Gallivan Magee & Associates Pty Ltd Insurance Brokers & Risk Management Consultants

Statutory Liability / Pecuniary Penalties

Statutory Liability Insurance is designed to protect companies and individuals against liability for statutory fines and penalties resulting from unintentional breaches of legislation. Also when actions are brought, they normally involve actions for multiple breaches.

e.g. Occupational Health and Safety Law ; Environmental Law ; Employment Practices Legislation; Company Law.

Some clients may have in place a Directors and Officers Liability Policy or even the more preferable Management Liability alternative. Some of these Policies may provide some cover for Defence Costs against Occupational Health and Safety Actions however that cover will be limited. Some of these Policies may even be extended to include Statutory Liability cover [which provides cover beyond just Defence Costs] however again it will be limited. Often $50,000 or $ 100,000 or $ 250,000. There have been awards approaching $ 1 M and it is suggested that these will increase.

If you do not have a Directors and Officers Liability Policy or the preferred Management Liability Cover then you are seriously exposed in the legislative areas referred to above. These Policies also provide cover for much more that just this important area of reference including the full suite of employment related claims such as unfair dismissal and discrimination and harassment. They also include cover against Trade Practice actions. Of most importance is the fact that they protect the individual against actions and as stated they provide cover for Defence Costs in defending the legislation actions referred to above. Some covers even extend to cover Statutory Liability [some fines and penalties cover] however as stated it can be a limited cover. The Management Liability [where available for a client] is a combined cover which also includes Directors and Officers, Entity cover, Employment Practices Liability, Trustee Liability [if applicable], a fuller Crime cover including Fidelity Guarantee, Defence Costs for Occupational Health and Safety and sometimes Statutory Liability [to a limit].

Therefore clients should have this cover [Management Liability (incl. Entity Cover) or at least Directors and Officers Cover] in place. However in the current regulatory and litigious environment even that is not enough. You also need cover for Fines and Penalties and higher limits. THEREFORE EVEN CLIENTS WITH SOME COVER FOR SUCH CLAIMS, SHOULD ALSO TAKE OUT THE SEPARATE STATUTORY LIABILITY TOP UP COVER.

For those without even a Directors and Officers Liability and or Management Liability then it is even more crucial. You have to have both or at least the Statutory Liability Cover.