Farm Liability Coverage Gaps and How To Fill Them

Transcription

1 Farm Liability Coverage Gaps and How To Fill Them Policy forms available in the marketplace must be tailored to fit the needs of the agribusiness client. This presentation will familiarize the attendee with a few of the many endorsements available to fill gaps found in unendorsed coverage forms. The session will discuss why endorsements are available in the in the Farm Liability Program and identify reasons to use certain endorsements. Since many insurers either use AAIS forms, use their own (proprietary) policy forms, or offer modified ISO and AAIS forms, this session will provide tips for reading and understanding the endorsements so clients can be properly protected. Copyright 2016 International Risk Management Institute, Inc. 1

2 Notes This file is set up for duplexed printing. Therefore, there are pages that are intentionally left blank. If you print this file, we suggest that you set your printer to duplex. 2

3 Farm Liability Coverage Gaps and How To Fill Them The ISO Farm Liability Coverage Form FL This coverage form looks, at times, like the ISO Commercial General Liability Coverage Form, and, at other times, it looks like the ISO Homeowner Coverage Form s Section II We find, very quickly, that it is impossible to serve two masters!! As such, gaps exist Not all insureds have the same needs This coverage form is designed for risks with basic Personal Liability exposures as well as business exposures that fall only within the policy s definitions of farming and custom farming 2 3

4 The ISO Farm Liability Coverage Form FL Not all insureds have the same liability exposures Risk assessment is vital Farmers (and others who meet the definition of insured ) are notorious for undertaking activities, in addition to farming, that are income sources An insured s risk can and does change Routine follow up is vital Your client who only farms today, may take on other business pursuit exposures without notifying you 3 Four For Our Review FL Amendatory Endorsement FL Farm Employers Liability and Farm Employees Medical Payments Insurance FL Custom Farming Liability Coverage FL Business Activities 4 4

5 Why Change the Form? The Farm Liability Coverage Form FL has an exclusion for bodily injury and property damage from pollutants 5 Why Change the Form? Although there are notable exceptions to this very broad exclusion BI if sustained within a building and caused by smoke, fumes, vapor or soot produced by or originating from equipment that is used to heat, cool or dehumidify the building, or equipment that is used to heat water for personal use, by the building s occupants or their guests BI or PD arising out of heat, smoke or fumes from a hostile fire 6 5

6 Solution? FL FL Amendatory Endorsement This endorsement is VITAL Adds an exception to the Pollution exclusion for BI and PD as the result of an agricultural fire under particular conditions 7 Solution? FL FL Amendatory Endorsement Adds Chemical Drift Liability Coverage Added as Coverage M Pays sums that the insured becomes legally obligated to pay as damages for physical injury to crops or animals, if The injury was caused by discharge, dispersal, release or escape into the air, from the insured location of the chemicals, liquids or gases used by the insured in usual and normal agricultural operations The chemicals, liquids or gases were released by other than an aircraft No coverage for expense to test, monitor, clean up, remove, contain, treat, detoxify, neutralize or respond or assess the effects of pollutants Subject to an Annual Aggregate Limit of Insurance of $25,000 This limit can be increased 8 6

7 Why Change the Form? The FL Farm Liability Coverage Form contains exclusions making it very clear that injuries to an employee - as well as damages claimed by anyone as a result of injuries to an employee - are excluded This insurance does not apply to: Workers Compensation or Similar Law Any obligation of the insured under a workers compensation, disability benefits or unemployment compensation law or any similar law Employers Liability Includes BI sustained by the spouse, child, parent, brother or sister of any employee as a consequence of BI to that employee This exclusion applies whether the insured may be held liable as an employer or in any other capacity and to any obligation to share damages with or repay someone else who must pay damages because of the injury 9 Solution? FL FL Farm Employers Liability and Farm Employees Medical Payments Insurance Available to modify FL Farm Liability Coverage Form CG Commercial General Liability Coverage Form What does it do? Provides payment for damages for legal liability of the insured as a result of BI sustained by a farm employee caused by an occurrence arising out of and in the course of employment Damages include care, loss of services or death as a result of the BI Medical Payments for a farm employee become available This coverage IS NOT synonymous with Workers Compensation Coverage 10 7

8 Shortcomings of the FL Please remember A Workers Compensation and Employers Liability Policy has two distinct coverage parts Part One Workers Compensation Insurance Protects the Named Insured (the employer) for their statutory exposure as an employer in the employer employee relationship Part Two Employers Liability Insurance Protects the Named Insured (the employer) for four very distinct exposures: Third party action over claims (No coverage is provided in the FL for this exposure) Care and loss of services (Coverage is provided in the FL for this exposure) Consequential bodily injury (No coverage is provided in the FL for this exposure) Dual capacity (No coverage is provided in the FL for this exposure) All of these exposures are EXCLUDED in both the FL and the GL What is the REAL SOLUTION? Source: National Council on Compensation Insurance, Inc., Copyright

9 Why Change the Form? The FL Farm Liability Coverage Form contains several exclusions for an insured engaged in custom farming 13 FL Exclusions - Continued 14 9

10 Solution? FL FL Custom Farming Liability Coverage Available to modify Farm Liability Coverage Form Commercial General Liability Coverage Form Provides BI and PD coverage for Custom Farming operations listed in the endorsement Removes the exclusions we discussed, for the listed operations Exclusion 2.j. Custom Farming Exclusion 2.r.(5) Damage to Property Exclusion 2.u. Damage to Impaired Property or Property Not Physically Injured This endorsement is auditable!!!

11 Why Change the Form? The FL Farm Liability Coverage Form contains an exclusion for Business Pursuits The exclusion removes BI or PD arising out of or in connection with a business engaged in by an insured As the definition of business means a trade, profession, occupation, enterprise or activity OTHER THAN FARMING OR CUSTOM FARMING, this exclusion does not apply to Farming The operation of an agricultural or aquacultural enterprise and includes the operation of roadside stands, on your farm premises, maintained solely for the sale of farm products produced principally by you and DOES NOT INCLUDE Other retail activity Mechanized processing operations Custom farming As long as receipts do not exceed $5,000 in the 12 months prior to the occurrence 17 endorsement Solution? FL FL Business Activities Endorsement has a schedule which requires Insured Location No. and Location Description of Business Option to include Liquor Liability Option to include Room and/or Board Option to include Rental of a Part of the Insured Location to Others With respect to the business DESCRIBED IN THE SCHEDULE, the Farm Liability Coverage Form is modified as follows Liquor Liability Exclusion can be removed The Business Pursuits Exclusion is deleted The Employers Liability Exclusion is modified The Medical Payments Exclusion for Professional Services and Business Pursuits is modified A particular part of the Rental of Premises and Ownership or Control of Premises Exclusion is modified Room and/or Board services with respect to a residence owned by an insured can be indicated in the 18 11

12 What We ve Reviewed FL Amendatory Endorsement FL Farm Employers Liability and Farm Employees Medical Payments Insurance FL Custom Farming Liability Coverage FL Business Activities 19 12