Why You Need Statutory Liability Insurance
- Sep 04, 2019
- 9 min read
In Australia, many regulatory government bodies and have become increasingly stringent regarding Occupational Health & Safety within the workplace, and there are a number of Acts of Parliament under which business owners and employers can be held accountable. These include;
- Occupational Health and Safety Act
- Environmental Protection Act
- Privacy Act
- Anti Money Laundering & Counter Terrorism Financing Act
- SPAM Act
- Fair Work Act
- ASIC Act
- Transport Act
- Therapeutic Goods Act
- Mining Act
- Building Professional Act
- Electricity Act
In fact there are more than 5,000 pieces of legislation that can result in a fine or penalty, and more than 700 of these can find a Director personally liable.
If ever you have an injury, death or even an ‘incident’ in your business, Safe Work (or ‘Work Safe’ depending on which state you are in) will conduct an investigation into your business and practices.
In addition to this, you can be subject to a ‘spot inspection’ to look for potential breaches in the various acts, even if you’ve never had in incident.
At the very least this should concern everyone who owns a business and employs people.
It is more important than ever for businesses to ensure they not only have the correct policies and procedures in place to ensure the safety of their employees, but to also have adequate insurance in place to protect the business and its officers from any statutory risks that may arise. You can actually insure you and your business specifically for Statutory Liability exposure.
How Do I Protect My Business?
Businesses have an obligation to provide their workers with a safe working environment and must have adequate risk management procedures in place. This includes documented business procedures and new employees training materials.
More often than not, business owners do all they can to ensure they are compliant with statutory laws and legislation. With the large number of laws applicable to different types of businesses and industries, while also accounting for laws that that apply generally to all businesses and industries, it can be difficult to keep track of them all.
In order to do the best to make sure your business is compliant, and reduce the likelihood of a breach of legislation, there are some strategies businesses can implement to protect their businesses.
Developing a Risk Management Plan
One of the most effective ways of reducing the risk of being held accountable for statutory liability is to develop and implement Risk Management Plans. This involves being aware of the numerous laws and regulations that apply to your business and then outlining what needs to occur to ensure you abide by those laws, in a series of practical undertakings that incorporate the inherent risks in your business and which can be adopted by employees at all levels.
It’s prudent to document and provide training content to employees including the risk management plan to promote safe work practices and to ensure that everyone is on the same page. Such content should explain your risk management strategies and why they exist. The content should also outline mandatory laws as well as standard health and safety regulations and expectations.
This can seem overwhelming, however there are a great many WHS consultants for every industry who can make the process a lot simpler for you.
The important thing here is to incorporate the plan into the day to day activities of the business. Having a lever arch file with some printed material in a cabinet somewhere will not help you in the event of an incident.
The Risk Management strategy should also include the provision of insurance cover.
What is Statutory Liability Insurance?
Statutory Liability Insurance cover the company, senior management and employees for allegations of wrongful breaches of key legislation in the course of the company carrying out its business.
It includes cover for legal costs and expenses for both investigating and defending allegations against the insured party.
Statutory Liability insurance coverage includes monetary sums (fines and penalties) that are payable to regulatory bodies arising from a breach of the covered act.
There are a surprising volume of statistics each year demonstrating the high number of OHS related legal proceedings resulting from the serious injury or death of an employee or contractor. Having the correct policies and procedures in place is essential for all businesses to minimise the risks involved in carrying out their duties, however, there is always the risk that a business could unintentionally breach a law. This type of exposure may arise as a result of the actions of the directors, officers and employees of an organisation.
Ensure You Have Adequate Insurance Coverage
Statutory Liability insurance may provide cover for certain individuals and the company for fines and penalties resulting from the operation of the business, including fines related to workers compensation and occupational health and safety. In the event you have been held liable for a breach in legislation, Statutory Liability insurance may assist in covering the defence costs incurred from any resulting formal investigations as well as any fines and penalties issued.
Without such cover in place, many businesses – especially smaller businesses – would struggle to recover financially from an incident.
This is where your Insurance Broker can make a huge difference. A good Broker will understand your business and find the right insurance cover at the right price for you.
A good Broker will also help you to understand the ins and outs of the various insurance contracts available to you and this will even be of assistance to you in your overall risk strategy.
This is an area that will become a huge risk to the financial viability of businesses especially in the SME sector. Please talk to us if you have any concerns that you could be on the receiving end of a breach notice or a fine. TBIB has been protecting businesses and the livelihood of business owners for more than 40 years. Call us on 07 3252 5254 or drop by our website www.tbib.com.au and send us a message.