Ag Summit 2006 October 19, :45 pm – 4:30 pm Institute for Advanced Learning and Research Danville, Virginia By: Jesse J. Richardson, Jr., Associate Professor Urban Affairs and Planning Virginia Tech Blacksburg, Virginia (540) (540) (fax) Liability and Risk Management

Overview What are the legal risks? How do we avoid legal risks? How do we protect ourselves from adverse consequences of accidents?

Potential Liability People on your property Employees Neighbors Customers Other third parties

Anatomy of a Lawsuit Duty Breach Causation Damages

Grounds for Liability Intentional acts Negligent acts Strict liability Contract

Products Liability Grounds -Strict Liability -Negligence -Implied warranty 3 worrisome factors -Increasing # of claims -Increasing size of awards -Increasing #s of direct marketing operations

The best way to save the farm from a legal perspective: Proactive Safety Management 1) Develop a proactive liability audit program watching for possible problems should be part of every employees job 2) Develop a safety routine for your facility and stick to that routine checklists for employees to ensure that corridors are clear, hazards are prevented, etc. make safety a key word every day 3) Use contracts 4) Use release of liability forms 5) Use safety latches and locks to secure areas not open to the public, remove keys from tractors and other equipment, keep dangerous items out of reach of the public

6) Keep walkways, aisles, driveways, etc. clean and free clear of obstacles, snow, ice, etc. 7) Post signs (with pictures) to warn customers of potential risks and hazards 8) Set up your facility specifically for your activity 9) Minimize or eliminate contact between animals and customers 10) Use equipment appropriate to your activity 11) Use an appropriate business entity 12) Never say you are sorry, but treat accident victims kindly 13) Obtain adequate liability insurance

Business Organization Sole Proprietorship Partnerships General Partnerships Limited Partnerships Limited Liability Partnerships Corporations Sub Chapter-C corporation Sub Chapter-S corporation Limited Liability Companies Cooperatives

Titling of property Spouse can hold title and not be involved in the business Different business entities Leasing reduces risk as well

Liability Insurance Transfers risk to the insurance company Essential for all producers, particularly those with limited resources General Farm Policy- Beware! Disclose all activities to insurance agent What the large print giveth, the small print taketh away Attorneys fees! How much is enough?

Conclusions Be Proactive! Make safety a part of day-to-day operations Purchase liability insurance Plan- business organizations, titling of property, leasing, etc.