Thread: Liability for small shops?

Originally Posted by silentC

The thing about statistics and probability is that they cannot predict what will happen. All they can tell you is what has happened in the past.


It all comes down to utility. If you were rich then having to fork out $200k would make you whinge a bit but it wouldn't destroy you. If it happened to me, I would be devastated. When you start talking about odds, it only really helps an insurer work out how much they should charge for a premium. For the individual that the thing happens to, it doesn't matter whether it is 1 in 10 or 1 in a million. You're either unlucky, or extremely unlucky. Either way, you are still knackered.

When my old man ran a little 4WD tour business a few years ago, one of his first customers was an overweight lady who was writing a holiday article. He took her out to a rainforest walk and on the way back, she tripped over and fractured her ankle. He called for an ambulance and just before it arrived, she had a heart attack. Fortunately for him, she was one of those rare people who takes responsibility for her own clumsiness and declined to sue him, which she was probably entitled to do. He had no public liability insurance and would have been screwed if she had. He went and got a policy the next day. Nobody thinks it will happen to them.

I think when it comes to insurance, the only question you have to ask is "if it happened to me, could I survive it". Putting your faith in knowing the odds is no help. The odds of a horse winning a race are public knowledge, but it has little effect on the outcome. Betting with the odds is no guarantee that you will not lose your money.

I see where your coming from. Find it all very interesting.

But I still believe a good ball park could be given based on recent(close to whats happening now) past occurrences because such a huge population of stats could be available. (millions of people in the world) .

I would suspect there would be a computer program worked out somewhere, with a huge database, where all your personal data could be entered, and a ball park odds value could be given. Some insurance statistician maybe. (guessing not available to public) General odds at least for us to get a feel of really how likely we are to find trouble.
ie. 1 million to 1?…. 100 000 to 1?... 1000 to 1 ?…could break that down to something that makes sense.

Like for me…..I could be given something like this….(say) of the 40000 windsor chair makers around the world, constructing so many chairs over the last few years there was 10 incidents. Of the 10 ….5 were pursued in the courts……1 was proven justified against the chair maker….. and the chair maker turned out to be nice old lovely guy renting on the pension who had to go bankrupt, but was too old to care cause he had nothing to loose(and was allowed to keep his tools) despite obviously feeling bad what happened. And died early out of guilt. The computer says based on todays conditions and of the past few years (should they stay the same) you will face a possible lawsuit at the age of 868 (give or take 200 years). And when that happens you will not be covered properly because you didn't read the fine print properly (sorry sir we didn't include that possibility into the statistics) or some other legal loophole you were ripped off over.

something at least!…..not….

- statistics can't help because they talk about the past only (statistics are accumulated primarily to help predict the future aren't they ?) ..or
- there isn't a difference between 1000 to 1 and 100000 to 1. (One is luckier than the other ! isn't it…..)
uno what I mean ?

I can understand how it hits home with your dad(even though it really doesn't count because nothing happened), but again the story makes us feel as though there's a great chance it will happen to us when none of us really know.

imo…. everybody uses odds naturally wheather they are logically minded or not. Even without numbers. judge danger possibilities everyday. But its flawed because the events that we remembered are the fear based memories from other peoples stories or our own (that may have not even happened), not accounting for say, the thousands of non eventful days and the shear number of people there are in the world.

imo….If the insurance people offered their honest conclusions on the statistics they accumulated, you would feel grossly ripped off, ( and would consider doing the right thing with the money ….giving it to say oxfam or a planet saving group.) its a big grey area eh.

Originally Posted by apricotripper

I see where your coming from. Find it all very interesting.

But I still believe a good ball park could be given based on recent(close to whats happening now) past occurrences because such a huge population of stats could be available. (millions of people in the world) .

I would suspect there would be a computer program worked out somewhere, with a huge database, where all your personal data could be entered, and a ball park odds value could be given. Some insurance statistician maybe. (guessing not available to public) General odds at least for us to get a feel of really how likely we are to find trouble.
ie. 1 million to 1?…. 100 000 to 1?... 1000 to 1 ?…could break that down to something that makes sense.

Like for me…..I could be given something like this….(say) of the 40000 windsor chair makers around the world, constructing so many chairs over the last few years there was 10 incidents. Of the 10 ….5 were pursued in the courts……1 was proven justified against the chair maker….. and the chair maker turned out to be nice old lovely guy renting on the pension who had to go bankrupt, but was too old to care cause he had nothing to loose(and was allowed to keep his tools) despite obviously feeling bad what happened. And died early out of guilt. The computer says based on todays conditions and of the past few years (should they stay the same) you will face a possible lawsuit at the age of 868 (give or take 200 years). And when that happens you will not be covered properly because you didn't read the fine print properly (sorry sir we didn't include that possibility into the statistics) or some other legal loophole you were ripped off over.

something at least!…..not….

