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Our insured was contracted to perform some plumbing work on a property. An employee of the insured elected to take their dog to work. The dog escaped and ran over a neighbour's property that was under construction. The dog ran across the wet concrete driveway causing $15,000 worth of damage. The insurer of the contract works policy has accepted the claim but is seeking recovery.

A public liability claim was made to the plumbing companies insurer on the basis that the employee who by definition is an insured was vicariously liable for the damage as the owner of the dog.

The insurer has said that the policy will not respond as the "incident has nothing to do with the insured's business activities".

Is the insurer correct in their response? Are they bound to help our client deny liability if they don't believe they are negligent?

Reply:  Crossley Gates

Under section 63 of the Dog Control Act 1996 an owner of a dog is liable for any damage done by the dog. Therefore, the employee is probably liable for the damage to the wet concrete.

It is unlikely that vicarious liability applies to a purely statutory remedy like this. This means the employer may not be liable, but the employee is an insured in his own right and can claim directly as such.

The public liability policy will limit cover to liability in connection with the plumbing business. This requirement is interpreted broadly by the courts. There only needs to be some link between the business and the alleged liability for it to be satisfied. Here the employee was, presumably, working for the business when the dog escaped. I believe that is probably a sufficient link with the business for the policy requirement to be satisfied.

December 2020

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