Insurance Against Liability to Pay Statutory Fines and Penalties

Abstract

Contracts of insurance which deliberately insure a person against liability to pay fines or penalties have long been regarded as being contrary to public policy and therefore unlawful and unenforceable. So entrenched is this view that these sorts of contracts have not been a standard part of insurance companies' offerings and the courts have not had to deal specifically with any one-off such contracts as might have existed. Several insurers are now offering, as a fairly standard component of their corporate/business/commercial packages, cover against liability for fines and penalties which may be imposed under certain pieces of recent legislation (particularly environmental, health and safety and consumer protection legislation). This article examines the principles underlying the view that fines and penalties insurances are unlawful, and discusses an alternative argument and its chances of success in the context of Resource Management Act offences.