- statistics can't help because they talk about the past only (statistics are accumulated primarily to help predict the future aren't they ?) ..or
- there isn't a difference between 1000 to 1 and 100000 to 1. (One is luckier than the other ! isn't it…..)
uno what I mean ?

I can understand how it hits home with your dad(even though it really doesn't count because nothing happened), but again the story makes us feel as though there's a great chance it will happen to us when none of us really know.

imo…. everybody uses odds naturally wheather they are logically minded or not. Even without numbers. judge danger possibilities everyday. But its flawed because the events that we remembered are the fear based memories from other peoples stories or our own (that may have not even happened), not accounting for say, the thousands of non eventful days and the shear number of people there are in the world.

imo….If the insurance people offered their honest conclusions on the statistics they accumulated, you would feel grossly ripped off, ( and would consider doing the right thing with the money ….giving it to say oxfam or a planet saving group.) its a big grey area eh.

Clearly in your case you would be better off without insurance as you would sleep much better knowing the money you saved was put to a more noble cause.

The odds may be 1 in 100,00 but if you are the one - Could you survive? - that is the big question only you can answer.

Many large companies self insure for public liability, workers comp etc. They have the resources to cover the claims themselves. Small operators can't. So you have to look at insurance as a collective 1000 of your mates are chipping in to save each others butts if it goes pear shaped for one of you.

I was going to insure tools of trade ... back then it was only $3000 worth - premium was going to be $500 pa

Tools would only be covered while in my locked vehicle.

20 years later I have saved well over $10, 000 in premiums.

Liability insurance ... No Way would I be without it


Dave the turning cowboy

turning wood into art

Dave makes a good point. One can cover the lose on tools, but when it comes to a law suit, most would be flat out finding the funds to mount a legal challenge.
But getting back to the tools. One of my kids runs around with over $50,000 worth of tools in his van. Within six months of taking out insurance his van was broken into and everything stolen. Yes, it wasn't cheap when he took out the policy, but he was real glad he did.
Insurance is an absolute waste of money.......until you need it.

Hi Jake

I think you are looking at the wrong end of the insurance equation.

Big, more than $1 million, claims are rare and more than $10 million ones even rarer -- but an insurance company doesn't accumulate premiums to cover the risk. Instead the company takes out an insurance policy (called reinsurance) to cover these rare claims. Far more common are small claims, those less than $10,000 -- these are the ones that really cost.

I believe that the payout ratio for car insurance is about 80% of premiums -- so in broad terms, if an insurance company takes in $1000 in premiums, it expects to pay out about $700-800 in claims, say $120 in admin costs, and pocket around $80-150 as profit.

So if 1000 Aust woodworkers have taken out the Vic Woodworkers policy, that's a premium income of about $250,000 per annum.
If the annual payout is 60%, around $150,000 is paid out to settle claims. If the average payout is $10,000 -- that works out at 15 successful claims, or around 1 in 60 of those with the insurance. If the ratio of "try-ons" to genuine claims is 3 to 1, then around 1 in 20 chair makers will find the support of an insurance company useful.

how do those odds look?

I reckon that's more like it ian.

The risk is real, increasing, and not as low as you might think.

One injury event/claim may also have more than one “injured party” or parties who have suffered “damages” as in the 1^st case – the employee & the employer successfully made claims against the PL insurance. All the more reason to insure if you manufacture & supply to corporate clients.

SafeWork Australias research indicates approx 160 chair injuries in the workplace pa, approx 20 of which involve hospitalisation for the injury.
Ther is other Australian home injury prevention research that lists injury type, location & injury mechanism (fall from chair etc) which will allow you to quantify the number of injuries - but why bother yourself the risk is real the insurance is cheap!

A Couple of recent examples


1st case
Summary
She successfully claimed workers compensation and received a lump sum payment of $190,000 in 2005
Jantom and its insurer were ordered to pay the injured worker over $930,000
Jantom’s insurer was liable to indemnify the employer on behalf of Jantom. The employer was awarded close to $442,000 accordingly.

That’s over $1.5M for one claim.

http://www.abc.net.au/news/2013-08-3...broken/4926622
Same case
http://www.cch.com.au/au/News/ShowNe...D=40335&Type=F

2nd Case
http://www.advicelineinjurylawyers.c...ws/blog/page-2

Settlements for public liability clients Thursday, 14 February 2013
Adviceline Injury Lawyers recently settled two public liability claims. The first claim which was settled late last year involved an elderly woman who sat on a damaged chair in a bingo hall, which collapsed under her. She sustained spinal injuries as well as pain in her right leg.
A writ was issued against the proprietors of the bingo hall. We argued on behalf of our client that the bingo hall had failed to keep the premises in good and proper repair, including conducting regular safety to inspect for defects in their chairs.

