INSURANCE - Risk Management
- Risk Management
As the owner and operator of a business, you have more exposure to liability
and property loss than when living in a home used strictly as a residence.
Homeowner's insurance will not cover claims related to business in your home.
If a customer comes to your home and falls on the steps, your homeowner's
insurance may not cover any legal action because the customer was in your
home on business. It may also not apply if a customer's property or even
your own equipment used in your business is lost or damaged by fire or theft.
Some insurance companies can add a rider or endorsement to a homeowner's policy to cover home businesses. A separate policy, which is more costly, may be needed for some types of business. Consult your insurance agent to determine the most appropriate coverage for your home business.
Consider the following insurance coverage's when exploring your business insurance needs with your agent:
Liability insurance to cover the property of others, bodily injury, damages such libel and slander, and operations of hired independent contractors for which you are held liable. A blanket liability insurance policy can also cover legal fees and court costs.
Extended coverage for rider for windstorm, hail, smoke, explosion or vandalism protection.
Special protection to cover loss by fire or theft of business record, cash, other business documents and property, including tools and inventory.
Product liability insurance for many businesses, especially food and clothing processing and manufacturing.
An endorsement or rider to your personal automobile policy for business use if it's used to make deliveries or for other business.
An umbrella policy that covers all forms of liability can be purchased. The cost of the coverage varies depending on the business to be insured, location and the insurance company.
Worker's compensation insurance is required as soon as you hire an employee. Employers must contact the Workforce Safety and Insurance, 1600 E Century Avenue, Suite 1, Bismarck, North Dakota 58503-0644; 701 328-3820. As a sole proprietor or partnership, you are not required to pay Worker's Compensation on yourself or partner. It is optional but may be to your advantage to do so. If incorporated, you become an employee of the corporation and must pay for the coverage.
Remember the main purpose of insurance is to enable you to continue your business and lifestyle if a misfortune occurs. Identify and prioritize your risks to avoid being underinsured or over insured. It may be necessary to consult with more than one insurance agent, compare the coverage's, and determine what is adequate for you and your business. Always be certain to have something in writing stating what your business coverage is. This is especially important if your business liability is being insured under a personal homeowners or automobile policy.
Insurance risks will change over time. For example, an increase in your supply
inventory may exceed your insurance coverage and signal a need to increase
the coverage. Annually review your insurance coverage and the risks you face
with your agent.
______________________________________________________
Printed with permission from Donn Frahm, Insurance Agent, Carrington, North
Dakota
November 30, 1999
I. Insurance Considerations for Sideline Businesses:
A. Personal liability policies have business exclusions
B. Personal and business assets to protect
C. Owe public higher degree of care once on your property
D. Charging a fee changes liability exposure immediately
E. State of North Dakota may require insurance
II. Your Exposure:
A. General Liability (includes premises/operations and products liability
exposure)
B. Auto Liability (adequate limits of liability, UM/UIM, and non-owned auto
liability)
C. Workmens Compensation coverage for employees
D. Requiring certificates of insurance from independent contractors
Examples of Sideline Businesses:
Electric motor repair
Saddle work
Custom quilting
Seed sales
Custom snow removal
Casino transportation
Custom feed grinding
Hunting allowed on premises
Other Considerations:
Have attorney draft hold harmless agreement
Be careful when allowing customers usage of your own vehicles, especially
recreational vehicles
Remember that animals and people represent high exposure
Liquor - BE VERY CAREFUL
Printed with permission from Don Wanner, Insurance Agent, Dickinson, North
Dakota, December 1, 1999
GENERAL INFORMATION
The basic purpose of the Farm-Guard policy is protection of the farmers' assets. Usually a farmer has invested heavily in real estate, livestock, equipment and machinery, and operates as an individual or partner. Consequently, unlike a corporation, the farmer's entire assets, both business and personal, are subject to attachment for the satisfaction of a judgement.
WHAT IS INSURED?
