Suppliers should re-assess risk, liability, insurance

Insurance clients should re-assess their cover in terms of Consumer Protection Act and Companies Act compliance and liabilities, warns a short term insurer.

The Consumer Protection Act focuses on consumer rights, like equality in the market, right to privacy, choice, and information, honest marketing, fair contracts, value and quality. Protection of these rights is ensured by compalints, investigations and court fines.

Suppliers are broadly defined as any person who provides a service or goods to the public. Suppliers must act honesty, reasonably and fairly in transactions and interaction with clients and consumers.

“Irrespective of size or scope of business, suppliers have to offer quality, guarantees and packaging where relevant. Compliance to the Act goes far beyond mere disclosure of ingredients, for example”, warns PSG Konsult Short-term insurance support director, Vic Saunders.

Emphasis is placed on declaring full price, information in understandable language, disclosure of intermediaries, deliverers and installers, and even availability of a product.

Liability is insurable

Suppliers must take reasonable precautions, but could, and should also, insure themselves against some of the consequences of this new liability.

“Many of the risks of suppliers are insurable. The biggest single risk is liability. There are a wide range of cover options available against events for which you can be held liable”, said PSG Konsult short-term insurance support director, Vic Saunders.

General Liability cover, that forms a standard part of your policy, is not always sufficient. Business owners in manufacturing, construction and process industries may consider more specialised liability cover, such as legal liability, and defective workmanship.

Product liability is very important in manufacturing and retail, should your product have to be recalled as a result of a manufacturer’s fault. Consider also Passenger, Professional and Employers Liability cover.

“Since the current available insurance product range is diverse, and niche market orientated, risk managers and quality managers should consult a professional adviser.”

Companies Act makes individuals liable

In respect of the Companies Act, pay special attention to directors and officers liability cover. The definition in the new revised Companies Act of whom could be held liable in a business, has been extended to include individuals in their private capacity as directors or officers.

“Individuals could be held liable for negligence, faults or omissions, or breach of contract. These claims could amount to millions and ruin a business. Extended cover can indemnify you against legal costs, fines imposed by a court and in some instances even include settlements.”

In current poor economic circumstances, it would be hard for a business to recover after a large loss without insurance cover. Should the premium get too high, consider greater voluntary excesses to reduce the premium.

Insurable risk assessment

“Re-assess risks in your industry and business, and make sure you have cover for the largest risks. Which risks are your customers exposed to? Is there a chance of clients or members of the public being killed, injured or getting ill?

“Adjust your risk profile, priorities, risk management, liabililties, and update your cover.”

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