Agricultural business owners may feel they have risk under control, but even seasoned ranchers and farmers can miss an important aspect of risk mitigation. This involves protecting your business from potential liability for the mistakes made by third parties who supply services or products, such as subcontractors, suppliers or farm labor workers.
The concept of risk transfer refers to precautions you can take to help hold third parties financially responsible should their materials, products or services cause or contribute to a liability claim. The transfer of risk can be accomplished through contractual arrangements that include requiring third parties to have insurance coverage sufficient to protect your interests. When implementing a risk transfer program, you should work with your insurance agent as well as an attorney experienced in contract law in your state.
Following are a few typical farm-based scenarios that help illustrate how the mistakes of third parties could lead to claims against an agricultural business owner.