The Farm-Guard policy is a package policy in the sense that it provides liability
protection for:
Personal Acts of Insured's; Physical Condition of the Premises; and
Business Operations (Farming) on and off the premises of the named insured
and members of his immediate family. Business pursuits (that generate in
excess of $2,000 in receipts in the prior calendar year) and business property,
other than farming, are excluded. Farming is defined as "the ownership",
maintenance or use of the "insured premises" for the production of crops
or the raising or care of "livestock". "Farming" also includes operations
of roadside stands kept mainly for the sale of the insured person's farm
products. "Farming" does not include altering the characteristics of farm
products through processing operations.
This definition becomes important to the agent because today farmers are
often conducting businesses other than actual farming on and off the premises.
To supplement their income farmers are engaged in part-time selling jobs
- seed corn, fertilizer, insurance, etc. Some farmers have established businesses
which call for processing the produce which he and other farmers raise -
seed corn drying plants, butchering plants, saw mills, etc. These businesses
may be allied to farming, but are not farming as defined.
These operations are business pursuits and are excluded if they generate
more than $2,000 in gross receipts in the prior calendar year. Agents should
be alert to warn prospects that such operations are not covered in the Farm-Guard
policy, and suggest ways to provide the protection. If the operation is
incidental and generates less than $20,000 in gross receipts in the prior
calendar year, it may be covered by an endorsement which waives the exclusion
with respect to that operation. If it is more extensive, the operation may
be covered by a General Liability Policy.
The farmer owes an obligation to his employee under Common Law; he must provide
a safe place to work and safe tools to work with. Legislation in most states
has placed farm employees under the Workers' Compensation Act. (Minimum
requirements apply as to the time of employment and amount of payroll. Agents
should be aware of the minimum requirements for their state.)
WHO IS INSURED?
The broad definition of insured includes the spouse living in the same household
as the insured; a person living with the insured and related by blood, marriage,
or adoption; a ward, foster child or foreign exchange student living with
the insured; and any unmarried and financially dependent child under the
age of 25 who is away at school. Because the liability coverage extends to
the personal acts of any of the above persons, the underwriting rule provides
that only one individual can be identified as the "named insured" and covered
under the basic rate. If any others with an insurable interest in the farm
premises and operations wish to be named in the policy, they must be identified
as "additional insureds," and an extra premium paid. The definition of insured
also includes a partnership, corporation, estate, trust, or any other entity
as stated in the declarations.
Caution: Adding additional named insureds decreases the amount of liability coverage available per insured in a catastrophic loss where all insureds are named.
HOW IS IT INSURED? - Types of Coverage
The Basic Unit - Mandatory Coverages
Liability to Public - Coverage A. This coverage protects the insured against claims, whether legitimate or not, for all types of covered damages to persons or property allegedly arising out of some act of negligence in connection with the farming operations, use of the premises, or personal acts of an insured. "Fire legal liability" coverage which protects tenants for damage caused to rented property by their negligence is also included.
Some exclusions pertaining to this coverage are: Injuries of employees
Liability assumed under contract unless the contract pertains to the farming
operations and is dated prior to the date of the bodily injury or property
damage.
Damage to property in the care, custody or control of the insured, with a
few exceptions.
Damage from crop dusting or spraying from an aircraft.
FARM-GUARD
BUSINESS ACTIVITIES ENDORSEMENT GMRC 1031
The Farm-Guard policy excludes "business activities" when the total gross
receipts exceed $2,000 in the prior calendar year. "Business activities is
defined in the policy as "trade, profession, or occupation other than farming."
To a varying degree, many farmers engage in activities which can not be defined as farming such as snow removal, machinery repair, seed corn sales, etc. The farmer needs liability protection for such activities to round out a full and complete program of protection. The farmer could purchase a General Liability policy for such "business activities" but frequently the activity requires only a small portion of the farmer's time and contributes only marginally to the annual income. Consequently, the farmer finds the "minimum premium" of the General Liability policy too costly.
