Frequently Asked Questions
Seed Sales Reps
Seedsmen’s Errors and Omissions Insurance: An Explanation
The London Market for Seedsmens Errors and Omissions was established over 40 years ago to meet the specific insurance needs of those involved in the seed trade. This insurance is as relevant today as it has ever been.
Who needs Seedsmen’s Errors and Omissions Insurance?
Everyone who is involved in growing, conditioning, or distributing seeds. At any stage of the seed business mistakes can occur.
Surely Products Liability is Adequate?
No! Seedsmens E and O should be carried in addition to Products Liability as they are entirely different coverages and complement each other.
Seedsmens E and O covers claims against the seedsmen which may result from recommendations, advice, calibrations, proper gps usage, misdelivery, crop consulting/scouting etc. involved in or subsequent to seed sale.
Products Liability covers Bodily Injury and Property Damage.
Examples of Seedsmen E and O claims:
Claims may arise anytime a grower is unhappy with a crop, and feels the seedsmen may be the nearest ‘deep-pocket’. Some are frivolous, some have merit, but all need to be defended at a cost to the seedsmen. Defense costs are included in the Seedsmens E and O limit of liability.
The following allegations have all caused substantial claims and/or costs on seedsmen’s policies (from $20,000 to $2,000,000):
- The wrong seed variety was supplied by an insured, resulting in a claim for the difference between the value of the crop that was produced and the crop that should have been produced.
- A grower maintained that the insured’s salesman made representations concerning resistance of a sorghum variety to a soil borne fungus, which damaged his crop.
- 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. Damage can be reduced by disease control treatments and by not planting in areas known to be infected with disease. Recommendations or advice on disease control may result in a suit.
- MISAPPLICATION: Claims resulting from seed failing to perform in a given area as perhaps advised by the Sales Representative.
- See specific loss examples
What are the key features of Seedsmen E and O?
under the London policy means the individual, firm or corporation named in the schedule and includes the partners, employees and any executive officers and directors if the insured is a corporation. Additionally “Seed(s)”
are defined as including “seeds, bulbs, plants roots, tubers or other similar means of plant propagation”, and it should be noted that the policy covers worldwide sales.
There is a Deductible
(minimum $2,500) which applies to each claim including costs. In this context a claim means all claims resulting from a single sale to one customer of one kind or variety of seed. With the Multiple Claims Clause,
Underwriters have addressed the point that many claims could result from a single lot of seed by limiting the number of deductibles to 3, for an additional premium.
The Sum Insured
is an annual aggregate limit inclusive of defense costs and there is enough capacity in London to respond to the current needs of any seedsmen looking for coverage.
As in all such policies there are some Exclusions:
Dishonest, fraudulent, criminal or malicious acts or omissions
of the insured or his employees are not covered.
Also excluded is the purchase price of defective seed.
Under the standard Limitation of Liability used by seedsmen replacement seed is offered by the seedsmen if the original is found to be defective.
Claims arising from the sale of seed not harvested during the most recent season
of such seed are not covered. However, this does not apply to losses arising from seeds which by custom of the trade are carried over to the following seasons, if before such sale a purity and germination test is performed within the specific statutory period.
As mentioned above, the policy excludes bodily injury
including death, of any person and damage to or destruction of any property
including farm animals.
Claim for damage to plants because of disease, rust, wilt, fungus, insects or larvae
are excluded unless the plants are those grown from seed sold by the insured.
There is no cover for any liability assumed under written or oral contractual agreement
between the insured and any other third party.
Punitive and exemplary damages
are excluded, although the underwriters may afford a defense to a claim for both compensatory and punitive or exemplary damages. Claims and claims expenses arising from the Racketeer Influenced and Corrupt Organizations Act
are also excluded.
All policies contain a Retroactive Date
which is the date of the first continuously-held London policy. The policy covers claims made during the policy period arising from sales of seed after the applicable retroactive date.
There is a Limited Extended Discovery
clause which is only available to the insured if underwriters cancel the policy. It covers claims made within one year of termination provided the sale of such seeds was made before the termination date.
What other advantages are offered by a London Policy?
There are important reasons for a Seedsmen to buy a London policy, the only consistent market for this specialized class of business.
A London policy gives an insured immediate access to Locke Lord, LLP, underwriter’s attorneys to whom all claims have to be reported. Locke Lord has been handling claims ever since they worked with Underwriters and the ASTA, when first putting this program together, over 30 years ago. Their contribution has included establishing case law for this industry, and of course they are second to none as regards experience in handling Seedsmens Errors and Omissions claims.