The industrialization of farming has done more than just expand food production. It has also increased an agribusiness’ exposure to pollution liability.

For example, with 10 acres, four to five cows and hogs, yesterday’s farmland was able to absorb all applied animal nutrients. In contrast, today’s large farms can’t soak up the waste from 60,000 cows and hogs across the same 10 acres. Large amounts of methane emissions are contaminating air above large farms and putting clean water near these facilities in jeopardy.

This is leading to claims of nuisance, trespass, and negligence from rural neighbors and citizen action groups, leading to both state and federal lawsuits against today’s farmers.

One such case in Wisconsin, Wilson Mutual Insurance Co. v. Falk Farms, established manure as a pollutant, not a nutrient. Since this 2014 case, litigation against farms and manure lagoons has increased significantly. In response, federal and state governments and pollution insurance underwriters alike are asking agribusinesses to submit enforceable nutrient management plans.

In addition, the market has seen a substantial uptick in claims alleging damages due to odors. Odor claims are complex and have involved large class actions where livestock farmers have been shut down until the odor is controlled or abated. Pollution insurance can cover odor claims.

What is pollution insurance?

Pollution, or environmental, insurance is a supplemental coverage designed to fill in the gap created by a pollution exclusion present in 98% of commercial liability policies.

What does it cover?

Pollution insurance covers both first and third party damages arising out of the release, escape or dispersal of an irritation or contamination event. This includes liability for bodily injury, property damage, in most cases clean-up costs, damage to natural resources and defense costs.

How does pollution insurance work?

There are two general types of pollution insurance – contractor’s pollution liability and site pollution liability coverage. When it comes to agribusinesses, contractors and consultants working in the industry often purchase policies that combine coverage provisions. Here is a pollution coverage breakdown, as it applies to agribusinesses:

Site pollution liability coverage – Coverage for the release, escape or dispersal of a pollutant at a site scheduled to the policy. This policy is ideal for agribusiness land and facility owners and operators. It will contain exclusions for contractors.

Contractor’s pollution and professional liability combined form coverage – This coverage is applicable to certified crop advisors and agribusiness consultants that create and execute nutrient management plans for farms and manure lagoons.

Personalizing pollution coverage to your agribusiness

Most environmental insurance is sold in the surplus market, where rates and policies are not standard. Each carrier will not necessarily agree on what is considered a pollutant. Knowing what is covered means understanding what’s excluded. This will be key to making sure your policy works hand-in-hand with your agribusiness’ specific risks.

Work with your broker to include a wide definition of “pollutant.” Make sure it includes: manure, bacteria, nitrates, and odor. Additionally, most site pollution policies exclude pre-existing conditions, even though nitrates are typically present under farmland. Make sure your policy includes some type of pre-existing coverage for nitrate contamination so it doesn’t become an excluded loss.

Across industries, pollution insurance is key

Pollution insurance is no longer a luxury - or an added coverage only for environmental businesses. It is a necessity for businesses that want to remain economically viable in today’s litigious environment. More businesses are taking advantage of affordable pollution policies to combat ever increasing litigation.

Contact your HUB pollution insurance specialist to find out if you’re adequately covered for pollution liability.