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Filling the Gap in Seed Error’s & Omissions Coverage


You might be a seed grower if… you have tried every tool in your toolbox to find an easier way to help you scrape flax out of a truck corner.  If you have ever stopped for hours to clean out your combine, swather, trucks, augers, bins, etc. while your neighbors cruise from field to field with their combines, you might be a seed grower.  If you have ever done calisthenics to get your above-average sized body into a hopper bin to clean out every possible seed inside, without knowing if you will fit out of the same bin again, you might be a seed grower.  If you have worked every day throughout the winter regardless of the cold temperatures, the excessive snow-drifts, and the lack of feeling in your fingers, to make sure you get everything processed before spring, you might be a seed grower.

One of the most challenging situations for businesses buying insurance is learning about your coverage, or lack thereof, when you need it the most.  There are exclusions and conditions of coverage that apply to all forms of insurance.  It is the role of an insurance broker to explain the coverage conditions to clients, to provide options and to give advice to clients.

Seedsmen’s Errors & Omissions (E&O) Liability Insurance is widely known to anyone breeding, researching, producing, cleaning or selling seed.  This magical coverage is thought to provide indemnity for all situations where seed is involved, and for the most part, the insurance industry has grown the coverage available to be quite comprehensive. However, there is one scenario that continues to surprise the industry when they find out it is not covered.

I will start by explaining that E&O insurance, whether related to seed or not, is coverage that insures the named insured against financial losses to a third-party caused by actual or alleged mistakes or a failure to perform a service.  Therefore, when a seed operation purchases E&O insurance, it is buying protection for financial losses to the third-party seed purchaser, whether partial or total loss of crop due to an issue with the seed.

The gap in coverage that surprises producers is when they learn of a potential issue with the seed before it gets planted in the ground.  By catching the issue before it is seeded, the financial loss to the third-party is now removed and along with it, the trigger for coverage under Seedsmen’s E&O coverage.  The seller of the seed has now mitigated the problem by catching it before it grew (or failed to) into a much larger issue.  This is where most insurance policies fail to cover the gap, as the seller of the seed is now the proud owner of unsellable seed, that most of the time cannot be resold without some serious remediation.

In discussing this situation with insurance companies, it comes to light that it is deemed a moral hazard to offer coverage for seed sellers in this situation, and therefore most insurers do not provide any option to cover the gap.

Fortunately, when you work with someone who understands your line of work, solutions can be found.  On top of sourcing a comprehensive Seedsmen’s E&O Policy, there are solutions available to cover portions of the first party exposures that any seed seller could get stuck paying out-of-pocket if a seed issue is caught before it gets buried in the ground.  This saves the hassle of dealing with angry customers, the bad “PR” that comes with a poor field being featured on Twitter all summer with your business as the #hashtag, and saves you the dent in your bottom-line profits by writing off potential income.

We get it and understand your business – not all seed is the same. Not all seed growers are the same. Work with an insurance broker who used to fit in the bin and has cleaned out the corners and has experience growing, cleaning and selling seed.  You may just find that not all insurance is the same, either…

David Schmidt is an Account Executive at Rempel Insurance Brokers in Morris, MB, specializing in insuring farms and businesses across Manitoba and Saskatchewan. 

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