Statutory liability insurance is designed to respond to defence costs, and in some circumstances reparation orders, arising from unintentional breaches of New Zealand legislation. While it is a common component of commercial insurance programmes, the scope of cover varies considerably between policies and is frequently the subject of dispute.
What statutory liability insurance typically covers
Policies generally provide cover for:
Legal defence costs arising from a prosecution
Reparation ordered by a court in limited circumstances
Cover under legislation such as the Health and Safety at Work Act 2015, the Resource Management Act 1991, and similar regulatory frameworks
Most policies do not cover fines or penalties imposed by courts. The distinction between reparation (which may be covered) and a penalty (which generally is not) is a recurring issue in coverage disputes.
Common areas of dispute
Coverage disputes under statutory liability policies often turn on:
Whether the conduct falls within the policy's insuring agreement
Whether notification obligations have been satisfied
The scope of the insurer's duty to defend
Whether an exclusion applies, including exclusions for deliberate acts or prior known circumstances
These issues can become complex quickly, particularly where a regulatory prosecution is accompanied by civil litigation or where multiple parties are involved.
