Due diligence is an extremely important concept to fully understand whenever you’re dealing with commercial insurance. Yet, as many Alberta commercial insurance brokers have noted in interviews and research studies, it’s not uncommon for business owners to misunderstand their responsibilities. Since failure to perform due diligence can lead to gaps in commercial insurance coverage or, in worst-case scenarios, a full nullification of coverage, it is extremely important for commercial insurance clients to engage with this all-important topic.
Due Diligence Explained
The Government of Canada’s Centre for Occupational Health and Safety maintains extensive online resources that provide a comprehensive explanation of due diligence as it applies to employers. In terms of commercial insurance, due diligence refers to the fact that employers are required to take all available precautions to prevent accidents and injuries to employees. Failure to perform due diligence can result in the rejection of insurance claims arising from accidents and injuries suffered on the job.
It is particularly important to understand that in the insurance world, due diligence can extend beyond the minimum legal requirements a business owner must meet. In other words, a business owner can be compliant with federal and provincial employment regulations and still have insurance claims rejected for failing to perform due diligence. These cases are covered under what is known in legal circles as “duty of care.”
Duty of care requirements dictate that an employer must, at all times, actively work to take all necessary reasonable precautions to prevent accidents and injuries. As such, due diligence can become a legal issue if an employer faces litigation as the result of a workplace accident or injury. In these types of cases, the employer must be able to demonstrate that due diligence was practiced, and provide supporting documentation.to support their claims.
If an employer is found to have failed in his or her duty to perform due diligence and duty of care, insurance policies that would otherwise have covered damages will be partially or fully voided. That can have disastrous consequences for a business owner, which is why it is very important to implement and maintain a strategic policy to identify and eliminate possible workplace hazards.
A Due Diligence Checklist
A sound due diligence policy will address the following:
- Federally and provincially required health and safety regulations
- Procedures for identifying and eliminating or controlling risks and occupational hazards
- A complete integration of safety procedures across all departments
- An ongoing commitment of human and financial resources to maintaining adequate levels of occupational safety
- Employee access to safety training and informational resources
- Proper training of employees in best practices for workplace safety, and in the use of protective devices and equipment
- A specific procedure for reporting and resolving hazards detected by employees
- Accountability for health and safety among managers and supervisory staff
- The keeping of records detailing the implementation of safety initiatives and training programs
- Maintaining individual training records for each employee
- Regular checks to make sure all workplace safety policies are being followed
- Disciplinary action for employees who willfully violate health and safety standards
- Annual reviews to ensure existing policies meet the evolving needs of the business
Other requirements may be necessary, depending on the nature of your business. In all cases, it is incumbent upon the employer to meet due diligence requirements and ensure an accessible and safe working environment for all employees, at all times.
Alberta Commercial Insurance Brokers: Questions? Concerns? Call Lane’s Insurance for Answers
Lane’s Insurance is a leading Alberta-based brokerage, providing complete solutions for business owners working in all industries. If you have any questions about your occupational health and safety due diligence requirements, or if you have any other concerns about your commercial insurance coverage, please contact a Lane’s Insurance representative.
Some of the commercial insurance products Lane’s offers include:
- Commercial property insurance
- Commercial vehicle insurance
- Commercial surety bonds
- General business insurance
Visit Lane’s Insurance online today to get a fast, free quote.