A trial was set down in March 2013, with the Defendant denying liability for the injuries. A mediation was arranged in December last year in an attempt to reach an early resolution of the claim. Despite the client’s pre-existing injuries and age, we were able to obtain a six figure settlement of our client’s claim for pain and suffering damages.

3rd Case

http://www.goldcoastbulletin.com.au/...-1226823990385

[QUOTE]The risk is real, increasing, and not as low as you might think.
[quote/]
Again there's are just examples given to push your point. And there Effective !…..but aren't applicable, AGAIN, because population isn't offered.

Really sorry to pick at them. Just doesn't make any sense. I'm not even a statistian. suppose this is going to make people believe that I THINK I'm an expert statistian...

but….
[QUOTE]
SafeWork Australias research indicates approx 160 chair injuries in the workplace pa, approx 20 of which involve hospitalisation for the injury.
[QUOTE/]
thats another fear based comment….totally VOID of population and detail about the chairs involved. For all I know, most of them are plastic chairs or swivel like chairs used in the office. That would make more sense to me because thats what most people seem to be sitting in now days.

A Couple of recent examples

1st case
Summary
She successfully claimed workers compensation and received a lump sum payment of $190,000 in 2005
Jantom and its insurer were ordered to pay the injured worker over $930,000
Jantom’s insurer was liable to indemnify the employer on behalf of Jantom. The employer was awarded close to $442,000 accordingly.

That’s over $1.5M for one claim.

http://www.abc.net.au/news/2013-08-3...broken/4926622
Same case
http://www.cch.com.au/au/News/ShowNe...D=40335&Type=F

2nd Case
http://www.advicelineinjurylawyers.c...ws/blog/page-2

Settlements for public liability clients Thursday, 14 February 2013
Adviceline Injury Lawyers recently settled two public liability claims. The first claim which was settled late last year involved an elderly woman who sat on a damaged chair in a bingo hall, which collapsed under her. She sustained spinal injuries as well as pain in her right leg.
A writ was issued against the proprietors of the bingo hall. We argued on behalf of our client that the bingo hall had failed to keep the premises in good and proper repair, including conducting regular safety to inspect for defects in their chairs.

A trial was set down in March 2013, with the Defendant denying liability for the injuries. A mediation was arranged in December last year in an attempt to reach an early resolution of the claim. Despite the client’s pre-existing injuries and age, we were able to obtain a six figure settlement of our client’s claim for pain and suffering damages.

3rd Case

http://www.goldcoastbulletin.com.au/...-1226823990385

AGAIN ! no population involved. ….. to me its like, say…..a neighbour goes fishing. Comes back with a bag full massive whiting…. I look at the fish a go my god ! ….. Don't know what people are talking about ! Clearly there's still plenty of fish left in the sea. (totally ignorant to the more likely possibility that say 10000 people went fishing on that day. 9000 caught nothing, 980 caught shrimps, and 20 did actually did well.

To me…..it begins with a motivation to justify everything done so far in life (or the importance to win the argument)……followed by grabbing incidents out of the air…..blowing them up like done here…..and feeling confident about it provoking a reaction that supports your argument, because it works so well with people

I don't want to upset, but sound stats are needed to make a good decision. Pretty good ones would be available somewhere. Some far better than guesswork. There not given to us (wonder why)

- statistics can't help because they talk about the past only (statistics are accumulated primarily to help predict the future aren't they ?) ..or
- there isn't a difference between 1000 to 1 and 100000 to 1. (One is luckier than the other ! isn't it…..)
uno what I mean ?

This is true, stats are used in two ways: to summarise the current situation and look at trends, and to help decide what to do in the future. What I'm saying is that they are useful to the insurance company because they help them work out what premium to charge. But they're not much use to the individual. Yes they might help you decide, but for me the biggie is how much it's likely to cost me if something goes wrong.

There's a thing called a utility test. Basically it tries to work out what the value of money is to you. You might take a known probability, like a coin toss. If I bet you $1 that the next toss will be heads, you'd probably think nothing of it. If I upped it to $100, you might think twice. The odds haven't changed, but the potential cost to you has. If I made it $1,000, you'd say no way (probably).

As you go up the scale, the probability has less impact on the decision, because you get to a point where you are not prepared to take the risk.

The point about the odds is that even if they are 1 in 100,000,000, it still might happen to you.

The smaller the business the less affordable litigation becomes.
The risk of being sued, be it justified or not, is always there.
The cost to defend is exorbitant.
The chance of financial ruin is real.
The cost of insurance is minimal.
The odds are irrelevant.

