Not talking about Traffic Fines either, but you get the gist!
For those who have accepted Management Liability or specifically Statutory Liability Insurance on the understanding that it is insurance against risks involving either a Director, Company even a Sole trader having to defend a claim in their capacity as an owner or manager of a business, you may have also been sold that Fines or Penalties then imposed are also insured (eg; WorkSafe, ATO, EPA, ASIC, etc.).
Please be careful, as where some insurers do explicitly detail a Sum insured for Fines & Penalties, not all of them are permitted to be covered by law and, it is no exception in respect of Work Health & Safety breaches in the states of New South Wales, Western Australia and since the 21st September, 2021, in Victoria.
To summarise, if you carry a business in those states that require maintaining Workers Compensation Insurance, we inform our clients and colleagues alike that; where they are found to be in breaches of those state WH&S laws, Fine & Penalties handed down are uninsurable by law.
The understanding is that other States will most likely follow suit with similar Amendments to their WH&S laws in the future.
Perhaps a misconception by policyholders is that they are covered in every sense of the word but, it is common in most if not all policies within a broader Management Liability Insurance that;
Penalties mean any monetary sum payable by the Insured to any Regulatory Authority for a Statutory Breach by the Insured but excluding any Prosecution Costs.
Penalties do not include:
(a) tax imposed by way of penalty
(b) workers’ compensation premium imposed by way of penalty;
(c) penalties that are uninsurable at law.
In similar contrast, it is also worthy of note that the type of Remedial Orders in which a Penalty or Enforceable Undertaking Expenses that ensue such as a;
(a) remedy any matter caused by the commission of a Statutory Breach; or
(b) pay an amount as compensation for damage caused in consequence of a Statutory Breach; or
(c) pay an amount as compensation for loss of time or expense incurred in consequence of a Statutory Breach; or
(d) pay any remedial, reparation or restitution costs including but not limited to the cost of cleaning-up pollution and contamination; or
(e) pay Compensation.
Are not insured if such orders are brought forward by the courts.
Fines and Penalties which are civil, strict, or administrative and which are insurable as a matter of law and public policy in the jurisdiction in which the Claim giving rise to them is determined are accepted.
Fines and Penalties do not include any Tax Liability and/or Superannuation Liability.
Losses for which you may then become legally obligated to pay on account of any covered Claim include:
- Defence Costs;
- Legal Representation Expenses;
- sums payable due to settlements to which the Insurer has consented;
- awards of claimant’s costs;
- pre-judgment and post-judgment interest;
- punitive, exemplary, multiplied or aggravated damages or Fines and Penalties unless the Insurer is legally prohibited from paying such damages, fines, or penalties in the jurisdiction in which the Claim is determined
So on the 21st of September, the Victorian Parliament passed the Occupational Health and Safety Act 2004 (Vic) which received Royal Assent allowing new provisions to the Act that, amongst other things, provide that;
- all contractual terms indemnifying employers and/or persons for pecuniary penalties imposed under the OH&S Act are now void; and
- it will be an offence to enter into, offer to enter into or be a party to a contract that has the effect of indemnifying employers and/or persons in respect of any liability to pay pecuniary penalties imposed under the OH&S Act.
Those who have accepted these forms of Insurance in the past realizing they had protection with respect to Fines & Penalties ranging anywhere from $25,000- $500,000 in respect to WH&S, please make an important note in understanding your specific levels of cover or, discuss further with us to understand your policy implications.
The notion behind these measures put into place by the Victorian Government was so to deter employers and/or persons who then are directly liable for penalties imposed for a breach of the OH&S Act from any future OH&S violations, and also to generally deter employers from breaching the OH&S Act if they realized they would have to foot the bill.
Importantly, the amendments to the OH&S Act do not prohibit insurers from providing, and employers and/or persons from obtaining, cover for the costs of defending an investigation or prosecution. The amendments operate only to prohibit insurance cover for fines and/or penalties imposed under the OH&S Act.
This is not intended to be, nor should you rely on this information as legal advice however, should you have any queries or concerns about your current covers held through us, please contact us at any time to discuss.
Don’t fall behind the wheel & please take care!
Specialist Underwriting Agencies
Chubb Insurance Australia
Lander & Rogers