A major issue that is often overlooked by farmers is pollution coverage. Growing up on a commercial hog farm I was always made aware of the risks involved with pollution. My family continually expressed the need to be careful when spreading or knifing in manure. However, livestock farmers are not the only ones running the risk of having a large bill due to pollution. This can also be caused by fertilizers, chemicals, fuel, or poor irrigation practices.
The majority of farms have no insurance for environmental damage claims. The language in almost every farm pollution policy excludes long-term pollution. "On Dec. 30, 2014, in Wilson Mutual v. Falk, the Wisconsin Supreme Court determined that the standard ISO pollution exclusion excluded losses caused by bacteria seeping into wells after a farmer spread manure on a field. It’s a milestone decision that highlights at the state Supreme Court level just how far pollution exclusions can reach beyond landfills and industrial sites. California, Indiana, and Minnesota already have case law affirming that bacteria is an excluded pollutant in insurance policies sold in those states." (ARMR.net)
From this ruling, we have to assume that manure falls under the definition of a "pollutant" & the majority of farm policy pollution endorsements exclude physical injury to property resulting from pollutants. The Wisconsin Supreme Court ruled that the bacteria in the manure was considered a pollutant. Then being that the manure slowly drained through the ground, into the wells, this was considered a long-term event. The pollution endorsement in a vast majority of farm policies excludes pollution caused by long-term events.
The risk exposure that farmers face can be substantial. Here are some of the more common environmental loss exposures for farming:
Surface water contamination
Damage to nature resources
Bodily injury from exposure to bacteria
The right-to-farm laws do not cover the "right to pollute." The federal environmental protection laws will overrule State Right to Farm laws. These were put into place before large farms and CAFO operations were in existence. However, it is clear that these potential risks cannot be avoided as farms still need to spread manure & fertilizer on their fields. So what can you do?
Even if you only experience a short-term pollution issue, it won’t take long to surpass the typical $10,000 of pollutant removal & cleanup coverage on farm policies. Claims can easily get into the upper five or six figures, especially with larger spills. According to Environmental Research Letters in 2014 the total farm pollution cost was $157B. Not to mention, federal regulations deem the farmer responsible for pollutant cleanup.
We recommend the first course of action should be to increase your pollution clean-up limits to at least $25,000.
Then, increase your pollution liability to at least $250,000. These are both easy and relatively inexpensive solutions to the short-term pollution claims (i.e tractor spills on the road, overspreading before a large rain, over-spraying, etc.). Do know, that these pollution endorsements are very limited in coverage. They provide for sudden and accidental pollution events occurring in time frames measured in hours.
Consider specialized environmental insurance that is designed to fill the gaps of traditional farm policies. They cover:
Bodily injury and property damage, & on-site/off-site cleanup costs resulting from a pollution condition
Legal costs associated with defense against these claims
Pollution losses arising from groundwater and surface water contamination, odors, over-application of manure, or herbicides/pesticides.
Make sure to understand your coverage for both on-premise and off-premise pollution. The best advice we can give... educate, educate, educate yourself.
If you have any additional questions or concerns, don’t hesitate to reach out to us.
(Environmental Research Letters, 2014, https://iopscience.iop.org/article/10.1088/1748-9326/10/2/025006)
(ARMR Network, https://armr.net/library?tx_category=farms)