DON T FALL FOUL OF LEGISLATION CHALLENGES IN A CHANGING WORLD THE PRICE OF RESPONSIBILITY INTEGRATED PROTECTION IN A CHANGING WORLD

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1 STATUTORY & EMPLOYERS LIABILITY

2 DON T FALL FOUL OF LEGISLATION CHALLENGES IN A CHANGING WORLD It doesn t matter whether your business is manufacturing or agriculture, service, transport or retail. EVERY business has a responsibility to employees, customers, the general public and the environment. Some of these responsibilities lie in common law but many are embodied in statute, through Acts of Parliament. In New Zealand, each year, new Acts of Parliament are passed and existing legislation is repealed or amended. This myriad of new and reformed legislation often imposes substantial penalties on business, as well as individual officers and employees, who fail to comply. Liability can be absolute, with ignorance offering no defence, so keeping your company abreast of its statutory obligations is a key challenge. Ensuring these obligations are not breached is another. Even the best run companies can fall foul. THE PRICE OF RESPONSIBILITY You can be held responsible and prosecuted not only for your own breaches but also for those of people working for you. In some cases you can even be held responsible for any independent contractors and agents you use. Whether prosecuted or successfully defended, you are likely to pay a heavy price. The cost of legal representation and defence is on the increase and so are the fines. INTEGRATED PROTECTION IN A CHANGING WORLD

3 QBE INTEGRATED PROTECTION QBE can offer two policies to help Statutory Liability and Employers Liability. Statutory Liability insurance provides wide-reaching cover that can pay for defence costs and fines should you unintentionally break the law and face a criminal prosecution whereas Employers Liability covers a civil exposure for injuries not covered by the ACC legislation. Employers Liability pays for defence costs, settlements and awards, playing a small but vital role in your business s integrated liability protection. HEALTH & SAFETY IN EMPLOYMENT STATUTORY LIABILITY CRIMINAL EMPLOYERS LIABILITY CIVIL ACC If the Occupational Safety & Health Service instigates a criminal prosecution against you, Statutory Liability insurance will be there to support. However, if a civil action is brought directly by the injured employee, a Statutory Liability policy would be unable to respond. A civil action is likely when a workplace injury is not covered by ACC (e.g. gradual process or mental injuries) and the employee retains their right to sue. Here Employers Liability insurance steps in, effectively plugging the gap left between Statutory Liability cover and ACC protection. ACC will cover many accidents in the workplace. Injuries which fall within the scope of ACC negate an employee s civil right to sue. QBE THERE WHEN YOU NEED US In New Zealand, more people put their trust in QBE s liability insurances than any other because when you face a liability claim, you need access to the best. And that s what QBE seeks to provide. Our experienced claims team have an in-depth understanding of the complex legal and commercial issues which surround liability claims and will negotiate settlements in consultation with you. Should you be sued, they can appoint some of the country s best lawyers to help in your defence. This brochure does not attempt to provide full details of every aspect of cover, nor all exclusions or limitations which may apply. It is for information purposes only. For full details, please read our policy wordings, which are available from our local QBE office or agent, or your broker. Not all products are available in all markets.

4 COMMON QUESTIONS Will my Statutory Liability policy protect me if I unwittingly break ANY New Zealand law? Yes, with a few exceptions. These are Inland Revenue prosecutions, Arms Act 1983, Aviation Crimes Act 1972, Crimes Act 1961, Proceeds of Crimes Act 1991, Summary Offences Act 1981, Transport Act 1962, Transport (Vehicle and Driver Registration and Licensing) Act I m not a criminal and I m not careless what Acts could I possibly break? What if it s claimed I deliberately broke or ignored the law? In QBE s experience, businesses often accidentally breach construction, environmental protection, health and safety, consumer rights, maritime, fair trading and personal privacy laws. We will reimburse you for your defence costs as long as you are acquitted. What exactly will Statutory Liability pay for? What if a regulatory body wants to prosecute my Operations Manager? Reasonable legal defence, witnesses and investigation costs, plus most fines, court costs and any solicitors costs a court might order you to pay. They would be covered. The policy protects the company, and its trustees, directors, officers, sole traders, partners and employees. What if I have to face a formal inquiry or investigation by a regulatory body? In this scenario, QBE s Statutory Liability insurance contains an extension which would cover your reasonable civil legal defence costs. How could an employee bring a civil action against me? Aren t employees prevented from suing under ACC? What if a civil court grants an employee compensation and I have to pay exemplary damages on top? What if a criminal court orders me to pay compensation to an injured party under the Health & Safety in Employment Act? Not always. ACC covers most accidents at work but, under common law, employees can still sue for anything that ACC doesn t cover. This includes: exemplary damages mental injury not accompanied by any physical injury nervous shock or fright (often resulting in heart attacks/strokes), again not accompanied by any physical injury diseases brought on slowly, over time (e.g. chemical poisoning, exposure to the elements or extremes of temperature) QBE s Employers Liability will pay for defence costs, settlements, and ANY damages awarded by court, including exemplary damages. QBE s Statutory Liability policy covers compensation for an HSE claim.

