New legislation brings change for injury victims

The new Sentencing Amendment Act 2014 (SAA) that comes into force tomorrow (06 December 2014) will allow courts to consider awarding reparation for any shortfall in ACC payments to victims of crime.  The change could mean greater costs for businesses and individuals involved in court cases where an injured party has suffered a loss of earnings or has treatment costs that are not covered by ACC.

To explain the change in more detail, IAG has compiled a brief Q&A and a summary of the new law.  We welcome any questions you have about the legislative changes.  Please submit your query in the comments box at the end of this blog post and we’ll aim to respond to you within 24 hours.

What’s changing?
The SAA comes into force on 6 December 2014 and implements a number of the government’s reforms concerning victims of crime.  Courts can already order an offender to pay reparation to victims of crime for property damage and emotional harm, arising from criminal offending.  However, the changes will allow courts to order offenders to pay reparation to victims of crime for the shortfall in loss of earnings and treatment costs not paid by Accident Compensation Corporation (ACC).  For example, someone who causes injury to a third party may be required to top-up the 80% loss of earnings provided by ACC, or pay treatment costs not covered by ACC.

Why is this changing?
The main reason behind the change is the general consensus that injured victims of crimes face significant financial and emotional costs.  This change does not replace ACC.  Instead, it enables the criminal courts to require an offender to top-up any shortfall in the injured victim’s ACC compensation.

Summary of the changes
• From 6 December, the criminal courts may order an offender to pay compensation for the victim’s loss of earnings and treatment costs that are not paid by ACC.  This liability may be insured, if it’s the not the result of a criminal conduct that is intentional or reckless.  Generally, insurance would never cover criminal offences resulting from intentional or reckless conduct.  For example, a motorist found guilty of careless driving could have a reparation order imposed on them, but be insured for that payment if the policy they hold indemnifies them in the event of causing bodily injury.
• To impose reparation, a judge will consider the extent of the damage and injury, the loss suffered by the victim and the offender’s ability to pay.
• Examples of offences that might trigger reparation orders and attract insurance cover include:
– Careless driving e.g. when someone causes an accident without the intention to drive dangerously
– Dangerous driving e.g. when the driver causes an accident and has an awareness of the risk they are running
– Health and Safety in Employment Act violations e.g. if an employer fails to take all practical measures to avoid an incident.

What does the change mean?
We anticipate that customers who have such reparation sentences imposed by the courts will start to make claims on their policies where the policies cover bodily injury.  It will take some time for the new changes to be received in the market and we will also need to understand how IAG’s policies offering bodily injury cover within certain products, may need to change.  We are currently reviewing our policies in light of the legislative changes and working through how we will process claims where the policies do respond.

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