Managing a business includes risk. What an obvious statement now in the midst of a pandemic and economic crisis in our country. I am impressed at the resiliency of business owners who continue to move forward amidst the uncertainty around us right now. It is times like these where having a team of great advisors who have your back is crucial. These advisors will help you understand their specific areas of expertise and manage risk.
While not new, many business managers are still unaware of management liability policies and the risks that can be transferred to an insurer for their management liability risks. This coverage is not found in typical commercial or farm liability policies, as it is underwritten by companies that specialize in the legal aspects of navigating legal issues with business management. It is safe to say that adjusting a property fire loss and managing a wrongful dismissal lawsuit are very different issues and require different areas of expertise.
It is common to see management liability policies in place for non-profit organizations, as they protect their board members. However, the need for this coverage extends well beyond board-run non-profit organizations. Private businesses with investors, publicly traded companies, and, may I suggest that even family-owned farms, should consider management liability policies.
Consider a family farm. The farm has employees. The managing partners of the farm have siblings who own portions of the farm, but are not involved in management. The farm has a controller or book-keeper who is given full authority to pay bills, manage accounts and take the noise away from the farm manager who wants to grow a crop. There are management liability exposures in each of these aspects that can be transferred to a management liability policy.
A well-rounded management liability policy can include four areas of coverage: 1. Directors & Officers liability coverage; protecting the individuals who are making decisions on behalf of an organization. 2. Employment Practices Liability; providing insurance coverage for employee exposures such as discrimination, bullying, sexual harassment, unfair dismissal or hiring practices. 3. Employee dishonesty coverage; can be included to provide coverage for employees caught stealing from the organization. The complex claims from this area reveal that most losses occur over a long period of time, which makes it harder for the organization to discover the theft. 4. Fiduciary liability; the final component that can be included and will provide coverage when an organization is making financial decisions on behalf of their employees. Simply making choices on a benefits plan, or an employee retirement plan can create exposures that are covered by this coverage.
Finally, here’s a shameless plug for a great organization here in Canada – the Canadian Association of Farm Advisors (CAFA) is an organization of professionals that invest their time to understand agriculture, so that they can serve their clients better. If you need a referral to an advisor who knows agriculture, feel free to research your options through the advisor link on their website at www.cafenet.ca
Do you have questions? Rempel Insurance Brokers Ltd. are open for business throughout this pandemic and are glad to assist you with your insurance needs throughout this and all seasons of life. We wish you health and rich moments with your family throughout this time.
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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