Statutory Liability

Insurance against fines and penalties imposed under many Acts of Parliament, including associated legal defence costs.

Cover Examples

Health & Safety At Work Act

Legal defence costs and reparations only

Building Act

For example, fines for failing to obtain a consent or not supplying a written contract when required

Fair Trading Act

For allegations of misrepresentation or misleading conduct

What Is It?

Statutory liability insurance ensures that if a contractor breaches legislation they won’t be financially burdened by the resulting fine, which can be significant. Additionally, if the contractor is prosecuted under that legislation they won’t need to bear the significant legal defence costs.

As PCBUs contractors are responsible for health & safety on their worksite and any accident could result in a WorkSafe investigation, prosecution and potential reparations being awarded to the injured person. While statutory liability insurance can’t insure Health & Safety fines, it will cover legal costs and reparations.



Statutory liability insurance agrees to pay on your behalf any Fine under any Act of Parliament, Order for Reparation or Statutory Damages arising out of a Valid Claim.

In addition it will pay the Defence Costs necessarily and reasonably incurred by You with Our prior written consent, to defend a prosecution that if proven could result in a Fine that would be indemnified under this Policy; a proceeding that if proven could result in Statutory Damages that would be indemnified under this Policy; a prosecution under the Health and Safety at Work Act 2015.

Explainer Video

This short video explains the key points of statutory liability insurance.

Speak to an Adviser:

0800 284 584

Claim Examples


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.

The maximum fine for failing to comply with the requirement that building work must be carried out in accordance with a building consent is $200,000.

Other examples include:

  • Failing to comply with a notice to fix (maximum fine $200,000 plus $20,000 per day)
  • Using, or permitting use of building having no consent or code compliance certificate or certificate for public use for premises for public use (maximum fine $200,000 plus $20,000 per day)
  • Person who is not licensed building practitioner carrying out restricted building work without supervision of licensed building practitioner (maximum fine $50,000)
  • Licensed building practitioner carrying out restricted building work without appropriate licence (maximum fine $50,000)
  • Person holding himself or herself out as being licensed to do or supervise building work or building inspection work while not being so licensed (maximum fine $50,000)

The Insured had a diesel fuel facility in its yard. The tank was owned by the fuel supplier but the Insured was responsible for its upkeep. The fenced and gated yard was broken into at night and amongst other things, an unsecured valve on the tank was maliciously turned on.  Fuel ran into a bunded area surrounding the tank.  

Unfortunately, the drain hole in the bund had been left open by an employee of the Insured after he had cleared rubbish from it the previous day. 18,000 litres of fuel ran into a nearby stream.  A massive clean-up operation was undertaken, largely paid for under the policy at a cost of around $300,000.

The Council brought action against the Insured and its supplier under the RMA. The Insured was convicted and fined $14,250 plus prosecution costs. Defence costs were $60,000. 

Other examples include:

  • failure to comply with a resource consent condition
  • pollution of land or waterways with stormwater run off from site or air pollution from dust
  • illegal dumping of site waste
  • misleading conduct
  • misrepresenting your qualifications, experience and license status
  • misrepresenting your trade association membership
  • misrepresenting your ability to provide independently insured guarantees

A building company in Timaru was fined $40,000 for exposing individuals to risk of illness, harm, or death. The building company had sub-contracted another builder to construct a farm shed. However, the sub-contractor had not had much experience with farm shed construction, having primarily being involved with residential construction.

A few weeks into the job, a WorkSafe inspector was alerted to the site and discovered two builders working on the roof of the 4.8-metre-tall shed without proper safety equipment to protect them from a fall onto the concrete floor below. Issues identified included there was no harness system, the mobile scaffolding was on unstable ground, and there were no edge protection brackets. Some work was done rectify these issues but at a subsequent inspection many of the issues remained. As a result WorkSafe brought a prosecution against both the main builder and sub-contractor, with the sub-contractor being fined $23,000.

Under statutory liability insurance fines can’t be insured, but the builder’s substantial legal defence costs were covered.

Policy Key Facts

This is meant as a summary of the most important items in the policy.  For a complete understanding of what it does and doesn’t cover you should always read the full policy wording.

  • fines payable on conviction of an offence that is punishable by conviction
  • associated legal defence costs
  • reparations


  • excluded acts, including the Crimes Act and Transport Act
  • fines & penalties under health & safety legislation (although legal defence costs and reparations are covered)
  • events happening prior to the policy’s retroactive date
  • deliberate or dishonest actions
  • offences not punishable by conviction

An excess is payable for each claim


How Much Does It Cost?

The cost of a fine for breaching the law could easily run into thousands of dollars, not to mention the potential legal costs if you’re taken to court. And if a judge awards reparations to an injured party under our health & safety legislation this could easily accumulate to many thousands of dollars. Compared to this, statutory liability insurance is an essential investment in managing your risk.

Terms & Conditions

View our current policy wordings. Existing policyholders may be on a previous version. Specific endorsements to this wording will be individually noted on your policy schedule. In some cases we may recommend an alternative insurer, if so we’ll send you their policy terms & conditions.

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