Herald
Wednesday November 20, 1991
WHY do most Australians rush to help roadside victims of accidents or assaults (after the event) and most Americans continue to look the other way?Not because Americans are naturally more heartless than Australians but because in the litigious US the victims of hit-and-run drivers or muggers who can't be found are very likely to sue helpers who have obligingly identified themselves to police.
This situation hasn't yet become a major problem in Australia but there are many occasions in everyday life where your savings could be wiped out by a successful damages claim against you. All these hazards can be covered by insurance, often for a very modest premium; but, as Mr Christopher Henri, NSW manager of the Insurance Council of Australia (ICA), points out, "all too often under-insurance or no insurance proves tragic for the victims of disaster".
Most of us interpret these disasters - injury or property loss and damage -as affecting ourselves and our families but we also can be ruined by disasters that affect other people if it can be shown we were responsible for them. These are often called "third party" risks though, in most cases, they seem to be second party in that the claimant is someone we directly, and not indirectly, impact upon. (Actually, the second party is your insurer, who compensates the third.)
They also come under the broad umbrella of "liability" which, in its narrowest legal definition, presupposes "negligence" by the defendant or respondent and "pecuniary loss" by the plaintiff or claimant. In our increasingly dense legislative jungle, however, the most conscientious citizens can inadvertently breach their obligations and be successfully sued, while plaintiffs may advance "impaired quality of life" as well as, or instead of, financial loss.
As the insurance industry is very competitive, don't accept the first deal on offer.
When money is tight, you may think first of price: premiums and "excess"(the amount of any claim you must pay yourself). But it's important to remember the advice of NZI Insurance Australia: "Be prepared to pay for quality cover supported by quality service."
Most people don't really insure against mishaps but against disasters. Especially in the area of liability, cover is more important than cost. It's thus imperative to read the small print and note the exclusions or omissions. Another insurer may give you the protection you need, or for an extra charge you usually can get a standard policy "endorsed" (an exclusion struck out or an extension of cover added).
The small print shows that your protection could vanish if, in a spontaneous surge of sympathy for the victim(s), you admit liability before consulting your insurer. In that case, your policy may be cancelled or a claim disallowed, leaving you to be sued by the victim(s). Because of the negligence implication in liability, it follows that you won't be covered if you intentionally cause injury or damage. And there normally are other exclusions for circumstances that would facilitate a disaster.
The best-known third party risk is covered by motorists' compulsory third party insurance (CTP), which involves personal injury to pedestrians, passengers and occupants of other vehicles, though not the driver of the at-fault vehicle. This type of policy is exceptional, not only by being compulsory, but also in that it's guaranteed renewable so long as your vehicle remains registered, whatever your driving record and claims history. Further, admission of liability is not only possible but implicit because if the accident were caused by another vehicle everyone but its driver would claim against its CTP. And where the at-fault vehicle has no CTP or can't be traced, victims can claim against a "nominal defendant", now administered by the Motor Accidents Authority.
Until recent years, you automatically acquired CTP on registration by taking your vehicle to the nearest motor registry of the Roads and Traffic Authority, together with a "pink slip" from your local garage certifying roadworthiness if it was more than three years old. At first, only the Government Insurance Office (GIO) was permitted to handle this business, but then a computer selected one out of 13 eligible companies to be your insurer.
Since July 1, the procedure has changed. You now choose your own insurer(out of 14) and acquire from it a stamped "green slip" for CTP, which you also take to the motor registry. Note that your CTP must match the period of registration.
Touring caravans and trailers also must be registered for the road. If the van has no brakes and weighs less than 250 kilograms, it requires no pink slip. If it's unmotorised, it requires no green slip. While it's on the road, moving or stationary, and attached to its towing car, it's covered by the latter's CTP.
The ICA points out that when a van is detached from your car and parked on or outside your property it's not covered by CTP. And, as a vehicle, it's a standard exclusion from your home building and contents policies. If people were injured by it (for example, if it rolled away or if children who were playing on it fell off), they or the nominal defendant could claim damages from you. To protect yourself, you need an endorsement on one or more of your existing policies or separate public liability insurance for it.
Perhaps you think that if you have CTP, don't own a van and have an old jalopy you're happy to write off, you have no worries on the road. But what if your jalopy ran into a Rolls-Royce or the front window of an antique shop?
