The regulatory burden on organisations seems to get heavier every day, and manufacturing companies are no exception. Breaches of occupational health and safety (OHS) or environmental legislation, for example, can have a devastating impact on small businesses that fail to purchase adequate statutory liability cover.

Not only can your company be found liable, certain directors and officers within the organisation could also come under fire, putting their personal assets at risk. Furthermore, a strict liability breach means plaintiffs may not even have to prove intent or negligence occurred.

Fines and penalties are just the tip of the iceberg. The financial repercussions for a statutory breach may include the costs of investigating the incident and any reputational damage your company suffers in the aftermath.

What are the biggest risks?

There are a number of threats businesses must identify before investing in manufacturing insurance for statutory liability.

According to statistics from CBP Lawyers, workplace health and safety remains the biggest threat to Australian companies. Nearly two-thirds of claims on statutory liability policies came under this banner.

These risks are particularly important to account for in manufacturing, which is one of the country’s most hazardous industries. There have already been four workplace deaths in the sector this year, while 11 occurred in 2014.

Meanwhile, environmental breaches are responsible for approximately 20 per cent of claims. Again, the nature of manufacturing makes environmental regulations an ongoing challenge for some businesses.

The remaining 15 per cent of respondents in the CBP Lawyer data listed ‘other breaches’. This covered a wide range of statutory complaints, including alleged breaches of the Corporations Act, the ASIC Act and contraventions of consumer law.

Finding the right policy

Manufacturers can access statutory liability insurance as part of directors’ and officers’ liability or management liability insurance. Stand-alone policies are also available.

However, it’s crucial that small businesses review their manufacturers insurance carefully to ensure they are aware of the extent of their coverage and any exclusions. Statutory liability policies should protect you against the breaches that pose the biggest risk to your business, covering both individuals and the organisation for potential fines and penalties.

Experienced insurance brokers can help you identify the right level of cover for your needs and negotiate with multiple providers to find a comprehensive and cost-effective option. Please contact MGA Insurance Brokers to discuss your statutory liability exposure.