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Insurance Cover for Health and Safety Defence Costs
By
Stephen Chessher
Beale & Co.
Effective representation of a client being investigated or prosecuted by the HSE and similar bodies can be expensive.
Insurers recognise that the outcome of a health and safety prosecution often has a bearing on civil claims for damages, whether for personal injury, physical damage to buildings or plant or financial losses and therefore have a vested interest in ensuring that their policyholders have access to high quality legal advice and representation.
Cover for costs of defending health and safety and certain other prosecutions (but not for fines) is commonly provided under many commercial insurance policies including:
* Public liability
* Employer's liability
* Professional indemnity
* Contractor's All Risks
* Directors' and Officers' liability
Policy wordings differ considerably but common features include:
Written Consent
Insurers invariably agree to pay only costs incurred with their written consent. Generally a term will be implied that consent cannot unreasonably be withheld so, for example, it might be considered unreasonable for the insurer to insist on its policyholder instructing a nominated solicitor, especially if that solicitor was not a specialist in the field.
It follows that the insurer's consent should be sought at the earliest possible opportunity, preferably before any legal costs have been incurred.
It should be noted that reporting to insurers of an accident which may result in a claim (which will invariably be required by policy conditions) is not the same as seeking consent to incur legal costs and consent should always be sought explicitly.
What sort of legal costs?
Some policies provide cover for all costs incurred with their consent in relation to the defence of a prosecution. Others are far more specific and may restrict cover, for example, to solicitors' fees. The latter would exclude, amongst other things, counsels' fees, experts' costs, in-house costs etc.
Prosecution Costs
Some policies will pay costs and expenses awarded against the insured in the event of a conviction.
N.B. Insurers will never meet the cost of fines which would be deemed contrary to public policy.
What sort of Court?
Some policies will provide cover for costs incurred in relation to proceedings brought in any court. Others may restrict cover to proceedings in a court of summary jurisdiction (i.e. magistrates' court). That would mean there was no cover for proceedings in the Crown Court (which is commonly the forum for more serious health and safety offences) or for representation on an appeal (whether brought by the prosecution or the defence).
In addition to cover for defence costs, some policies will also provide cover for costs of representation at coroner's inquests. It is not the function of a coroner's court to apportion blame but nonetheless it is frequently the case that a coroner's inquest is a precursor to criminal charges or a civil claim or both.
It is sometimes a moot point whether the policy will provide cover for costs of representation during an investigation but before charges have been brought. Effective representation pre-charge may well influence the prosecutor's decision whether to bring charges and is often vital in challenging the admissibility of evidence after charge.
What sort of offence?
Some policies restrict cover to named offences, for example offences under the Health and Safety at Work Act 1974. This may have anomalous consequences. For example, in the event of a fatality, there would not be cover for a manslaughter charge but would be cover for a lesser offence brought under the Act.
Who is covered?
Where cover for costs is provided, it may be restricted to costs incurred in defending the insured party. Strictly construed, that would exclude costs of defending directors or employees who may be prosecuted as individuals either as well as or instead of a company.
Potential Civil Liability
Policies often provide that the circumstances of the alleged offence must be such as may give rise to a claim for indemnity under another section of the policy.
Less often there will be a further proviso to the effect that costs will be covered only if defence of the health and safety proceedings would, in the opinion of the insurers, assist in the defence of the potential civil claim. This sort of proviso inevitably involves a subjective judgment and involves the further difficulty that at an early stage of criminal proceedings it will not always be apparent what issues may be relevant to a later civil claim.
Exclusions
There are rarely exclusions to cover for costs but one type of exclusion occasionally encountered is where a prosecution results from a deliberate management decision, act or omission. This would imply recklessness on the part of senior management, for example recognising a serious risk to health and safety but nonetheless deciding to run the risk, perhaps in order to save costs. Perceptive readers will immediately realise that recklessness of that sort is precisely the type of activity that is likely to result in a prosecution!
Conclusions
* Check the wordings of
all policies which might be relevant
* Notify insurers of an intention to obtain legal advice as soon as possible
after an accident/incident occurs.
Beale
and Company
Garrick House
27-32 King Street
Covent Garden
WC2E 8JB
020
7240 3474
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