If the "business activity" is incidental in nature and makes no use of employees, we will permit endorsement of the Farm-Guard policy to waive the exclusion on business pursuits in return for an additional premium.
Caution must be stressed in using this endorsement. Premium rates are based on the premise that the activity is minor in comparison to the insured's farming activities. If the "business activity" generates more than $20,000 in gross annual receipts in the past calendar year, the operation should be insured separately under a General Liability Policy. (Please note that if the insured is operating on a commission basis such as a seed corn salesman we will use gross commissions instead of gross receipts). If the insured employs hired help in the activity (irrespective of income) a General Liability Policy must be used and Workers' Compensation insurance provided. The Farm-Guard policy does not cover employers' liability for these activities nor will the endorsement waive the exclusion with respect to Coverage C and D of the Farm-Guard Policy.
When an insured/applicant is engaged in an incidental business that is not listed on the Business Activities Rate Schedule, but meets the rules outlined on this page, submit to the Home Office for consideration. Incidental Retail/Service N.O.C. has been provided for those activities. Some examples are baking pastries, bee keeping, breeding animals, storage of property of others, open air markets, and fish hatcheries.
Should an insured engage in several different activities during the year,
the additional charge should be made for each activity. All classifications
will be shown on the endorsement in order to waive the exclusion for each
of them. The following is a listing of activities that would not be subject
to coverage:
| Bulldozing | Custom Butchering | Fishing for Charge |
| Miniature Golf Courses | Golf Driving Ranges | Tennis/Handball/Shuffleboard Courts |
| Horse Boarding, Racing Stables, Breeding, Livery | Hayrides | Rental or Riding of Horses |
| Archery Ranges | Sawmills | Swimming for a Charge |
| Hunting on Premises for a charge | Custom Spraying | Hoof Trimming and Horse Shoeing |
| Seed Corn Processing | Dance Studios | Exercise Classes |
| Day Care Services exceeding 4 children | Dog Kennels | Machinery Rentals |
| Machinery Repair-including welding | Tree Trimming | Livestock Dealers |
| Skeet or Trap Shooting | Manufacturing | Auctioneers |
| Snow Removal for Governmental Subdivisions | Picnic Grounds | Rock Quarries |
| Fruit Orchards open to the Public |
This sample information was provided by -Farmers Union Insurance Agent, Donn
Frahm
For further information on applications that relate to your business on
Outfitters & Guide Services, Gamebirds, Commercial Equine Boarding, Pony
Rides, Recreational Equipment, Water Rafting, etc. please contact your insurance
agents for proper procedures to assure you are covered.
Recreational Industry Program
CWIC's Recreation Industry program insures premises and rental operations
for recreational businesses. Services cover businesses that rent or lease
recreational sporting equipment; commercial equestrian boarding, training
or breeding operations with or without auxiliary activities; as well as guides,
outfitters and packers who provide guided outdoor recreational activities.
A special application is required for this program that offers limits up
to $1 million and a variety of adaptable features to cover small to large
operations.
Program Features
The CWIC Recreation Industry program offers the following features to maintain
the affordability and flexibility you need to meet your budget and adequately
insure the safety of program participants:
Limits up to $1,000,000 per occurrence
Medical payments of $5,000
Fire damage legal limit of $100,000
Products and completed operations
Personal injury and advertising injury
Physical damage to property in your care, custody or
control
Defense costs outside the limits
Optional Coverages
Limited assault and battery coverage
Hired or non-owned auto coverage
Fire super session coverage for accidental fires started on government property
Eligible Activities and Coverages:
| Hunting Guides | Fishing Tours | Water rafters |
| Trail rides or park trips | Rope courses | Mountaineering |
| Climbing walls | Hiking & biking tours | Wagon, hay, sleigh or carriage rides |
| Resorts | Campgrounds | Amusement centers |
| Trap/skeet ranges | Guest ranches | Swimming Pools |
| Water parks | Snowmobiling tours | ATV tours |
| Kayak rental or tours | Canoe rental or tours | Paintball fields |
| Family fun centers | Go-kart tracks | Batting cages |
| Farriers | Livestock auctions | Mini-golf |
| Driving ranges | Boarding stable operations | Pony rides |
| Pleasure or show horses | CCC for horses | Race horses |
| Riding instruction | Llama trekking | Boat, jet ski or waverunner rental |
| Ski and cross country ski rental | Snowboard rental | Riding clubs |
| Hunting Clubs | Bike rentals |
Source: West Plains Insurance Inc.