5 CASE STUDIES HEALTH & SAFETY CRIMINAL A customer slipped and fell on a supermarket floor. Two weeks later they died of unrelated causes but a prosecution for unsafe premises was triggered under the Health & Safety in Employment Act. The charge was vigorously defended and no fine was imposed but the Statutory Liability policy still paid $18,000 in legal defence costs. HEALTH & SAFETY CIVIL An employee of a pest control contractor developed health problems including nausea and skin disorders. It was discovered this was due to prolonged exposure to chemicals used in fumigation but, as a gradual process claim, no compensation was available through ACC. The man took a civil suit out against his employer and their Employers Liability policy stepped in to pay defence costs and a $42,000 award of damages. CORONERS INQUEST Following a fatal workplace accident a plastics manufacturer was called to a coroner s inquest. The coroner found no adverse circumstances but nevertheless the manufacturer incurred solicitors costs which his Statutory Liability paid, triggered by the Health & Safety in Employment Act. ENVIRONMENTAL POLLUTION An earthmoving contractor constructed a groundwater retention pond but the pond wall failed and sediment from the earthworks ran into a nearby stream. The contractor was prosecuted under the Resources Management Act for polluting even though the pond was constructed to the required standard. BUILDING CONSENT A property owner changed the use of his premises without obtaining proper consent. Although it was in a commercial zone, the local authority later discovered that part of the building had been let for residential purposes. They fined the property owner under the Building Act. MISREPRESENTATION A number of representations were made in the course of marketing a new pharmaceutical product which could not be substantiated. An investigation was undertaken and as a result fines were imposed under the Medicine Act. UNFAIR TRADING A real estate agent tried to attract the optimum number of bidders to an auction by giving a guide price of between $175,000 $200,000 when, in fact, the vendor s minimum price was $200,000. Following complaints, the Commerce Commission found the agent guilty of misrepresentation under the Fair Trading Act. HISTORIC PLACES Whilst preparing a new property development a contractor uncovered old bones. The contractor continued work and caused damage to the remains before the Historic Places Trust had an opportunity to assign the site status. He was fined under the Historic Places Act. LIQUOR TO MINORS A liquor store sold wine to a young woman thought to be over 18. It transpired she was 15 years of age and the store was fined under the Sale of Liquor Act for breaching the terms of its license by selling to minors.

6 Whilst our full range of products can be viewed at our website, we detail below some we believe might be particularly relevant to your business. General Liability A cornerstone of your legal liability protection should be General Liability. QBE offers a broad and well-written combination of public and product liability insurance that can help to protect your business following third party property damage or personal injury. Property Insurance QBE s Material Damage and Business Interruption insurance can help to reinstate your insured business assets and cover you for income lost as a result of damage. Professional Indemnity the term professional applies to a wider spectrum of people than ever before, all of whom can be sued for their mistakes. Professional Indemnity insurance can help cover the financial consequences of your errors, protecting your reputation and your livelihood. QBE New Zealand QBE is the leading business insurer in New Zealand and companies in the QBE group have been providing insurance here since Our products are managed by highly skilled and experienced professionals and distributed through selected intermediaries to both the corporate and commercial markets. We provide insurance solutions tailored to our clients needs, particularly in the corporate sector. QBE operates a network of branches throughout New Zealand, which means our clients, wherever they are, enjoy accessibility, highly responsive decision making and local service. Our full range of products can be viewed at our website. Branch Network We have offices throughout New Zealand: Auckland (09) , Hamilton (07) , Tauranga (07) , Napier (06) , Wellington (04) , Christchurch (03) , Dunedin (03) , Invercargill (03) For further details contact your insurance advisor or phone QBE Insurance (International) Ltd. Incorporated in NSW Australia. A member of the QBE Insurance Group. SELB1202