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Farm Liability Insurance

It is imperative that you have a full and frank discussion with your insurance agent or broker about your farm liability coverage. Your agent should be advised of all activities that the farm operation participates in. The insurance company calls these activities "exposures". Your agent needs to know what exposures you have to be sure that you are adequately protected against the possibility of a significant financial burden.

Today’s farm business is no longer isolated from the public, both from the view of visitors to the farm, the products you produce and activities you undertake away from the farm. Any of these activities may result in a "third party" (someone outside of the contract between your farm operation and the insurance company) alleging that through your negligence you have caused them to suffer Bodily Injury or Property Damage.

It is common for the liability policy to cover the farm operator, spouse, their children (while living in their household) and employees (while doing the farm business’ work).

Coverage is normally provided for your legal liability for:

  • occurrences arising out of your personal actions
  • occurrences arising out of your premises
  • occurrences arising out of your farming activities

Typical sections of coverage in a Farm Liability wording include:

  • public liability
  • tenants’ legal liability for damage to residential property rented or under the custody care or control of the insured caused by named perils (fire, explosion, smoke or water escape)
  • voluntary medical payments subject to capped amount
  • voluntary payment for damage to property of others subject to capped amount.

The insuring company will defend the insured against civil actions and assumes the right to make negotiations and settlements, as it deems expedient.

Liability Exclusion/Endorsements

A number of activities that some might consider normal farm business activities such as regular custom work, custom spraying, pick your own activities or horse riding lessons may require a special endorsement.

Here are some areas of coverage that may be excluded. You will need to review the exclusions with your insurance agent or broker:

  • recreational vehicles (owned and not owned)
  • watercraft (owned and not owned)
  • trailers (farm and residential)
  • damage to a neighbours crop caused by own spray drifting off
  • leakage of fuel oil, pesticides, herbicides, manure onto neighbouring property
  • your custom farming operation
  • your "value added" business
  • your spouse’s "non farm" business
  • riding lessons and trail rides

Umbrella Liability Insurance

Some farm policies may have a basic farm liability limit of $500,000. This may be too low for larger operations. It is possible to buy umbrella liability insurance that is on top of the basic automobile and farm or other liability coverage. The umbrella not only increases total coverage but may also provide an insurance response to a third party allegation of personal injury or property damage that would not be covered under the basic farm liability policy.

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