101 N Main St
Watford City, ND 58854 701-842-2466
Named insured:
Address: ___________________City_________________________
State:___________Zip:_________________
Telephone ( )_____________________________W (
)_____________________________________H
Premise address:________________________________City________________
State:__________ Zip:_________
Other locations:
Agent name: __________________________
Address:_______________________________________________
City: ______________________________________State:________________
Zip:_________________________
Telephone ( )_____________________W (
)____________________________________H
Contact:__________________________________________________________________
Liability limit applied for $_____________________
Effective Date:
| Limit | Guest Day Cost | Minimum Premium |
| 300,000 | $0.70 | $350 |
| 500,000 | $0.90 | $550 |
Higher limits or other exposures must be submitted to CWIC.
Please give detailed description of operation. ______________________________________________
Farm liability carrier______________________________________
Policy No. ____________________________________________
Gross receipts (attach copy of fee schedule) $_________________
Fee charged per guest $_________________________________
Average group size_____________________________________
Total Guest days_____________________ Hunt days_________ Fishing
days_____________________
Total acres owned or leased for
agriculture_________________________________________________
Total acres used for
hunting_____________________________________________________________
Type of crop grown on
land_____________________________________________________________
List quarry
hunted_____________________________________________________________________
Are birds stocked? Yes ____ No____
Do you breed and raise birds? Yes____ No____
Are any endangered species on property? Yes____ No____
Is trap shooting provided? Yes____ No____
Are any hunters under age 21? Yes ____ No____
Are blinds provided? Yes____ No____
Are guests guides? Yes____ No ______ if
so,what percent?_______
Are boats used? Yes ____ No____
if so, what percent?________
Is lodging available? Yes ____ No____
Total receipts?____________________
Is food served? Yes____ No____
Total receipts? ___________________
Is waiver required ? Yes____ No____ If so Please
attach a copy.
Will coverage for lodging and food be included in policy? Yes____
No____
Loss
history_________________________________________________________________________________
List any operations located within residential/commercial
use:_______________________________________________________________________________________________________________________________________
Any person who knowingly, and with intent to defraud any insurance company
or other person, files an application for insurance containing any false
information or conceals information concerning any fact material thereto,
for the purpose of misleading, commits a fraudulent insurance act, which
is a crime.
Date______________Applicant's Signature_________________________
Date______________Producer's Signature_________________________
SAMPLE
RELEASE AND ACCEPTANCE OF RESPONSIBILITY
AND ACKNOWLEDGMENT OF RISKS
ACKNOWLEDGMENT OF RISKS I understand and acknowledge that the activity that I am about to engage in bears certain known risks and unanticipated risks which could result in injury, death, or damage to myself, my property, or to other third parties. I understand and acknowledge those risks may result in personal claims against____________or claims against me by other third parties.
ACCEPTANCE OF RISK AND RESPONSIBILITY - Being aware that this activity entails risks of injury to myself and to third parties as a result of my actions, I agree to accept and assume all responsibility and risk for injury, death, or damage to myself or to my property arising from my participation in this activity. I agree, covenant, and promise to accept and assume all responsibility and risk for injury, death, or damage to other third parties and their property arising from my participation in this activity. My participation in this activity is purely voluntary and I elect to participate in spite of the risks.
