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.
Definition
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
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.
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)
RESOURCE MANAGEMENT ACT
An earthmoving contractor was subcontracted to carry out earthworks on a rural development project near a stream. During a heavy rainfall event, sediment-laden runoff from the earthworks site entered the stream due to inadequate sediment control measures (eg. silt fences were poorly installed and not maintained).
Under section 15(1)(b) of the Resource Management Act, it is an offence to discharge any contaminant onto land in circumstances where it may enter water, unless allowed by a resource consent or permitted activity rule.
The regional council brought charges under the RMA. The contractor’s statutory liability policy covered their legal defence costs of $18,000 and (at that time) the fine imposed of $42,000. Note, that as of 20th August 2025 insurance can no longer cover RMA fines and infringement fees.
FAIR TRADING ACT
- misleading conduct
- misrepresenting your qualifications, experience and license status
- misrepresenting your trade association membership
- misrepresenting your ability to provide independently insured guarantees
HEALTH & SAFETY AT WORK ACT
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.
WHAT'S COVERED
- fines payable on conviction of an offence that is punishable by conviction
- associated legal defence costs
- reparations
- complaints to the LBP Board
WHAT'S NOT COVERED
- excluded acts, including the Crimes Act and Transport Act
- fines & penalties under health & safety legislation (although legal defence costs and reparations are covered)
- fines and infringement fees under the Resource Management Act (legal and investigative costs as well as the cost of implementing remedial actions ordered by the court are covered)
- events happening prior to the policy’s retroactive date
- deliberate or dishonest actions
- offences not punishable by conviction
OTHER THINGS YOU SHOULD KNOW
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 wording for customers buying cover through our online portal. 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.