What is a Farm Liability Policy?

This coverage is made to protect the insured, the people who come to visit the farm, as well as the property of others if it is damaged due to the farm operations. 

A Liability policy covers accidents within a farm or ranch. However, as per the National Association of Insurance Commissioners, an accident is defined as “An unexpected event or circumstance without deliberate intent.“ So how to know whether an accident is valid or not? 

In this article, we will deep dive into how a liability insurance policy can save a business; how important it is, and how it works.

Different types of Farm Liability 

Premises liability 

This type of liability will protect the insured if someone got injured within the ranch premises. We all know what characteristics a farm or ranch has. Some parts are muddy, slippery, and wet. And having some visitors is quite inevitable. There are family members or friends who might visit a farm every now and then. Visitors, especially the first-timers tend to be amazed and might touch one of the animals like horses.

Example Scenarios:

If an accident happened and a visitor got injured from a horse’s kick; this policy will cover its medical expenses.

Another good example is when a delivery guy came to bring the monthly supply of fertilizer. The man accidentally fell due to an uneven and slippery walkway. His medical expenses will be covered too. This kind of accident can really happen. Hence, having this protection added to an insurance policy is very important. 

Moreover, if the owner does activities like agritourism, premises liability can be very useful. Agritourism or agrotourism is an operation in which the owner brings visitors to their farm or ranch to conduct certain activities like a pumpkin patch, hayrides, and other ranch or farm ventures. 

Product Liability

 A standard farm policy already includes liability protection. However, this covers only the products that the owner grows inside the farm property. And that produce shouldn’t be processed when they sell it. 

For example:

Let say grapes or apples are being sold outside, not processed or fermented. And unfortunately, a consumer got sick right after eating the produce and was diagnosed by the doctor of being poisoned by fertilizer. 

If proven that the product is the cause of the incident; the farm product liability will cover the damages. But, if the product is being sold in public that is already processed, that will not be covered.

For example:

if the grapes are processed to wine, prunes, and juice. As well as if the apples turn to apple cider, apple juice,  and other processed products.

If the farm tends to operate mainly or partially to process the produce, adding a commercial liability coverage is a must. The insured must talk to its insurance agent about it so they can properly advise the owner on what policies the farm should have.  

Operations Liability 

 This policy covers if a property was damaged due to the ranch or farm operations; as well as if someone got hurt or injured. One of the common examples is an accident caused by a truck. This heavy and giant farm machinery is not that easy to control especially if they are crossing roadways during operation. 

Pollution Liability

 This is one of the most needed policies in the farming business. Again, this is badly needed. Exposures to harmful gases are inherent in a ranch or farm operation. It is hard to avoid and somewhat normal in the farming business.

Fertilizers used in farms that are nitrogen-based produce greenhouse gases. Greenhouse gases caused a greenhouse effect. It is the warming of the Earth’s surface as well as the air above it. It traps the energy from the sun. But that’s not all that nitrogen can do. It can also overload and contaminate waterways with dangerous pollutants. It can spread on water and air.  

Ever wonder why having news about lawsuits against farming business is no new to many? This is exactly the reason. House’s near a farm, especially a big or growing one tends to receive a lot of complaints regarding contamination. Hence, having pollution liability in the policy is definitely a lifesaver for a farm business.  

Building construction liability 

This is for farmers who make or build their own building even without the contractor’s help. Some farmers do this to save money. They build new additional buildings or do the repairs by themselves. Building construction liability covers if anyone got injured during the construction within the farm or ranch premises.

Farmer's market liability

 Accidents within a farmer’s market do happen. It can be because of food poison and allergic reactions to food products. Also, body injuries due to slips caused by unorganized fruit on the floor. These may result in lawsuits and this policy can cover that.

Fire Liability

If in any case that the farm burned and the equipment, trucks, and some buildings were damaged by fire; then this policy can save the ranch for the loss. Moreover, even the houses and properties of the neighbors that have been damaged by the fire will be covered too. 

What is Umbrella Policy?

Un umbrella policy is a kind of liability insurance that gives more coverage or extension to standard insurance. For example, an accident happened and a visitor was injured by a truck within the farm. After the investigation, it turned out that the farm was held liable for the accident.

Automatically the insurance’s premises liability will kick in. Let’s say that the hospital bill was $1,000 and the policy’s maximum limit is only $500. Without an Umbrella Policy, the remaining $500 will be shouldered by the insured.

However, if the umbrella policy was added on the insurance then that $500 will be paid to the umbrella policy. Many may think that this policy is just an extra fee that they don’t really need. But if you think of it, this is the cheapest way to ensure that their farm business can surely survive any inevitable accidents.

What can make Liability claims invalid?

Some things and situations can make a liability claim invalid. These are the following:

Crime

Any accident, damage, and injuries that are caused by an intentional crime is invalid

Illegal doings

Activities that are not legal and also done intentionally will also make a liability claim void. 

Fraud or false pretense

Deceiving is definitely unacceptable. Like pretending that the farm grows only apples but the truth is there are other businesses hidden in the farm that are far different from the farming industry.

Negligence

This is the biggest reason why claims exist. In running a business, there must be a “ duty of care “ about everything on the farm. The farmers or workers, visitors, and neighbors. The owner should always think of the safety of everyone. Because once negligence occurs, accidents happen. And during a claim of negligence, some laws can identify whether the owner can be held liable or not. 

Strict Liability 

This liability is for an ultra-hazardous farm operation. In this case, no matter how careful the owner or the person performing the activity is; if someone got hurt or anything got damaged still the insured will be held liable.

Here are the reasons why:

Some farming activities are ultra-hazardous mostly about handling,  storing, and transporting dangerous chemicals.

Since the insured were well aware of the level of dangerousness of the chemicals that they are using; how can that not be considered as negligence?

Hence, it does not matter even the insured says they didn’t intend an accident to happen. Any damage caused by their ultra-hazardous operations will count and make them liable.