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Are you adequately insured against fines and penalties?

As you’re well aware, compliance in and around the transport industry is ever-increasing.

Through this, we are seeing increased activity from several Gov’t bodies and in some cases for good reason.  With this however, comes the burden of potential fines and penalties which can come from these actions, not to mention the legal costs that are associated in defending the company and its Directors and Officers.  Such threats can come from WorkCover following the injury or death of an employee, the EPA for any environmental incidents or the Gov’t Transport Departments if it relates to breaches of the road rules.

As a result of increasing regulation, the insurance industry has come up with an insurance product that will defend both the Company and the people that own, manage or work for the Company should they face action from a Regulatory Authority for a breach of a Gov’t act, provided that the breach was not wilful or deliberate.  The Policy can also extend to include such things as unfair dismissal in the workplace, tax audit costs and employee theft.

In a recently completed case, there was a road transport accident involving a heavy vehicle which led to a triple fatality.  Following the incident, there was a thorough investigation of all circumstances and it was concluded that the vehicle was perfectly maintained, was travelling at 86km/h in a 100 km/h zone, was under the legal allowable weight and the Driver was within his legal driving hours.

As a result of the accident, the RMS in NSW conducted an audit of the business over the previous three year period and found that the company’s vehicles had beaten the point to point camera times 220 time over the three year period, which represented less than 1% of the company’s total truck movements.  The Company and its Directors subsequently received 260 separate court attendance notices with the potential fines if all were applied totalling $3,300,000.

The reality of this case was that there was very little that the Company could have done to avoid the breaches based on the information they had to hand.  The Company was Trucksafe accredited and all vehicles were fitted with Satellite Tracking, but the company’s GPS did not highlight the co-ordinates of the cameras and even if they did, the camera times are not published, so there is no way the company could monitor whether or not their Drivers were beating the times.  All vehicles were fitted with Speed Limiters set at 100 km/h, meaning that for the Drivers to beat the times, they were either running off hills at greater speed than 100 km/h or were going faster than the regulated speed in zones less than 100 km/h.  All of which the Company could do little about.

When the Court Attendance Notices were issued, it was acknowledged that for whatever reason, the incidents were not reported to the management of the Company by the RMS over the previous three year period and as such, the Company had no knowledge that the trucks were beating the times.  The sad reality is that the Driver involved in the incident that sparked the investigation had attracted 26 of the 220 separate offences and as such if the Management of the Company had of been aware, he would not have been employed by the Company as they had a strict three strikes policy which the Company could demonstrate they had used before.

It is hard to understand what else the company could have done but notwithstanding that, the Company was subjected to media harassment and protracted investigations and court cases that took more than 3 years to conclude.  The total cost of the claim come in at $1,000,000 including legal costs which were approximately $700,000 of that.  Whilst this business has suffered greatly as a result of all that they have been through, it goes without saying that without the right insurance protection in place – which included putting the Company and their management in touch with an expert legal team that specialise in that field – the business would not have survived.

In our opinion, as sad as stories like this are, it reinforces why the need for insurance against this risk is as vital as it is for the Assets you own.