What is statutory liability insurance?

Statutory Liability insurance provides protection against investigations, fines and associated defence costs that may be imposed following an alleged, actual, or unintentional breach of certain acts of parliament while conducting business.

What is statutory liability?

Statutory liability is the liability that a company, its directors, executives and managers including line supervisors face when they breach certain statutes of parliament, intentionally or not.

What are statutory liability examples?

A company and/or an individual could attract Statutory Liability in cases of:

• Violation of workplace health and safety laws (i.e. an accident at work or unsafe work practices)
• Breaching duties and responsibilities of environmental laws
• Offences in terms of the Resource Management Act and Building Act (i.e., using a building for a purpose it was not zoned for or without a current warrant of fitness)
•  Investigations by the Commerce Commission, such as for misleading or deceptive conduct in terms of the Fair Trading Act, or for price fixing or anti-competitive behaviour

What is the liability for breach of statutory duty?

Breaching statutory duty could mean you and/or your business can be:

• fined;
• ordered to pay reparations;
• ordered to implement changes/improvements in terms of an enforceable undertaking; or,
• in extreme cases, face imprisonment.

You will also have to pay legal costs to defend you and/or your business.

What does statutory liability insurance cover?

Statutory Liability policies provide access to defence costs and experienced legal representatives to defend you and/or your business. It also covers fines, penalties, orders for reparations payable to an injured person, and can include enforceable undertakings. The shortfall between the injured person’s 80% loss of income paid by the ACC and their full salary can be included.

What isn’t covered by statutory liability insurance?

Fines and penalties in terms of the Health and Safety at Work Act 2015 cannot be insured by law.

Gross negligence or recklessness, deliberate or intentional acts are usually excluded from a statutory liability policy.

Additionally, acts excluded from most statutory liability policies include:

• Certain sections of Commerce Act 1986
• Land Transport Act 1998
• Arms Act 1983
• Crimes Act 1961
• Misuse of Drugs Act 1975

What are statutory liability insurance claims examples?

A few Statutory Liability claim examples include:

1. WorkSafe can investigate and prosecute a business, owners and employees where someone is seriously harmed (including bullying, stress or sexual harassment) or dies because of a workplace accident.
2. The Commerce Commission prosecuted the owner of a business which sold unsafe toys that did not comply with product safety obligations.
3. A regional council investigated a business under the RMA Act for an alleged breach of their consent, resulting in the discharge of large amounts of dust.
4. A health provider faced prosecution for the failure to provide a safe work environment when nurses were assaulted at the facility by a patient.

Do I need statutory liability insurance?

While not all businesses face the same risks, and not all legislation applies to all businesses, many businesses need Statutory Liability cover for claims following legislation breaches.

For example:

1. A person conducting a business or undertaking is responsible for the health and safety of its employees, the workplace and the public.
2. You cannot mislead customers on any of your services or products. The Commerce Commission can investigate Fair Trading Act violations.
3. If you build or design a house and contravene the specific covenants to that property, such as using it for a purpose other than what it was zoned for, or build on an area of the section, you can face prosecution under the Resource Management Act.
4. The Commerce Commission can investigate price fixing agreements and other anti-competitive behaviour by businesses or providers.

An experienced liability broker can assess your business risks and advise you of your statutory liability insurance requirements.

How will statutory liability insurance protect my small to medium-sized business?

A Statutory Liability policy will afford you access to legal representation and support in dealing with a claim. It will also protect your balance sheet and cash flow against large legal bills for defence costs.

Managing a claim is time-intensive and requires specialist skills. With the right insurance cover, you can concentrate on running your business.

How much statutory liability cover do I need in NZ?

Each business faces unique risks, depending on its nature and industry. A specialist liability insurance broker can guide and advise on appropriate covers and policy limits.

To learn more about how Marsh can assist your organisation in understanding and managing statutory liability risks, please contact us.