Does my insurance company pay, or do I, if I am sued? The short answer is - that depends on the extent and the breadth of your insurance cover.
While standard house and car insurance includes some personal liability cover, given the increasing value of liability awards in South African courts purchasing extended liability cover is probably a good idea.
“People are generally unaware of whether, or to what extent, they are covered for personal liability” says Gari Dombo, Managing Director, Alexander Forbes Insurance.
He says that when people buy insurance for their house, their car or their possessions they are actually, often unbeknownst them, also purchasing personal liability cover as part of these standard personal policies.
Things that are covered if you are sued
motor liability is included in the motor section;
property owners liability in the buildings section;
tenants liability and general liability (home and away risks) in the contents section
Since, however, each insurer compartmentalises things differently “it is often difficult to find where your liability cover appears in the policy wording and what the particular exclusions are” says Dombo.
That said, most policies generally cover you and your immediate family for accidental damage to physical property as well as accidentally causing bodily injury or illness to a third party.
However, common exclusions, for which we might be sued
the use of firearms
liability arising from your employment, business or profession
compensation stipulated by vehicle insurance legislation
gradual pollution, like contaminating a neighbour's bore hole water
liability accepted through contract(except if such liability would have existed anyway)
As such, Extended Personal Liability (sometimes called PLIP ) cover is recommended by most insurers to insure that “the patchy quilt of partial liability cover provided by your other policies is turned into comprehensive personal liability cover” says Dombo.
Extended Personal Liability cover substantially increases the amount for which you are covered for personal liability. The extra cover offered can be as high as R50 million.
Furthermore, Extended Personal Liability cover can only be purchased once you already have the various underlying covers in place. As such, it really is an extension of existing cover, not a replacement.
Unlike your existing cover, Extended Personal Liability is not limited to bodily injury or loss or damage to physical property. It also covers wrongful advice and damage to reputation or defamation not generally covered by traditional policies.
Examples of incidents - for which we might be sued - included in wider cover:
giving an acquaintance casual financial advice in your personal capacity which causes loss to the other person;
saying something defamatory about the nursery school teacher causing parents to take their children out of the school, resulting in the nursery school suing you for loss of business and the teacher suing you for reputational damage;
causing a third party to be wrongfully arrested;
injuring someone while travelling overseas in a hired car
gradual pollution (usually limited to R250 000).
These examples illustrate just how much we are exposed to liability and for which we are probably not covered by our existing policies.
Many insurers may increase the limit of cover without increasing its scope. Is is essential that people should ask their insurer or broker whether their Extended Liability includes broader than primary cover.
