Insurance for forest and rural fire liabilities
Jeremy Manks, New Zealand Tree Grower February 2015.
All individuals or businesses are exposed to liability for damage or personal injury caused by fire. However the Forest and Rural Fires Act imposes extra liabilities within rural fire districts. When there has been any damage, the person who accepts responsibility, or who is determined to be responsible for a fire, will be liable for −
- The costs of control, restriction, suppression or extinction of the fire
- Costs for safeguarding property from damage by the fire
- Any loss in value of damaged property and consequential losses or damage.
These are the statutory liabilities and may not be the same as full liability if it all comes to a court case. The person responsible does not need to have been negligent to be liable under the Forest and Rural Fires Act. For example, even if you have a fire permit and have taken all reasonable precautions and a fire spreads out of control, it is probable that costs would be recovered from you. Other examples of responsibility are picnic fires or an accidental spark from a grass mower.
Some of you may remember the results of a forest fire in the Nelson region when couple eventually had to sell their property to cover costs and damages to a forest. The fire was judged to have been caused when ashes which had been put outside from a domestic fire were fanned by the wind.
The district fire authority may make a charge on people who own land in the district or on any person who had property in the district at the time of a fire to cover the cost of firefighting. There are some exceptions for residential and farm land and buildings. If you have public liability insurance this levy is covered. However there is also a levy which may be imposed by the district fire authority to cover general expenditure. This is more in the way of a rate and is not covered by insurance.
Public liability insurance
To cover the liabilities mentioned above, as well as other general liabilities, all businesses should have public liability insurance. This will cover the legal liability for damages resulting from a fire. For the statutory liabilities imposed under the Forest and Rural Fires Act, as distinct from a general legal liability, it is usual for the policy to automatically include a Forest and Rural Fires Act extension. The extension will probably have a lower sum insured of between $100,000 and $250,000. If you own land, ensure you have the extension and that the amount is adequate. You can always request a higher limit if you have any concerns.
It is probable that any policy insuring your plantation against fire will have a requirement that contractors working on your property carry insurance cover for liability. Whatever the situation, a contractor will not automatically have the benefit of your public liability insurance cover, so it pays to have this aspect sorted before a contractor comes on to your property to work.
An individual with household personal effects insurance will probably have some protection under the personal liability extension in that type of policy. This should also include protection for the extra liabilities imposed under the Forest and Rural Fires Act, but you should check because policies vary.
Fire precautions and cover
The Forest and Rural Fires Act contains stipulations regarding lighting, supervision and prevention of fires. With the exception of farm vehicles, it is an offence when not on a public road to operate most types of mechanical vehicles or standing engines in a fire district without the written consent of a fire officer. Timber cutting machinery must be kept in good condition.
In addition an insurance policy may have further stipulations for fires in the open air. Examples are −
- Fires must be in a cleared area and at a distance of at least nine metres from any property
- Fires not to be left unattended at any time
- A suitable fire extinguisher must be kept available for immediate use
- Fires must be extinguished at least one hour before you leave the site.
As mentioned above, a forestry policy taken out by a forest owner will usually have a condition that contractors working on their land carry minimum levels of public liability as well as Forest and Rural Fires Act cover. Breach of any of the stipulations outlined above could exclude protection from insurance.You should always take sensible precautions and get advice if you are concerned.
These are some examples showing costs resulting from fires in rural areas.
- 2009 in Kaimaumau it took over a month to extinguish a fire and the estimated firefighting costs were in excess of $1 million
- 2010 at Mt Allen a fire also took several weeks to extinguish with the estimated firefighting costs again in excess of $1 million
2010 near Wellington the fire was extinguished in a day but the firefighting costs were still in excess of $200,000.
Even small fires which can be extinguished in half a day cost an average of $60,000 to $80,000. Damage to pasture and fencing is added to this and can often be three to five times the firefighting costs. The annual rural firefighting costs over the past five years have ranged between two million and four million dollars excluding third party property damage. The cumulative costs over this period are estimated to be over $14 million.
Make sure you have appropriate insurance in place to protect against the significant financial exposure posed by fires in or near your forest. You also need to make sure you get good advice when arranging cover.
Jeremy Manks works for ForestReNZ, a specialist insurers of New Zealand forests