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It’s important you understand how much statutory liability insurance you need. This will depend on your industry, risk exposure and legal requirements. 

What is Statutory Liability Insurance and how much coverage is necessary?

Statutory liability insurance is designed to safeguard against legal obligations arising from statutory violations or breaches. This type of insurance provides coverage for situations where a business is held accountable for failing to comply with specific legislations or regulations. 
Statutory Liability Insurance offers protection by covering legal expenses and any compensation payments resulting from claims related to statutory breaches. While not mandatory, obtaining this insurance is strongly advised, especially for businesses operating in regulated industries or those subject to statutory requirements. 
In New Zealand, statutory liability insurance is not mandated by law, but it is recommended for businesses to mitigate potential financial risks associated with legal proceedings stemming from statutory non-compliance. 
Determining the appropriate amount of statutory liability insurance hinges on various factors such as the nature of your business, its size, the extent of statutory obligations, and any contractual agreements requiring specific coverage. 

To ensure adequate coverage, it's crucial to assess your business's statutory compliance needs.

  1. Identifying Risks: Evaluate potential legal liabilities stemming from statutory breaches relevant to your business activities. 
  2. Industry Standards: Research industry norms and recommendations regarding statutory liability coverage to align with similar businesses. 
  3. Contractual Obligations: Review any contractual agreements with clients, suppliers, or other stakeholders to ascertain if statutory liability insurance is stipulated as a requirement. 

Example of an Statutory Liability Insurance claim:

A statutory liability insurance claim for an electrical business for example, might arise if a customer alleges that the business failed to comply with electrical safety regulations mandated by law. For instance, if a client suffers an injury due to faulty wiring installed by the electrical business, they could file a claim citing violation of statutory safety standards.

In such a scenario, the statutory liability insurance would cover legal expenses, settlements, or judgments resulting from the claim, ensuring the business can fulfill its financial obligations while adhering to legal requirements. 

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