Statutory Liability Insurance

What is Statutory Liability Insurance and why do you need it?

The LPMS Statutory Liability Insurance policy is designed to cover the costs of legal defence and the settlement of fines or penalties as may imposed by the courts for inadvertent breach of a range of statutes.

Statutory Liability Cover

Provides cover for fines or penalties imposed and legal costs incurred for non-compliance with statutes not falling within the scope of the civil liability Professional Indemnity contract.

The cover applies to unintentional or innocent breaches of the statutes and the policy contains an exclusion for any reckless breach or deliberate disregard for the provisions in any statute.

The LPMS statutory liability insurance includes the costs of defence and the settlement of fines or penalties under a wide range of statutes.

Some statutes were payment of fines would be contrary to public interest are excluded such as revenue collecting legislation, or where the legislation does not allow indemnification such as the Health & Safety at Work Act 2015, however reparation awards under the HASAWA are covered.

The relevant parts of the policy wording for your information are:

“Occurrence” means any event, act, omission or circumstance, neither expected nor intended, which may result in an allegation of breach or contravention of the Act or which results in an investigation, inquiry, prosecution, proceeding, hearing, settlement negotiation, review or appeal, arising out of an Occurrence.

Penalties shall not include:

(a)    The cost or payment of any enforcement order, remedial order or compliance order.

(b)    Any tax (including any fine or penalty resulting from a failure to pay any tax), rate, duty, or interest on such tax, rate or duty, except as provided for in Condition 5.04.

(c)     Any damage, restitution, compensation or reparation imposed by a tribunal or court of competent jurisdiction, except a reparation order imposed by the Court on an Insured upon conviction for an offence under the Health and Safety at Work Act 2015:

(d)    The value of any property subject to confiscation or forfeiture:

(e)    Any fine or infringement fee imposed by the Court on the Insured upon conviction for an offence under the Health and Safety at Work Act 2015 arising from an Occurrence on or after 5 May 2003;

(f)      Any monetary payment, penalty or fine for which the Companies may not lawfully indemnify the Insured.

The following are examples of Claims under the Act:

Prosecution under the Resource Management Act in relation to unauthorised discharge of sediment-laden runoff from subdivision.

Possible prosecutions under the Resource Management Act in relation to the removal of contaminated fill from a site.

Worksafe prosecutions under the Health & Safety at Work Act for injuries sustained at work.  These are leading to increasing reparation awards with awards for ACC shortfall on future lost earnings as well as awards for emotional harm.  Awards for emotional harm are reaching $110,000 in serious harm cases where the additional ACC shortfall can reach over $200,000.