Contractual Risk Transfer

Many agribusiness-related transactions involve written contracts between various parties, such as growers, sellers, vendors, and buyers. These contracts often include clauses that transfer risk from one party to the other, usually in the form of insurance requirements, indemnity obligations, and waiver of rights or release of liability.

These obligations may be uninsured or uninsurable—and potentially damaging to your bottom line. Indemnity obligations in particular have the potential to create financial liabilities for an unwary indemnitor.

In spite of that, far too many agribusinesses do not have their contracts reviewed by a knowledgeable insurance professional prior to execution of a contract.

We believe that any truly effective risk management program must include routine pre-execution review of insurance-related contractual obligations. This can be problematic for businesses lacking qualified insurance professionals or in-house personnel experienced in these matters.

The solution? AGRisk 360.

Highly experienced AGRisk 360 personnel will review insurance-related sections of your proposed contracts in light of your current insurance and risk management program. We will then offer recommendations that give you the edge you need to make informed business decisions about avoiding, accepting, or transferring risk.

More specifically, AGRisk 360 Contractual Risk Transfer experts will:

  • Analyze overall contractual indemnity obligations in the context of your existing insurance coverage and make you aware of uncovered obligations (for example, a warranty of fitness for a particular purpose skewed in favor of a vendor of your organization’s products).
  • If your organization is the indemnitor, propose revisions to the indemnity obligation to achieve a fit with existing insurance coverage to the extent possible, while otherwise limiting the obligation (for example, if your organization is leasing land and providing indemnity for environmental conditions arising from use of the land, we might propose a release of liability for pre-existing environmental conditions).
  • If your organization is an indemnitee, try to maximize risk transfer to the indemnitor in accordance with IRMI guidelines relating to contractual risk transfer, subject to final review and approval by your organization’s attorney.
  • Review contractual insurance requirements and revise them as necessary to benefit your organization if it is covered in whole or in part by the other party, while concurrently limiting access to your organization’s policies if that is an issue (for example, we might make you aware that one of your vendors is seeking coverage for products liability caused by its own negligence after tender of conforming goods by your organization).
  • Make you aware of waiver of rights and releases of liability, and disclose potential problems (for example, that the waiver is not mutual or insurance coverage will be voided by the waiver).
  • Provide advice and training for your organization’s transactional attorneys, who may lack an extensive insurance background (for example, we might provide specimen contractual insurance requirements for a lease of farm land that includes housing for workers).