Insurance issues arising in the gig economy

What is the gig economy?

‘Gig’ is a slang term referring to a ‘job for a specified period of time’ and harks back to when musicians were engaged for a performance or a ‘gig’. The gig economy refers to the growing trend towards freelance or contract workers, as well as the share economy of resources such as property and equipment. In the US, almost 30 per cent of the workforce now participate in the gig economy. That is expected to grow to 50 per cent by 2027.

Some highly recognisable examples of the gig economy at work are:

  • Uber and Lyft – ride sharing
  • Airbnb – accommodation sharing
  • Airtasker – task sharing
  • Dozr – construction equipment sharing

The gig economy is clearly the way of the future. This poses both challenges and opportunities in the corporate and insurance worlds in terms of how best to classify, assign and transfer risk in these ‘non traditional’ employment and commercial relationships.

What are some of the risks emerging from the gig economy?

The risks that have already emerged with some prevalence from the gig economy include:

1. Who insures the workers?

It remains unclear who insures gig workers in various scenarios. For instance, if an Uber driver is involved in an accident, who insures that driver for compensation and damages arising from any personal injuries sustained? There have been different judicial approaches to this issue in various jurisdictions and situations. This gives rise to great uncertainty for both the drivers and the corporation.

In another example, who insures an Airtasker worker who suffers injury when attending a domestic home to perform a contracted task? Airtasker eschews responsibility. The homeowner’s public liability cover (an extension to home and contents insurance) excludes claims by workers. The homeowner may have direct liability to the Airtasker worker, unless another insurance solution can be found.

2. Who insures the work performed?

A similar issue arises for consideration about who insures for the negligence of gig workers. If you are engaging with a freelancer who does not hold appropriate insurance cover, you may not have recourse against an insurer (and its deep pockets) in the event the gig worker causes loss and damage.

3. Who insures the property?

A standard insurance policy wording may not cover property that is ‘hired out’ via a platform such as Airbnb or Dozr.

Again, the platforms Airbnb and Dozr see their purpose as ‘connecting supply with demand’ and exclude liability. This creates a few issues for the property owner namely:

  • Are they covered if the hirer causes damage to their property?
  • Are they covered if the hirer suffers property damage, personal injury, loss or other damage arising from the hire of the property?

How can insurance help?

In some instances, the new and emerging risks arising from the gig economy can be assigned through properly drafted contracts and agreements that clearly spell out where the liability (and the obligation to insure) falls.

However, some of the risks identified above will not be covered by standard or traditional insurance policies.

New products providing coverage directed at the gig economy are constantly being developed. This may otherwise be achieved by amending or endorsing existing policies. However, insurance arrangements should be carefully reviewed to ensure that you are covered for risks arising from the gig economy.

What should you do to protect yourself?

The gig economy offers much in the way of flexibility and free market engagement – but review your insurance to make sure you are covered in the event something goes wrong.

If you are a member of the gig economy, or you engage with members of the gig economy, talk to your broker about your insurance needs.

Queensland Smoke Alarm Laws and you

Whether you are a home owner, a renter, a landlord or a renovator/builder, the smoke alarm legislation introduced by Queensland Fire and Emergency Services from 1 January 2017 will affect you!

As a landlord….

  • Existing smoke alarms manufactured more than 10 years ago must be replaced with photoelectric smoke alarms which comply with Australian Standards (AS) 3786-2014. All smoke alarms should be interconnected within the property.
  • Smoke alarms should be installed on each storey including – in every bedroom; in hallways that connect bedrooms and the rest of the property and if there are no bedrooms on a storey, at least one smoke alarm should be installed in the most likely path of travel to exit the property.
  • Any person can legally install a battery powered alarm, but 240-volt hard-wired smoke alarms must be connected by a licensed electrician.
  • Within 30 days before the start of a tenancy in a domestic residence, you must test and clean each smoke alarm in the property.

As a tenant….

  • During the tenancy, you must test and clean each smoke alarm in the property, at least once every 12 months. To test a smoke alarm, press the ‘test’ button.

As a home owner….

  • Existing smoke alarms manufactured more than 10 years ago must be replaced with photoelectric smoke alarms which comply with Australian Standards (AS) 3786-2014.
  • Smoke alarms that do not operate when tested must be replaced immediately.
  • It is recommended that smoke alarms be either hardwired or powered by a non-removable 10-year battery, and ionisation smoke alarms be replaced with a photoelectric type as soon as possible.

As a renovator/builder….

  • All new or substantially renovated homes or units require hardwired, photoelectric interconnected smoke alarms. For existing dwellings, the smoke alarms can also be powered by a non-removable 10-year battery.
  • Smoke alarms must be installed on each storey, in each bedroom, in hallways that connect bedrooms and the rest of the dwelling, and if there are no bedrooms on a storey, at least one smoke alarm must be installed in the most likely path of travel to exit the dwelling.
  • It is essential to also have a well-practiced fire escape plan.

For further details, refer to Queensland Fire and Emergency Services’ website at smokealarms

Single Touch Payroll is here

The biggest change to payroll in history is here and compulsory for businesses with 19 or fewer employees.

What is it?

Single Touch payroll (STP) is an ATO compliance regulation which requires employers to send employee payroll information, including salary, wages, PAYG withholding and superannuation to the ATO at the same time as their standard pay run.

Why is it happening?

The government likes STP for a number of reasons.

  • It’s a much more efficient way to operate the taxation system.
  • It will make the black economy more difficult…at least in theory…because the ATO will know who is being paid, how much they’re being paid and when.

What are the benefits?

The ATO will be able to pre-fill the BAS for employers, eliminating errors and double handling.

Online access to Payment Summaries means that employers no longer have to provide Payment summaries at the end of the year, as the ATO will already have this information.

What’s the scale of this?

ABS data reveals that there are approximately 782,000 businesses with 19 or fewer employees in Australia…about 37 per cent of all Australian businesses.

What are the concerns?

Worries range from businesses not being aware of the changes to some employers not even having digital payroll software. A lot of small businesses are struggling to come to grips with why the change is needed.

What’s the ATO approach?

The ATO has said that they weren’t interested in cracking the whip to ensure short-term compliance and are instead taking a long-term view, but they certainly want to bring all businesses into the digital world.

What’s the solution?

A number of third party software providers have introduced low cost solutions for micro-businesses, while larger businesses should have already have updated software to deal with the changes.