Originally Posted by silentC

The point about the odds is that even if they are 1 in 100,000,000, it still might happen to you.

thats the crux of the problem. Such high odds shouldn't be even considered. I find it odd and embarrassing that, that statement gets these sort of reactions …..->

I actually find it relieving. …….ahhhhhhhhhh…. 'thank god those odds are so high. I don't need to worry about it.'

maybe with less talk/concern about high odds people would find more effort into say …. prevention !

Originally Posted by rustynail

The smaller the business the less affordable litigation becomes.
The risk of being sued, be it justified or not, is always there.
The cost to defend is exorbitant.
The chance of financial ruin is real.
The cost of insurance is minimal.
The odds are irrelevant.

fear. Does it matter if the odds are so high ?

fear.

fear

fearrrrrrrrrrr

So is the cost to oxfam or a planet saving group, where you can get near 100% chance of saving say hundreds over the extremely remote odds of compensating for hurt to just one person
The odds would be irrelevant if the whole system wasn't set up on them. The odds would be irrelevant if the insurance companies brought in soothsayers or mystics (no offence to soothsayers or mystics) to dermine their odds.

To say the odds are irrelevant could be quite insulting to someone whose spent their whole studying them. Using them. Getting reliable feedback on how their predictions have fanned out.

…your not Campese are you ?!….. suppose I should dump all my feeling and kiss you ar#e if you are. Thats the only thing I liked about rugby. Not playing it. Just watching him during those few seconds he got the ball.

Still want to here about prevention methods being employed to discover invisible felling shake before construction. Or is that a secret too
sorry. don't hit me.

I actually find it relieving. …….ahhhhhhhhhh…. 'thank god those odds are so high. I don't need to worry about it.'

Yeah well we all have to make up our own minds on how we feel about it. At the end of the day, for me, when I'm thinking about insurance, I'm thinking of the cost to me if something goes wrong. I insure my house because, although I don't know what the odds are of it burning down, if it did burn down I could not afford to rebuild it. As part of the house and contents, we have public liability too. Do we need it? It's just something they 'throw in' (but of course we pay for it). One day a friend came to visit and our dog jumped up and scratched the diamond out of her engagement ring. We couldn't find it, so she wanted us to pay for it. We claimed it on the insurance, all good. Was only $600, but $600 is $600...

maybe with less talk/concern about high odds people would find more effort into say …. prevention !

Maybe. Naturally you want to make things as well as you can and have them last and not take anyone's eye out. Some manufacturers don't give a toss and it's probably them that liability insurance was invented for. Like extended warranty insurance. They make crap which breaks down after 3 years, so you claim it on warranty, they give you a new one, and it's paid for by all the other suckers out there who pay for extended warranty. Instead of just buying decent stuff in the first place.

I know a bloke who doesn't insure his cars. Instead he puts the premium in his bank account. After nearly 40 years, he is way ahead and buys himself a new car every 10 years or so with the money he saved. For some stupid reason, we are paying I don't know how much (must ask the missus) to insure our 10 year old bomb which is probably worth $3,000 if that. I wish someone would steal it and write it off. I've only ever had one or two claims over all the years I've been paying car insurance. I'm way behind.

It's all worth thinking about...

Originally Posted by apricotripper

fear. Does it matter if the odds are so high ?

fear.

fear

fearrrrrrrrrrr

So is the cost to oxfam or a planet saving group, where you can get near 100% chance of saving say hundreds over the extremely remote odds of compensating for hurt to just one person
The odds would be irrelevant if the whole system wasn't set up on them. The odds would be irrelevant if the insurance companies brought in soothsayers or mystics (no offence to soothsayers or mystics) to dermine their odds.

To say the odds are irrelevant could be quite insulting to someone whose spent their whole studying them. Using them. Getting reliable feedback on how their predictions have fanned out.

…your not Campese are you ?!….. suppose I should dump all my feeling and kiss you ar#e if you are. Thats the only thing I liked about rugby. Not playing it. Just watching him during those few seconds he got the ball.

Still want to here about prevention methods being employed to discover invisible felling shake before construction. Or is that a secret too
sorry. don't hit me.

The odds are irrelevant when you have a case made against you.
To me, it makes no difference what the odds are, if it is within the realms of possibility then it deserves consideration. Particularly if your financial status doesnt cover it.
Fear is a subjective word. It doesnt require absolute fear to realize you could face financial ruin in the event of a long shot coming home. There is also the analogy that anything can happen and sooner or later probably will. Wouldnt be so bad if the odds were being weighed up against a single specific event, but in the case of liability there are so many different forms of action that can be taken it leaves a person in a risky position.
As for Campese? The less said the better. I loved watching Jonah run straight over the top of him. There is no place on a rep rugby field for non tacklers.
There are no secrets about felling shakes. They are just another defect in timber.