Management Liability for Farms

Farm Management Liability Insurance is essential for all agricultural enterprises, irrespective of their size and farm occupation. Management Liability Insurance can provide cover for private companies, sole traders and farming partnerships.

What is the difference between Public Liability Insurance and Management Liability Insurance?

Public and Products Liability Insurance for farms offers protection to the insured entity against claims for personal injury or property damage that may arise from a third party.

A farm Management Liability Insurance safeguards both the organisation and its directors and officers from claims resulting from errors or intentional misconduct. This policy aims to cover companies from legal repercussions stemming from the negligent or improper conduct of their directors or officers.

Woman sitting in ute talking on UFH radio while mustering cattle

What is a farm Management Liability insurance policy?

A Management Liability Insurance typically offers coverage for liability claims across six distinct sections of the policy.

These policy coverage sections include;

Management Liability
Corporate Liability
Employment Practices Liability
Crime Protection
Superannuation Trustees Liability
Statutory Liability

Farm Management Liability Claim Examples

Farm Employment practices liability can encompass a range of claims. These claims can include accusations of wrongful termination, workplace harassment, bullying, sexual harassment, discrimination, and failure to provide a safe working environment, as well as breaches of employment contracts.

With a growing awareness of their rights, employees are increasingly prepared to take legal action against their employers. The indirect costs associated with employment practices liability can lead to adverse publicity, reputational damage, diminished productivity, and stress for both parties involved.

Statutory Liability for farms provides essential coverage for breaches of statutory obligations and non-compliance. Examples of potential breaches include those related to occupational health and safety, animal care and protection laws, veterinary and chemical usage, biological controls, and environmental regulations.

Farms encounter a wide range of legislative demands, and the financial implications of even a minor regulatory infraction or investigation can be considerable. It is vital for farms to adopt effective compliance and control measures to reduce the likelihood of facing such claims.

Directors and Officers Liability insurance for farms offers protection for directors and officers in the event that third parties file claims alleging wrongful actions. Such wrongful actions may encompass a range of issues, including deceptive conduct, failure to act in the best interests of shareholders, breaches of trust, inaccuracies in financial reporting, inequitable treatment of shareholders, unfair trading practices, competition violations, trading while insolvent, contract breaches, inadequate staff training and supervision, unsafe work environments, and environmental violations.

The rise in regulations has escalated the operational risks faced by farms. Additionally, in a rapidly evolving regulatory landscape, many directors may not fully grasp their comprehensive legal responsibilities. They hold various duties and obligations for which they are personally accountable, some of which could result in unlimited personal liability

The Crime section of a Farm Management Liability insurance policy offers protection against various criminal activities, including theft of money and property by employees or third parties, internal fraud through collusion, fraudulent actions involving suppliers, contractor theft, fraudulent fund transfers, counterfeiting, forgery, credit card fraud, and social engineering

What is Social Engineering?

The prevalence of social engineering crimes targeting farms is rising, largely attributed to the growing reliance on online payments, use of email accounts and the substantial amounts involved in invoice payments.

A typical scenario of social engineering in the agricultural sector might involve a livestock or fertilizer supplier sending an email to a farm to request an update of their account information. Subsequently, the farm continues to process payments into the newly provided account, which is later discovered to be a fraudulent third-party account

Certain Management Liability policies may offer coverage for Social Engineering claims; however, it is often more effectively addressed through a more extensive Cyber Insurance policy for farms.

A Management Liability Insurance policy may provide coverage for expenses related to tax audits and investigations that arise from an ATO audit. Typically, the coverage for tax audit costs is capped within the policy, and the extent of this coverage can differ among insurers.

It is crucial to understand that this provision does not extend to any fines or penalties imposed by the ATO; rather, it addresses the costs incurred by the company in preparing and submitting a claim, including accountancy fees.

Superannuation Trustees Liability offers protection against actual or alleged acts, errors, or omissions related to the trustees of a staff superannuation fund. Claims may arise from trustees failing to meet their obligations to the necessary standards, not adhering to the trust deed, common law, and relevant legislation, or lacking an established governance and risk management framework.

Farm workers unloading chemicals from truck

The number of claims made against farm owners and operators by employees, shareholders, regulators, creditors, and other stakeholders is increasing. Furthermore, the financial repercussions of a typical regulatory investigation can be significant for a farm.

Farm Management Liability Insurance coverage and the limits provided by each policy can differ significantly among insurers. Consequently, it is essential to engage with a farm insurance broker who understands farming operations and insurance requirements.

Farm Management Liability Insurance

Management Liability for Farms

What is the difference between Public Liability Insurance and Management Liability Insurance?