Fleet and liability insurance go together like bread and butter

“Basically there are two types of insurance,” says NTI’s National Liability Product Manager Alex Sawtell. 

“One is insurance on material damage to an item. That might be someone who has an accident and damages their truck. The other is third-party liability, which covers injury or damage to a third party.”

Liability insurance protects you against claims for injury or damage caused by you or your employees. Fleet cover protects you against claims for injury or damage to your vehicles or drivers. 

Vehicles versus tools

Fleet policies and individual motor policies only cover the specified vehicles. Liability policies are much broader, covering all your business activities regardless of how the claim arises. 

So you’re covered if one of your team is digging with a shovel and cuts an internet cable, breaks a water pipe or injures a member of the public. Liability insurance also covers non-registered vehicles used as tools, such as diggers and forklifts.

For insurance purposes, which policy responds to an incident depends on what the plant was doing. For example, while a street sweeper is driving to a worksite, it’s a vehicle (covered by your fleet policy). But as soon as you turn on the sweepers and begin work, it’s a tool (covered by your liability policy). 

That’s a simple example, but things can get murky, especially when more than one insurer is involved. That’s why Alex recommends keeping all your cover with a single insurer – it makes things much simpler if you have to lodge a claim.

Keep it simple

Say a third party is unloading goods from your trailer, and in the course of unloading they injure another party. If they’re directly in the course of unloading, your fleet policy applies. If they’ve finished unloading and were moving the goods to another location, your liability policy applies. 

It’s a grey area, and it’s not hard to imagine disputes between insurers around whose policy should respond. But there’s a simple solution, as Alex explains:

“It’s in those grey areas where having both policies with the one insurer really shines, because there’s no argument between, say, NTI and another insurer to say, ‘Well, no, it happened at this stage or that stage of the unloading process.’

“We just accept that there’s a claim that’s covered by one of our policies. We’ll determine which is the most appropriate policy and then we pay the claim.”

It saves time and hassle and means you can get back to work sooner rather than later. It can also avoid problems where there might be a gap between what your compulsory third party (CTP) policy covers and what your other policies cover.

Brooke Caldwell, NTI’s National Heavy Motor Product Manager – Fleet, agrees: “If we have a fleet policy, it will cover off property damage to other parties as well as personal injuries to other parties when it’s from a registered motor vehicle. An unregistered motor vehicle [like a bobcat or a forklift] would fall under liability.

“That works differently depending on how the CTP works and how different policies are structured from different insurers. The way NTI’s liability and fleet policies work together is we try to eliminate as many gaps as possible other than what your CTP might cover.”

Small gap, big difference

Small gaps can make a big difference when you’re making a claim. NTI’s Marie Moar, Claims Technical & Relationship Manager for Queensland, recalls a case where NTI insured a fleet operator that subcontracted its trucks and drivers.

“The drivers owned their trucks, but they had the carrier’s logos, and they wore its uniform. The fleet operator owned the trailers, and one of the subcontractors happened to be on a trailer when it failed, and he was thrown.

“We had the public liability policy for this client, which doesn’t cover those kinds of claims. 

“The carrier had a general liability policy, but it specifically excluded liability for personal injury arising from the use of a motor vehicle. So he was excluded under that policy

“The motor policy was with another provider, but there was a ‘CTP gap’. So neither of those covered the injury either. They were effectively uninsured – a very bad result.”

Ten million dollar baby

Liability claims can run to tens of millions of dollars, so you want to be sure you have enough cover to fully protect your business. Alex cites the example of a worker who asked a friend to help move some containers. The friend fell from a container while a forklift was shifting it, and ended up a quadriplegic. 

“A claim like that where somebody loses their ability to work and needs a heap of medical care for the rest of their life, modifications to their home … it ended up being around $11 million.”

And even that amount can be small compared to the costs that can arise from other mistakes. Consider what might happen if a load of concrete intended for a pedestrian area is delivered to the wrong destination and is used for foundations. Remediation could include demolition, site recovery, material costs, lost income, extra wages and more. On a major site, such costs could run into the tens of millions – not a sum you’d want to face without an insurer at your back.

For Alex, the solution is simple: get all your insurance with the one provider. In NTI’s case, when a customer has an accident, and all their policies are with us, we simply pay the claim and get our customer back on the road. 

“We want to reward our customers for their loyalty by being loyal in return,” he says. “We can sort out the internal accounting later.” 

This blog is a guide only and does not contain a definitive list of regulatory requirements which you must meet as a business owner. Businesses are required to comply with all laws, regulations and codes of practice by identifying their risks, and develop and implement control measures tailored to their circumstances, and you must seek independent advice to assess your circumstances.