Public liability insurance is for accidental third-party injury or property damage; it does not pay to defend a WorkSafe or other regulatory investigation into an alleged breach of law. For a tradie, defence costs for that investigation can fall on the business even when the allegation is unintentional and no fine is imposed.
Statutory liability insurance may cover legal and defence costs for an alleged unintentional breach of a covered New Zealand law, including representation during an investigation or hearing, subject to the policy wording. BizCover describes statutory liability cover as applying to certain unintentional breaches and including legal representation and defence costs.
When a regulator investigates your work
A WorkSafe investigation can require a business to respond to questions, provide records or take part in a hearing. Statutory liability insurance can help with legal representation and defence costs for covered allegations, if the policy responds. It does not decide whether you breached a duty, replace safe work practices or guarantee that every investigation is covered. BizCover explains the investigation and defence response; check the policy wording for its triggers, exclusions, limits and excess.
The HSWA fine rule: section 29
Section 29 of the Health and Safety at Work Act 2015 makes insurance against fines and infringement fees under that Act unlawful. An insurer cannot pay an HSWA fine or infringement fee for you. That legal bar concerns the fine itself; defence costs for an investigation are a separate policy question and may be covered if the wording allows it. WorkSafe’s HSWA guidance links to the Act.
For fines under other laws, cover is possible only where that law permits insurance and the policy wording includes the fine. BizCover notes that statutory liability cover applies only to certain laws and breaches. Never assume a fine is covered from the policy name alone.
How it differs from public liability
Public liability insurance responds to covered third-party claims for accidental injury or property damage and may meet the legal defence costs of that liability claim. Statutory liability is designed for legal costs and representation when a regulator alleges a breach of a statute. The situations and policy wording differ, so one policy should not be treated as a substitute for the other.
Trade examples: when this cover may matter
- A builder receives a WorkSafe request for site records after an incident involving a subcontractor. The question is whether statutory liability cover will fund legal advice and representation for the investigation.
- An electrician is asked to explain safety records after a regulator raises concerns about work at a site. Cover depends on the alleged breach, the insurer’s policy and whether the law permits the relevant costs.
- A plumber or small contractor faces questions after a work-related incident involving staff or another contractor. The policy may help with eligible defence costs, but cannot insure an HSWA fine.
These are examples of situations to ask an insurer about, not promises that a claim will be accepted.
Who should consider statutory liability insurance?
Who needs statutory liability insurance? Sole traders, contractors and small trade businesses may want to consider it if their work exposes them to regulatory investigations or allegations under health and safety, consumer, environmental or other covered laws. WorkSafe says HSWA applies to nearly all work in New Zealand, so businesses should understand their duties as well as their insurance. The Act and WorkSafe guidance are useful starting points.
Check the policy before you buy
Ask what investigations trigger cover, whose legal costs are insured, which laws and alleged breaches are included, and what exclusions, limits and excess apply. Confirm how the policy treats fines under laws other than HSWA, and keep the policy wording with your business records. If you are unsure how the wording applies to your trade, speak to the insurer or a licensed insurance adviser.