RELEASE - I hereby voluntarily release____________________, its agents or employees, and all other persons or entities from any and all liability, claims, demands, actions or rights of action, which are related to or are in any way connected with my participation in this activity, including specifically but not limited to the negligent acts or omissions of ________________________, its agents or employees, and all other persons or entities, for any and all injury, death, damage to myself or to my property. I further agree, promise, and covenant to hold harmless and indemnify _________________, its agents or employees, and all other persons or entities from all defense costs, including attorney's fees, or from any other costs incurred in connection with claims for bodily injury or property damage which I many negligently or intentionally cause to other third parties in the course of my participation in the activity. I further agree, promise, and covenant not sue, assert or otherwise maintain or assert any claim against _____________________, its agents or employees, and all other persons or entities, for any injury, death or damage to myself or to my property, arising from or connected with my participation in this activity or from any claim asserted against me by other third parties. In signing this document, I fully recognize that if anyone is hurt or property is damaged while I engage in this activity, I will have no right to make a claim or file a lawsuit against _________________, or its officers, agents, or employees, even if they or any of them negligently caused the bodily injury or property damage.
EFFECT OF THIS RELEASE AGREEMENT - I understand and acknowledge that by initiating and/or signing this document I have given up certain legal rights and/or possible claims which I might otherwise asset or maintain against _________________, its agents or employees, and other persons, entities, including specifically, but not limited to, rights arising from or claims for the acts or OMISSIONS, negligent in any degree, of _______________________________, its agents or employees, and all other persons or entities.
I understand and acknowledge that by initiating and/or signing this document,
I have assumed responsibility and legal liability for the claims or other
legal demands, including defense costs, which may be asserted by spectators
or other third parties against me as a result of participation in this activity.
I understand that this is the entire Agreement between myself and
_______________, its agents or employees, or agent of ___ or by me. My signature
below indicates that I have read this entire document, understand it completely,
and agree to be bound by its terms.
SIGNATURE__________________________
SIGNATURE OF PARENT OR GUARDIAN (under 18)_____________________
RELEASE
In consideration of receiving permission from________________________to enter upon the premises of their farm the receipt of which permission is hereby acknowledged and in further consideration of receiving permission to hunt as an individual legally licensed to hunt, pursue and take wild game under the laws of the State of South Dakota, the undersigned does hereby release and agree to hold harmless __________________________, and their agents and employees, (is any), from any and all liability claims, legal actions to lawsuits of any nature arising from or relating to any loss, damage of injury, including death or personal injury, that may be sustained by any of or each of the undersigned while upon the premises of the farm or upon any property leased or under the control or supervision of said ______________, will not be held responsible for injury, damage or loss to persons or property occurring directly or indirectly by reason if negligence or wrongful acts of any member of the hunting party, guide, agent, or group representative.
Each of the undersigned acknowledge that they are fully aware of the risks inherent with and associated with hunting and pursuit of wild game and that the undersigned hereby elects voluntarily to enter on the farm and premises owned, controlled or leased by _______________________________.
Each of the undersigned specifically acknowledges that they are experienced hunters and are knowledgeable concerning safety rules and precautions to be taken when handling firearms, that they have hunted previously and recognize the fact that neither _____________make any representation as to the safety if the sport of hunting itself nor as to the qualifications or expertise other hunters included within the hunting party. Each of the undersigned hereby voluntarily assumes the risk of loss, damaged or injury including death that may be sustained by the undersigned while upon the _________premises while engaged in actual hunting and stocking of game and while being transported to or from hunting locations by motor vehicle or any other mode of transportation furnished by ____________________________.
This release shall be binding upon the heirs next of kin, executors, administrators and personal representatives of the undersigned.
By signing this release each of the undersigned represent:
(1) That he/she has read the foregoing release, understands it, and has entered
into said release voluntarily.
(2) That he/she is legally licensed to hunt wild game under the laws of the
State of ______ and is an experienced hunter, and
(3) That he/she has hunted previously and is in all respects qualified to
hunt safely.
Dates this _______-day of _______________________20__.
