- WHO NEEDS SEEDSMEN’S PROFESSIONAL LIABILITY INSURANCE?
- SURELY PRODUCTS LIABILITY and/or MISCELLANEOUS E&O INSURANCE IS ADEQUATE?
- WHAT SORT OF CLAIMS DO SEEDSMEN ATTRACT?
- WHAT ARE THE KEY FEATURES OF THIS INSURANCE PROGRAM?
- THE ISF AND THIS PROGRAM FOR SEEDSMEN’S PROFESSIONAL LIABILITY
WHO NEEDS SEEDSMEN’S PROFESSIONAL LIABILITY INSURANCE?
Everyone who is involved in growing, conditioning, or distributing seeds. At any stage of the seed business mistakes can occur in the selection, conditioning, packaging or testing of the seed which can cause or contribute to the loss in whole, or in part, of the customer’s crop. Even the most professional of organizations may suffer from a lapse in standards which can seriously impact the company’s balance sheet if there is no applicable insurance.
SURELY PRODUCTS LIABILITY and/or MISCELLANEOUS E&O INSURANCE IS ADEQUATE?
Seedsmen’s Professional Liability Insurance should be carried in addition to Products Liability Insurance as they are entirely different coverages and complement each other.
Seedsmen’s Professional Liability Insurance covers claims against the Seedsmen which may result from failure of the seed sold to conform to the variety or other specified qualities, or to be suitable for the purpose specified, resulting from any error, negligent act or omission by the company or its employees. Miscellaneous E&O covers the professional services of the Seedsmen performed for others for a fee. The Seedsmen does not perform professional services for others for a fee.
Products Liability covers Bodily Injury and Property Damage, both of which are excluded by the Seedsmen’s Professional Liability Insurance. Sometimes a Products Liability Policy is enhanced to cover misdelivery but that is not an adequate substitute for Seedsmen’s Professional Liability Insurance.
WHAT SORT OF CLAIMS DO SEEDSMEN ATTRACT?
There are six main categories of claims as outlined below. In most cases the key factors are the adequacy of the seedsmen’s quality control and seed testing procedures, including the sampling procedures, and the depth of the plaintiff’s distress at having lost all or part of his harvest and subsequent profit (sometimes blaming the seedsmen, instead of his own farming techniques).
- Mechanical Error: Such as errors in labeling, mixture of the wrong kinds or varieties of seed, inadequate labeling or inadequate laboratory testing for germination.
- Overzealous Distribution: Including verbal warranties as a result of a salesman over-representing the seed product and catalogue warranties perhaps beyond the control of the seed producer. It is recommended to use a Standard Disclaimer of Warranty and Limitation of Liability, which is a protection against some of these claims.
- Germination Deficiencies: This type of loss can be controlled by careful grow-out testing and strenuous policing by official state and federal seed testing laboratories. Although claims may be less frequent, they tend to be particularly severe when they do occur.
- Misapplication: Claims resulting from seed failing to perform in a given area.
- Disease Control Problems: Susceptibility to disease varies on the susceptibility or genetic resistance of the type of seed planted. Seedlings or plants may become infected with disease due to seed borne organisms, or be infected by disease organisms in the soil or on plant residue.
- Miscellaneous Problems: Improper and inadequate pollination can produce substandard seed and consequential losses. Claims also arise from failure to carefully rogue undesired types, kinds or varieties from the seed field and, in particular, apparent carelessness in harvesting the seed production fields.
WHAT ARE THE KEY FEATURES OF THIS INSURANCE PROGRAM?
The policy wording covers Claims Made during the policy period, excluding claims/circumstances which are known about at the inception of the policy. It defines “Seed(s)” as including “seeds, bulbs, plants roots, tubers or other similar means of plant propagation”. The policy covers World-Wide Sales of all crops including Genetically Modified Organisms.
The Limits and Deductible are both inclusive of defence costs and expenses. This means that the sum insured should be adequate to include these expenses. The Deductible would be geared to an Insured’s turnover, and to the Insured’s own claims record.
Underwriters are willing to offer a Catastrophe Protection for those large risks which only require insurance to protect them against the unusually large claims. Capacity is available to provide limits up to $10,000,000 or more.
THE ISF AND THIS PROGRAM FOR SEEDSMEN’S PROFESSIONAL LIABILITY
The ISF have a key role in this program, in promoting it amongst the membership, and acting as technical consultant to Underwriters. This consulting role will serve to keep Underwriters informed about the seed trade so that they better understand the risks involved in it.