This hazard can be covered by third party property damage insurance (TPPD)which can be taken out separately or as part of "comprehensive" car insurance(which also covers damage to your vehicle). Cover is commonly available up to$20 million for any one accident and is well worth the modest premium involved. There is, by the way, a proposal - which the insurance industry has so far successfully resisted - that TPPD be made compulsory.
A higher premium and/or excess may be imposed for the age (under 25) and inexperience (under two years) of the driver, not the owner, of the vehicle if driven with the insured's consent. Commonly there's a basic excess of $300 plus a similar "age excess". A policy or claim is invalidated if the driver approved by the insured is unlicensed, "under the influence of intoxicating liquor or of any drug" or committing some other offence.
All forms of car insurance are confined to Australia. In the unlikely event you wish to drive your car overseas, you must obtain special insurance in every country or bloc (such as the European Community) you drive through. Even within Australia there are snags. In certain circumstances your comprehensive policy is valid for a "substitute" car but that car isn't covered by either your own car insurance or TPPD.
If you hire a car inside or outside Australia, don't simply assume it has CTP and TPPD. Check.
Boats differ from cars in that they may not need to be registered, their drivers may not need to be licensed and, in any case CTP, is not required.
Registration by the Maritime Services Board is required if a boat is permanently moored, capable of travelling at more than 10 knots, or is more than nine metres in length. Drivers, who can be as young as 12, must be licensed for power boats capable of more than 10 knots.
Many boat owners have erroneously believed that registration included CTP, though the new procedure for cars may demonstrate that registration and insurance are separate operations. Insurance for third party injury and property damage, each up to $5 million, can be obtained as part of comprehensive boat insurance (including own-vessel loss or damage), and is certainly advisable on our increasingly crowded waterways. Water skiers, boats capable of more than 50 knots and racing boats require additional cover.
Travellers should obtain Australian and especially international travel insurance. Not only will this protect you against loss of luggage, overseas medical expenses and other hazards, but personal liability for injury or damage up to $250,000 is standard cover. The Australian Federation of Travel Agents recommends CU Travel and General Insurance, part of the Commercial Union group, but individual agents such as IOOF Travel also may use other insurers.
Though often overlooked, the liability cover in your household insurance policy well may be the most valuable component. "Household" or "home" policies may be for the building, its contents or both; while the liability offered -though often undifferentiated - is "public" for the building and "personal"for the contents policy.
Both cover damage to the possessions or injury to the person of anyone but yourself, family and employees - with certain exclusions such as treelopping or the use of motor vehicles. Both are set at a minimum of $2 million cover under the Insurance Contracts Act, though most companies now offer $5 million
Further, both clearly involve the element of negligence. So don't tell a visiting friend who falls down your stairs: "Don't worry; you're covered by my insurance." Mr Henri warns: "In a litigious society, people assume automatically there's a deep-pocket syndrome that covers every accident. A liability policy only pays when the insured is found guilty of an act of negligence."
The important difference between "public" and "personal" liability is that the former applies to victims on the premises (home and grounds), while the latter applies to victims outside the premises and includes attacks by your animals.
A common mistake is to assume that excluded "employees" are domestic staff, and that most ordinary householders have no worries. In fact, anyone who does work on your premises could be regarded as your employee. It's important, therefore, to get any contractor for repairs or alterations to your property to note on the contract or written quotation that all workers are covered by workers' compensation.
If you engage casual cleaners, gardeners or "handymen", to protect yourself against lawsuits in the event of injury you should take out a domestic workers' compensation policy. The NRMA doesn't offer this; the GIO does. It costs only $30 a year by itself and $20 when attached to a contents policy.
Under the Strata Titles Act, the body corporate of a unit block is required to take out public liability insurance of at least $5 million, together with domestic workers' compensation insurance. These policies apply only to the common property. Owners of strata property get public liability cover inside their units through their contents policies.
If your church, club, social group or other body organises sporting events, it and you should be covered for sporting injuries to the participants. This can be arranged through the Workcover Authority of NSW. For those under 18 it costs 8c per person per year for athletics and $2.90 for rugby league. Over 18 the respective premiums are $1.40 and $11.50. Visiting teams can be covered at special daily rates.
© 1991 Sydney Morning Herald