Being a mining contractor can be a risky business. Below are some tips on how to best manage your insurance and risks when providing services as a mining contractor.
1. Ensure your business activities are correctly disclosed to your Insurer
One of the most common mistakes we see mining contractors make is not correctly disclosing all of their business activities. This can be disastrous in the event of a major claim which arises from activities that have not been properly disclosed to your insurers.
For example, you may be an engineering and maintenance company servicing the mining industry. In addition, you may do some marine engineering. Business activities in the marine industry are often a decline risk for many general insurers. If your insurance policy does not specifically list all activities including Marine Engineering, you run a very big risk that any claim which arises from this activity will be excluded.
Therefore, it is important you work with your insurance broker to ensure all your business activities are correctly disclosed to your insurer and are noted on your insurance policy documents.
2. Contractual Liability Review Process
Any agreement that you enter with a mining company will usually obtain clauses which result in your business assuming liability under contract. This means that you are agreeing to be contractually liable rather than legally liable as result of your negligence.
It is important that any contract you propose to work under is reviewed by a qualified lawyer who specialises in contractual liability. Crucial Insurance offers our clients a contractual liability review service via Meridian Lawyers. This review service specifically addresses the indemnity and insurance clauses relating to contractual liability.
It is a valuable service which helps you understand the extent of liability being assumed under contract and highlights the extent to which your insurance provides back to back indemnity under the terms and conditions of your insurance policy.
3. Obtaining insurance for liability assumed under contract
Most Public & Product Liability policies specifically exclude any liability which is assumed under contract. As an insured you may be able to obtain coverage under your Liability Insurance if your insurer agrees to provide contractual liability coverage in writing.
In most cases, an insurer will agree on a contract by contract basis depending on the liabilities you are being asked to assume. If there is a specific contract which you often work under you can apply to your insurer to have the contract noted as a “Designated Contract” under your relevant insurance policy. This means any work performed under the Designated Contract will be covered for liabilities which are assumed under contract as opposed to strict negligence.
Before approaching your insurer, it is strongly recommended the contract is reviewed by a specialist lawyer. Any onerous contract terms should be negotiated out where possible prior to presenting the contract to your insurers.
4. Provision of Professional Services for a fee
If your business provides any services for a fee then you may be providing what is deemed a “Professional Service”. For example, many mining contractors can provide pre-inspection or repair reports for a fee. Crack testing reports are an example of the type of advice which can be provided for a fee without any manual work being done.
Many Public Liability policies specifically exclude Professional Liability which is deemed as any advice provided for a fee. If your business does provide fees for services, then you will need to speak to your insurance broker about a Professional Indemnity policy to provide coverage for these activities.
5. Property in Care, Custody & Control
A Public Liability policy will limit coverage for loss or damage to property not owned by you that you have in your care, custody and control. For a mining contractor working on expensive mining equipment, this can often mean machinery worth hundreds of thousands of dollars and even into the millions.
Standard Public Liability policies impose a cap on cover for claims resulting from property in your care to $250,000. Therefore, it is essential that you understand the amount of risk your business has when being in control of customers property and equipment.
If you are responsible for customer’s property and equipment with value over $250,000, you should speak to your insurance broker about obtaining increased coverage for Property in Care, Custody and Control.
6. Sub-Contractors Register
One of the best ways you can manage your risks is to be vigilant about managing sub-contractors who perform work on your behalf. This includes:
- Maintaining an up to date register of your sub-contractors.
- Having a Master Sub-contractor Agreement which stipulates the following:
- Type of Insurance each contractor must have
- The minimum sum insured for each type of insurance
- The additional clauses which are required for each type of insurance
- Ensure that all sub-contractors maintain a minimum level of insurance as per the Master Sub-Contractor Agreement
- Ensuring your sub-contractors having liability insurance that includes the following clauses:
- Principals’ Indemnity (extending coverage to your business as the principal for their activities)
- Cross Liability
- Waiver of Subrogation
- Periodically review all sub-contractors have up to date insurance with relevant certificates of currency on file for each required class of insurance.
The most important step is to take the time to understand the risks which are unique to your business. We strongly recommend taking the time to invest in a comprehensive Risk Review of your business so you can properly understand your risks and the insurance protection which is right for you.
Mining Contractors provide a wide range of services to a vast Australian mining industry. There is no one size fits all approach.
Crucial Insurance and Risk Advisors and experts in helping Mining Contractors understand their risks and exposure and designing specific insurance solutions which provide protection that will be there when you need it most.
If you would like a Crucial Insurance Risk Review that contact us today for a no obligation discussion on how we can help you protect your mining contractor business.
This article was written by Tony Venning,
Managing Director at Crucial Insurance and Risk Advisors.
For further information or comment please email firstname.lastname@example.org.
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