The devastating gas explosion that rocked a quiet Christchurch street earlier this year made me think about Public Liability insurance. Yeah I know that sounds a bit weird. My first thoughts were obviously with the family and the neighbours affected by the blast but being a typical lawyer I couldn't help wonder if the gas contractor who called to the property the day before had Public Liability insurance. 

Six people were injured and it was a miracle nobody died considering the force of the explosion. Police and WorkSafe investigations into what happened are ongoing. Regardless of the outcome, I sincerely hope the contractor had Public Liability insurance. 

Most New Zealand businesses have some form of Public Liability insurance but they tend to sign the application form and chuck the policy in a drawer where it gathers dust. Businesses often forget it’s the insured parties’ responsibility to ensure they have the right cover in place. It is that old cliché of ‘buyer beware’. When you’re getting insurance it’s up to you to make sure you have enough cover.

Businesses need to insure themselves for an amount that is sufficient for the risk that could arise out of the work that they are doing. The most common level of cover for Public Liability insurance seems to be around $1 million but a million bucks wouldn't go anywhere near to covering the amount of damage caused by the explosion in Christchurch, for example. 

Ask yourself this question: ‘If something happened, would the amount my business is insured for be sufficient to pay what I need to pay?’ That is what Public Liability insurance is for. It is to cover any damage caused to the general public by the business and/or its employees. Insurance pays for damage that the business owner would otherwise be liable for.

Insurance brokers can give you advice on the type of cover you need but your accountant and lawyer are well placed to understand the scale of the business activity and how much you should be covered for.

Feedback, comments and questions are always welcomed – please feel free to e-mail me on [email protected] or to book an appointment online visit: http://aspiringlaw.co.nz/Booking/.

Janice Hughes is a Director of, and senior legal adviser at, Aspiring Law. Please remember, this information is designed as a general guide, and should not replace specific legal advice on a particular issue.