Manure spills are more than just an accident – they pose a major liability for farmers, truckers and land owners alike. Ruptured pipes, spills during roadway transportation and leaks from manure lagoons causing seepage into local waterways have contaminated water supplies and led to wildlife death and human illnesses.
In response, state and local governments and the Department of Natural Resources (DNR) have issued notices, fines and in some cases filed lawsuits and passed new edicts. Most notably is the 2014 case Wilson Mutual Insurance Co. v. Falk Farms that established manure as a pollutant, not a nutrient.
Before this verdict, farms relied on a modified pollution liability endorsement to their General Liability (GL) policy to cover up to $1M in pollution costs. While this sounds adequate, farms have had to learn the hard way that it’s not. The pollution endorsement on a GL policy is actually very restrictive, mostly covering site clean-up and excluding nitrate-related losses and non-owned disposal sites, and allocating only a small amount of coverage - up to $25,000 - for third-party liability costs. As a result, farmers face significant insurance coverage gaps for the handling and transporting of manure.
While many farms are following proper pollutant management controls, when accidents do happen they gain widespread public exposure thanks to social media and local environmental groups on high watch. Fortunately, there are more insurance options with more comprehensive protection for your farm. Consider the following stand-alone and endorsement pollution coverage options for farm and agribusiness operations:
- Pollution Liability Insurance. This stand-alone policy covers a farm’s first-party liability, (i.e. an onsite farm spill), including sudden and accidental coverage (i.e. there was a leak in the hose while transferring manure from one lagoon to another) as well as seepage coverage (i.e. a small leak that wasn’t caught for years and now the farm’s waterways are contaminated).
- Commercial Pollution Liability Insurance. This standalone policy covers a farm’s third-party liability, which includes third-party bodily harm and property damage (i.e. a manure spill that affects local well water). Additionally, this covers a farmer’s owned site and non-owned disposal sites where manure is applied, and can include Prior Acts Coverage, to defend you for past activity (i.e. you previously rented a field for manure disposal and then years later a lawsuit surfaces, naming you as a previous renter who polluted the soil).
- Transportation Pollution Liability Insurance. A TPL endorsement can be added to both pollution liability and commercial pollution liability policies, to cover the transportation of your farm’s manure to another site. Whether using your farm’s automobiles, or rented trucks, and driving manure across country dirt roads, state roads or federal highways, a TPL endorsement is necessary to cover spills en route to rented disposal sites.
- Contractor’s Pollution Liability Insurance. Some farms will outsource their manure transportation and field allocation to a third party. In that case, the third party operator will need a Contractor’s Pollution Liability policy to haul manure and apply it elsewhere.
BONUS: A stand-alone pollution policy can mean better pricing for your other insurance policies.
When farms procure a stand-alone pollution policy, it’s possible to obtain better pricing on the farm’s other liability coverages. By off-loading the pollution exposure to another carrier, the general liability, property and umbrella policies can include a pollution exclusion, and therefore, lower your premium rates.
Contact your HUB farm and agribusiness specialist for more information on transferring your risk to a stand-alone pollution policy.