Waivers - Be Careful What You Sign
Signing waivers and agreements to hold others harmless can significantly affect your insurance coverage. Many New Zealand businesses are currently being forced to accept these conditions, particularly in the economic climate whereby many are just grateful to get the work; however, unwittingly, by agreeing to them, you can be eroding your position in unforeseen ways, or worse, you can be invalidating the insurance you are relying on if things go wrong. Here’s a detailed look at how waivers can affect different types of insurance.
Understanding Waivers
A waiver is a legal document where you voluntarily relinquish certain rights or claims. In many cases, waivers limit liability for businesses or individuals providing services or activities that carry inherent risks, such as tradesmen, contractors, and providers of recreational activities. However, many corporates will also demand all those they do business with sign terms and conditions, which incorporate limitations of the corporate's liability. In this scenario, the contractor is often a sole trader reliant on the work for survival, whereas the corporation could contract any contractor at their discretion. The negotiating position of both parties is rarely equal.
Impact on Liability Insurance
For businesses/principals, waivers can be crucial to risk deferment. By having contractors or suppliers sign waivers, the company can reduce the likelihood of potential liability claims against them or be held to account for their actions and the damage that they have caused. However, suppose you are the contractor or supplier, with your or your insurer’s ability to recover from an at-fault principal. In that case, your risk profile significantly increases, which may be an additional exposure your insurer isn’t willing to cover.
Impact on Property Insurance
Risking your plant, motor vehicles or buildings to a party that holds no, or significantly limited, responsibility if they damage them, logically, should be avoided and, again, may not be a risk that your insurer is willing to underwrite. At a minimum, best practice would suggest it’s critical to declare the rights you have waived to your insurer. Even if it is a risk they are willing to accept, non-disclosure of what would be deemed material facts to the terms on which they assume the risk, of which they have not been informed, so it would be an easy opportunity to decline future claims.
Impact on Travel Insurance
Travel insurance policies generally include coverage for accidents and injuries during your trip. Signing a waiver for an activity while travelling could affect your travel insurance coverage directly. So, it’s crucial to read the fine print of your travel insurance policy to understand any exclusions or limitations related to high-risk activities (such as motor scooters and mopeds), and most importantly, be aware that when you agree to waive another party’s liability, you are likely to be insuring yourself for that activity.
Legal Considerations
The enforceability of waivers can vary widely. Some jurisdictions have strict rules about what can and cannot be waived. If you have concerns about signing a waiver, it’s essential to understand the legal context in your area and consult with a legal professional.
Best Practices
Read Carefully: Always read the waiver thoroughly before signing. Understand what rights you are relinquishing.
Consult a Professional: If you’re unsure about the implications of a waiver, consult with a legal or insurance professional.
Inform Your Insurer: If you’re in a situation where agreeing to a hold harmless condition or waiver of liability seems unavoidable, inform your insurer before you decide to do anything. As has been previously stated, waiving your rights does become material to your insurance coverage, and your provider will need to determine if it is or is not something they are willing to underwrite, and if so, what conditions and provisos they will apply. Knowing this, you can make an informed choice.
In summary, while signing waivers can limit your ability to pursue certain claims, it can affect your insurance coverage directly. However, it’s essential to understand the specific terms of the waiver and how it might interact with your insurance policies. Always approach waivers with caution and seek professional advice if needed.
If you have any questions, contact us at [email protected], 07 903 5000 or get in touch with your broker directly.
