GENERAL QUESTIONS AND ANSWERS IRO THE OCCUPATIONAL HEALTH AND SAFETY INSURANCE (OHSI) COVER:
Q: What prompted the requirement for specific Occupational Health and Safety Insurance (OHSI) cover?
A: The amendments to the OCCUPATIONAL HEALTH AND SAFETY ACT (No 85 of 1993) (OHS Act) became an Act on 10 February 2014.
Q: So is this not a made up story to sell a policy?
A: Unfortunately not, this is a real piece of Legislation which needs to be adhered to and has new risks for property owners. This new Regulation forms part of the bigger OHS Act. It needs to be read in the context of the whole Act and not just as a Regulation which can stand alone. It integrates with the requirements of the Act as a whole.
Q: What part of this new change is then relevant to me as a property owner?
A: I need to answer this in a few points, as there is not a simple answer.
1. The only buildings excluded from the Act are single storey private dwellings which are occupied by the owners.
The Act includes the following buildings in its applicable definitions:
1.1. Double storey private residences, whether occupied by the owner or not.
1.2. Any dwelling rented out for gain
1.3. Any other building not excluded, which means any other building in SA
2. The Act now includes renovation and repair as part of “construction work” along with the rest of what we know as construction activities.
This implies that an electrician replacing a light fitting because is considered to be a contractor.
3. All relevant property owners now have a legal duty to provide a safe working environment for any and all Contractors working on their property.
Q: Is this it, all the changes? Why then the fuss?
A: No this is not it. Wait there is always more. The new Regulation is aligned to the Consumer Protection Act (CPA) in that it allows for anybody in the property chain to be sued. A third party who suffers a loss can now claim against any one of or all of; the Property Owners or their Company, a Body Corporate and all owners, the Managing Agent or any tenant involved.
Q: But what is this loss exactly?
A: A loss referred to is where any tangible property is damaged, or where there is any bodily harm to a person through the owner’s negligence.
Think for a moment of a couple arriving at a property where a painting contractor is working. He and the ladder falls over and with it a bucket of white paint which lands on their red car below. The red car is now spotted with white paint. The falling ladder lands on the girlfriend breaking her arms as she tried to stop the ladder falling over.
Q: Yes that is sad but I do not need to worry as my liabilities are insured.
A: That may be true and correct and we do not for one moment say that your current insurance will not cover you at all. What needs to be taken into account is whether there is a right in common law or delict¹ where you could be held liable and your policy will not respond?
¹“Delict is the circumstances in which one person can claim compensation from another for harm that has been suffered.”
Q: Why will my policy not respond?
A: Many policies in the market exclude or limit all claims resulting from contractors. This is a common exclusion and is found in personal lines wordings which cover your house or, specialised policy wordings for property owners. So these wordings specifically exclude or limit a liability claim made against you resulting from any contractor on the premises.
Q: But I have heard about a thing called the NEXUS². What is that?
A: Good question. In layman’s terms this means that for there to be delict¹, which is how a civil claim is made under a policy; there has to be a direct link between the wrongdoer and the plaintiff. You cannot just sue anyone for wrong doing. They need to prove that they acted negligently and that is what caused their loss or injury. It is perhaps important to note that most Commercial and 40% + of Sectional Title properties are tenanted which has an important impact on the Nexus of the parties involved.
²”Nexus; a connection or series of connections linking two or more things” for example the Insurance Company and the Insured as defined in the policy share a nexus.
Q: I understand sort of. That means that the property owner needs to have done something wrong to the person who claims from him for a loss?
A: That is 100% correct under delict¹, but this new Act as pointed out is aligned to the CPA; it also allows for the plaintiff who claims for a loss as a result of negligence to now claim from any or all of; the Property Owners, their Company or Managing Agent, even if they did not know of the event that lead to the injury.
It is important to note that the Managing Agent is an extension of the owner through the contract which they have both agreed to.
Q: Please make this clear to me through an example as this sounds to me to be the crux of the matter.
A: Let’s say that I am a tenant and I decide to call in an electrician to change my light fitting. The electrician then falls through the ceiling and now wants to claim for the injury/loss suffered because in his opinion or that of his attorneys that a safe working environment was not provided in terms of the Regulations. They now sue the Tennant and also all of the Property Owners, their Property Owning entity as well as the Managing Agent this despite the fact that they were all totally oblivious to his presence on the property.
Before the Regulation changes, litigating against the latter three parties was not possible. This is now a reality due to the changes in the Act.
Q: Yes I understand, but my insurance will cover me, will it not?
A: No this is where the problem comes in. Some policies offer no or limited cover for any contract work. In addition for liability covers to come into play the loss needs to happen under the care custody and or control (CCC) or Nexus² Rule of either the Property Owners, their Property Owning entity or their Agent; in this case the Managing Agent. If they were all oblivious to the presence of the electrician then it will not be possible for their existing policy to respond. Cover needs to follow the CCC or Nexus Rule. This is where current policies will now fall short.
Q: This is serious, but I have also heard that there needs to be a Health and Safety File. What impact will that have on the claim?
A: Again a very good question as there is a statutory requirement for the property owner to provide a safe working environment for any contractor on the property. The best way to do this is to make this file compulsory and available to all contractors on the premises. So even the electrician who will be changing the light fitting must see this file.
If the file or relevant information was not provided then another dimension is added to the claim. It could then become a claim for negligence against all the Directors and Officers of the Property Owning entity in their personal capacities or as the Directors for Professional Negligence. This would include the Trustees Bodies Corporate. These risks are not generally covered under any property insurance policies apart from some limited Trustees Indemnity cover.
You do get specialised policies which do provide this type of cover which are expensive, but then covers for these types of claim are generally excluded in terms of their wordings where there is no Nexus.
Q: Will your OHSI wording cover us for all of this?
A: Yes it will as it is a cradle to grave cover and it also automatically includes cover for the Property Owner, the Property Owning entity and the Managing Agent where they act on behalf of the Property Owner. They are all included as being part of the named insured. The tenants cover if there is any cannot be relied on to protect the owners. Deepest pockets are likely to be the target of any claim.
Q: Have you tested this against any legal minds or anybody who are in the industry?
A: Oh yes certainly. The legal framework and detail of the Act was explained to us by one of the Councillors who was tasked to set this Act up. As a Professional registered under the Act, he was more than qualified to guide us through the new insurance exposures contained in the Act.
The implications of the Act have been tested by various legal experts, including Advocates and Attorneys who specialises in OHS Act matters. Some of these opinions are available, as public documents.