In an increasingly litigious business environment, it is vital that contract cleaners, and other service providers, work closely with their insurance brokers and legal people to ensure they do not leave their firms vulnerable to patently unfair public liability (PL) claims. That was a clear message imparted at a recent industry meeting.
Conducted in response to its members’ growing concerns, the Building Service Contractors Association of Australia NSW division held a ‘Public Liability indemnity clauses: what is your exposure?’ forum at the Roseville Golf Club, Sydney, on 14th March.
An expert speaker panel comprised CRM Brokers’ Damien Coorey, Workplace Advisory Group’s Mark Diamond and A R Conolly & Company’s Liz Ramsay. Each gave an individual presentation and they were followed by questions from the floor.
“Ideally, we need to leave here today with an action plan,” said BSCAA NSW president Rick Gesterkamp, who introduced the speakers and directed the forum. In fact, a number of initiatives were mooted and some agreed on.
They included exploring a ‘standard’ PL contract that would be of most benefit to smaller contractors; working more closely with the Property Council of Australia and the Shopping Centre Council of Australia; and undertaking effective public relations and communications with members and the industry.
With more than 30 years’ cleaning industry experience, Diamond took his audience through recent PL history whereby the burden of PL costs has been moved from building owners and managers to BSCs. He concluded that, “cleaning contractors have copped this outrageous shift” due to traditional deference to their client body.
He also noted that some contractors void their PL cover by failing to notify their insurance company of indemnities to which they have agreed.
Coorey, with a long history of working closely with the cleaning industry and the BSCAA in particular, was well equipped to discuss a number of topics and issues including indemnities in general, policy wording and risk management. He covered common contractual requests, indemnity clauses, and common pitfalls.
“You must obtain legal advice on all insurance and indemnity clauses when considering a client’s ‘standard’ contract,” Coorey warned. He emphasised that standard contracts should not simply be re-drafted without taking legal advice.
Experienced personal injury lawyer Ramsay concurred saying contract cleaners must get legal advice on PL and that indemnity clauses should reflect accurately the site and tasks to which the contract applies.
“There should be a team approach to dealing with indemnity clauses with negotiations taking place between the contractor, insurance broker and insurance company,” Ramsay stated. “Maintain communications with insurance companies as site contracts change,” she added.
Importantly, Ramsay pointed to the common law and noted that contract cleaners cannot be liable for other service providers’ faults.
“There is no magic to indemnity clauses. If the wording doesn’t seem to make sense then it probably doesn’t. Terms such as ‘connected with’ or ‘arising from’ are too broad; ‘caused by’ is direct and appropriate,” Ramsay explained.
In his summary at the forum’s conclusion, Gesterkamp stated, “BSCAA members need to take a risk management approach to this issue and ensure that they protect their business from legal claims that could bankrupt them.”
Gesterkamp committed the BSCAA NSW division to following up with an action plan addressing PL concerns with all stakeholders.
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