Are You Covered? A Guide for Farm Liability Insurance
Source: University of Missouri News Release
You can’t avoid all risk on the farm. But, a strong farm liability insurance policy greatly reduces your risk.
You need to thoroughly read your policy regularly and check for gaps and needed updates, shares University of Missouri Extension economist Ray Massey.
Massey and Barry Langford, a law instructor in MU’s Division of Applied Social Sciences, recently updated MU Extension’s Farm Liability Insurance Guide, available for free download at extension.missouri/g455.
There are three common types of farm insurance: property insurance, general liability insurance and workers compensation.
It is important to know what your policy covers, but it’s just as important to know what it does not cover.
“Understanding exclusions in general farm liability insurance can prevent the insured from potentially disastrous surprises,” Massey shared in a University of Missouri news release.
Common exclusions include farmers market sales, agritourism, boarding dogs or horses, non-farm activities such as snow removal or landscaping, custom farm work, and spraying chemicals on your own farm or under contract for others.
Few policies cover new technologies that create risk, Massey says. “Consider drones, for example,” he says. “Are they an aircraft, or does an aircraft require an onboard human pilot?” Another is pollution. Pollutants may not be covered, but the definition of a pollutant is a broad subject to discuss with the insurance agent.
There is renewed interest in liability insurance due to damages caused by off-target movement of dicamba. It is critical to understand these insurance exclusions related to chemicals, says Massey.
Purchase endorsements, additions or riders to policies for special circumstances to cover exclusions as needed, says Massey. Umbrella policies also provide additional liability protection.
Farmers also must know rules about negligence, which can void liability insurance claims. Negligence includes illegal activities, fraud and intentional damage. Honesty remains the best policy when filing claims and in other activities, says Massey, so avoid misrepresenting or omitting facts on the application and claims.
Always confirm who the policy covers. The policyholder is always included, but ask about legal business entities operating as the business of the policyholder and relatives.
Most policies cover employees, but verify coverage for seasonal and short-term employees. Know if and how your policy covers independent contractors such as custom farmers or sprayers, as this is a complicated area.
Review and Update
Make it a practice to annually review policies and advise your insurer of changes in operations and number of employees, Massey encourages. Review premium and coverage amounts and consider the current economy and protection needs for the stage of your life. Failure to purchase sufficient coverage for business size and activities can have severe consequences for the financial health of the farm.