______________________________
Signature
SAMPLE
PARTICIPANT RELEASE OF LIABILITY
-READ BEFORE SIGNING-
In consideration of being allowed to participate in any way in the _______________ (Name of Organization) program, related events and activities, the undersigned acknowledges, appreciates, and agrees that:
The risk of injury from the activities involved in these programs is significant, including the potential for permanent disability and death, and while particular rules, equipment, and personal discipline may reduce this risk, the risk of serious injury to me does not exist; and
I KNOWINGLY AND FREELY ASSUME ALL SUCH RISKS, both known and unknown, EVEN IF ARISING FROM THE NEGLIGENCE OF THE RELEASE'S, or others, and assume full responsibility for my participation; and,
I willingly agree to comply with the stated and customary terms and conditions for participation. If I observe any unusual significant concern in my readiness for participation and/or in the program itself, I will remove myself from participation and bring such to the attention of the nearest official immediately; and,
I, for myself and on behalf of my/our heirs, assigns, personal representatives and next of kin, HEREBY RELEASE THE_______________________, its officers, officials, agents and/or employees, other participants, sponsoring agencies, sponsors, advertisers, and, if applicable, owners and lessors of premises used to conduct the event("Releasees"), WITH RESPECT TO ANY AND ALL INJURY, DISABILITY, DEATH, or loss or damage to person or property incident to my involvement or participation in these programs. WHETHER ARISING FROM THE NEGLIGENCE OF THE RELEASEES OR OTHERWISE, to the fullest extent permitted by law.
I, for myself and on behalf of my/our heirs, assigns, personal representatives and next of kin, HEREBY INDEMNIFY AND HOLD HARMLESS all the above Releasees from any and all liabilities incident to my involvement or participation in there programs, EVEN IF ARISING FROM THEIR NEGLIGENCE, to the fullest extent permitted by law.
I HAVE READ THIS RELEASE OF LIABILITY AND ASSUMPTION OF RISK AGREEMENT, FULLY UNDERSTAND ITS TERMS, UNDERSTAND THAT I HAVE GIVEN UP SUBSTANTIAL RIGHTS BY SIGNING IT, JUST SIGN IT FREELY AND VOLUNTARILY WITHOUT ANY INDUCEMENT.
___________________________Date Signed:_____________Age:_________
PARTICIPANT SIGNATURE
PRINT NAME:__________________
NOTE: This is a SAMPLE WAIVER FORM only. Final wording should be as directed
by the insured's counsel, but mostly observe the principles represented within
the above.
SAMPLE
OUTLAW TRAIL RIDES
Release of Liability
This Release is executed on the ____day of __________________,20___by
___________of_____________,known as Releasor, to OUTLAW TRAIL RIDES, of Hot
Springs, South Dakota, known as Releasee.
In lawful consideration of being permitted to ride a horse belonging to or in the care of Outlaw Trail Rides, in a supervised setting or otherwise, I, the Releasor, being of legal age, hereby agree that I, my heirs, distributes, guardians, legal representatives and assigns will not make a claim against, sue, attack the property of, or prosecute Outlaw Trail Rides, or any of its owners, employees or agents, either in law or in equity, arising from or by reason of any bodily injury or personal injuries known or unknown, death or property damage resulting or to result from any accident which may occur as a result of my use of any horse belonging to or in the care of Outlaw Trail Rides or any activities in connection with such use, whether occasioned by negligence or not.
I am aware that the use of such animals may constitute a hazardous activity, and am voluntarily participating in such activity with knowledge of the dangers involved and hereby agree to accept any and all risks of injury or death.
I HAVE CAREFULLY READ THIS AGREEMENT AND FULLY UNDERSTAND ITS CONTENTS. I AM AWARE THAT THIS IS A RELEASE OF LIABILITY AND A CONTRACT BETWEEN MYSELF AND OUTLAW TRAIL RIDES, ITS OWNERS, EMPLOYEES AND AGENTS, AND I HAVE SIGNED IT OF MY OWN FREE WILL.
OUTLAW TRAIL RIDES
By:__________________ _______________________________________
RELEASOR
By:____________________________________
Parent/Guardian
North Dakota State University
NDSU Extension Service