01 / The meaning
What it means.
The existence of a statutory liability section does not mean every fine or regulatory cost is insurable. Some legislation prohibits insurance or indemnification for particular monetary penalties. Other exclusions may address intentional conduct, known breaches, taxes, compliance costs or specified offences. Identify the exact legislation, jurisdiction, insured person and type of expense before describing what a policy could address.
Distinguish defending an allegation from paying a penalty and from correcting the underlying non-compliance. Those are separate costs with potentially different legal and policy treatment. An insurer’s consent may be needed for advisers, admissions and settlements, but regulatory deadlines still require attention. Management liability packages can contain statutory sections; the heading should never be treated as permission to transfer the business’s legal duties to an insurer.
02 / Put it in context
A practical example.
Hypothetical example: a manufacturer receives a regulator’s notice following an incident. It obtains appropriate legal advice, preserves records and notifies its insurer, asking separately about investigation expenses, defence costs and any amounts that cannot lawfully be insured.
This example illustrates the term. It does not predict a claim outcome.
03 / Read the detail
What to check.
- Identify the jurisdiction, legislation and nature of the alleged contravention.
- Separate defence expenses, compliance work and monetary penalties in the review.
- Check exclusions, lawful-insurability wording, consent requirements and the statutory sublimit.
04 / Start a useful conversation
A question for your broker.
Which specific regulatory costs could this section address, and which are excluded or prohibited from being insured?
05 / Connect the terms
Keep the meaning in context.
06 / Apply it to your business
Related insurance guides.
Further reading
Read the source guidance alongside the relevant policy wording.
General information only. This does not take into account your objectives, financial situation or needs. Before acting, consider whether the information is appropriate for you. Cover is subject to insurer acceptance and the policy terms, conditions, limits and exclusions. Read the Financial Services Guide and the relevant PDS (where applicable) and/or policy wording before deciding.
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