Why Your Business Needs Statutory Liability Insurance

Did you know there are over 5,000 acts of legislation regulating business activities in Australia?

There is no way you are going to remember every possible law, and you might be more familiar with some over others, but that is not an excuse for breaking the law. And pleading “but I didn’t know” is not a defence that will win.

So, having additional support might be useful when the need arises which is why statutory liability insurance could be worth considering.

Statutory Liability cover can fall under the banner of Management Liability Insurance. It exists to protect businesses from legal expenses if they were to breach an act of legislation. Policies can cover any reasonable legal and investigative fees that will also be likely to apply.  Remember these can rack up quickly, even if you have done nothing wrong and need to defend yourself.

Some Australian States have prohibited insurance covering fines and penalties arising from WHS breaches however, you are still able to cover the legal costs of defending an allegation of that WHS breach.

Statutory Liability also covers breaches of other types of legislation relating to consumer protection, employment practices, pollution, the environment, privacy, Chain of Responsibility (Transport Industry) and electrical safety.

As a business owner, you have a duty of care to the employees who place their trust that you will keep them in safe and secure working environment. Whilst you always try to follow WH&S regulations, no workplace is perfectly safe all the time.

Being so preoccupied with our core work activities, can sometimes mean we don’t always have time to fully adhere to the Safety and Compliance rules, as strictly as we should.

As a business owner, you’re constantly at risk of breaching an act of legislation. Whether it’s due to your actions, the behaviour of one of your employees or a defective piece of equipment in your factory, the threat of litigation looms over you at all times.

Here are some real-life claim examples:

Building Act

A property owner changed the use of his premises without obtaining proper consent. Although the building was situated in a commercial zone and was used partially for commercial purposes, the local authority discovered that part of the building was being let out for residential purposes. The property owner was prosecuted and fined for breaches of the Building Act.

Credit Contracts Act

A finance company pleaded guilty to 17 breaches of the Credit Contracts and Consumer Finance Act 2003, resulting from inadequate disclosure of the terms and conditions of its loans. The contracts were unenforceable because of this. The finance company also pleaded guilty to further charges of breaching the Act by telling the customers that the contracts were enforceable. The Court found that documents provided by the finance company had been faxed and photocopied, and in some cases were so distorted that they were impossible to read. The company was fined $60,000.

Fair Trading Act

A clothing importer and retailer was prosecuted and fined $15,000 for failing to affix country of origin labelling to clothing sold in New Zealand.

Source: Vero

If you want to discuss Statutory Liability Insurance, talk to your local Rivers Insurance broker who can outline the best options to suit you