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Statutory Liability Insurance

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What is a statutory liability insurance policy?

Statutory Liability Definition?

Statutory liability insurance provides protection for businesses and individuals against potential legal costs and penalties arising from unintentional breaches of New Zealand's statutes. Simply put, if you unknowingly break a specific law in your business dealings, this insurance can help cover the repercussions.

Statutory liability insurance is essential, but why?

Regulatory Environment

New Zealand has a comprehensive regulatory framework that businesses must navigate. An unintentional misstep can lead to significant legal consequences.

Financial Protection

The cost of defending against legal actions and paying fines or reparations can be financially draining. This insurance offers a safety net.

Business Reputation

In addition to direct financial costs, legal proceedings can tarnish a business's reputation. Having insurance shows a proactive approach to compliance and risk management.

What exactly does statutory liability insurance cover?

Statutory liability insurance primarily offers financial protection to businesses when they unintentionally breach a statute or regulation in New Zealand. This includes:

  • Legal Defense Costs: If your business is accused of a breach, the costs to defend against the claim can be covered.

  • Fines and Penalties: Should your business be found at fault, certain fines or penalties may be covered (subject to policy conditions).

  • Reparations: Sometimes, businesses may be ordered to pay reparations to a third party. This can be covered under the insurance.

How does statutory liability insurance work when you’re with Gerrards?

When a claim is made against your business for an unintentional breach, you inform us at Gerrards. Here’s how the process unfolds:

  • Notify Gerrards: As soon as you’re aware of a potential claim or issue, let us know. The sooner we’re informed, the quicker we can act on your behalf.

  • Gerrards Advocates for You: We liaise directly with the insurance provider, advocating for your best interests and ensuring that your claim is treated fairly and promptly.

  • Legal Support & Representation: With our vast network and expertise, we’ll help ensure that you have the best legal representation available, guiding you through every step of the legal process.

  • Claim Resolution: We work closely with the insurer to ensure that any fines, legal costs, or reparations are covered according to your policy, keeping you updated throughout.

What are the advantages and disadvantages of statutory liability insurance?

When deciding on statutory insurance it’s essential to weigh the pros and cons:

  • Financial Security: Protects your business from unforeseen and potentially large expenses related to legal issues.

  • Peace of Mind: Knowing you’re covered helps you focus on your core business activities.

  • Expert Assistance: Insurers often have legal experts to guide and support you through claims.

  • Not All Breaches Covered: Intentional breaches or those outside policy terms aren’t covered.

  • Cost: Premiums add to business expenses, though they may be seen as a necessary safeguard.

  • Healthy and Safety Act Fines: In New Zealand it is illegal for insurance companies to pay fines resulting from breaches of the Health and Safety Act. They can however still pay the defence costs. 

What are the common misconceptions about statutory liability insurance?

  • “It covers all legal issues”: This insurance only covers unintentional breaches of specific statutes. It doesn’t replace other types of liability insurance.

  • “It’s the same as general liability insurance”: General liability typically covers bodily injury or property damage claims, while statutory liability focuses on breaches of statutes.

How can you do it right? 

To ensure you’re getting the most out of your statutory liability insurance:

  • Understand Your Policy: Know what’s covered and what’s not. This helps in making informed decisions and avoiding potential pitfalls.

  • Stay Updated: Regulations change. Regularly review your policy to ensure it aligns with current laws.

  • Immediate Reporting: If you suspect a breach or face a claim, report it to your insurer immediately.

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