Source: http://www.minnesotafarmguide.com, February 15, 2015
By: Lynn Grooms
At the end of December 2014, the Wisconsin Supreme Court reversed a court of appeals decision, holding that manure that contaminates a well or aquifer is a “pollutant,” and therefore is not covered under a farm’s general liability insurance policy. The Wisconsin Supreme Court’s ruling in Wilson Mutual Insurance Company v. Robert Falk and Jane Falk, et al — visit www.wicourts.gov/sc/opinion/DisplayDocument.pdf?content=pdf&seqNo=13247 -indicates that farmers could be held liable for damages that occur from manure runoff.
Given this ruling, general-liability insurance policies could be changing. What is a farmer to do? First, call the insurance carrier to clarify coverage. David Anderson, CEO of the Green Bay-based insurance company Vincent Urban Walker and Associates Inc., recommends asking insurers how quickly they can put a farm-pollutant policy in place as well as what they are doing to ensure that the “bacteria exclusion” is taken out of the policy.
“Every policy has exclusions, and line A excludes mold and bacteria,” Anderson said.
“Environmental pollution is generally excluded from almost every type of personal or business policy,” said Kevin Erb, University of Wisconsin Extension conservation training coordinator in Green Bay. “If there is coverage, it is usually $10,000 or less, and that does not come close to dealing with the full potential cost.
“I would suggest putting together a few possible scenarios. For example, a non-farm neighbor to one of my rented fields contacts me a week after I spread manure and says he has test results that show his well is contaminated. Or, I am driving a sprayer down the road, pull over a bit too far when meeting an oncoming car, and the sprayer tank is punctured by a mailbox post.”
The farmer should ask not only if he or she is covered, but also the next steps to take from an insurance perspective to ensure coverage.
“Think about your operation, your soils, your neighbors and what could go wrong,” Erb advised.
Some insurers already offer policies that cover pollutants in addition to general liability. Some commercial manure handlers, for example, have had the exclusion on bacteria removed from their policies. However, these policies require the business implement risk-reduction strategies. Other insurers might attach riders to their liability policies that would be available for purchase, said Cameron Field, attorney, Michael Best & Friedrich LLP, Madison.
Anderson said some insurance companies will need to put a specific farm-pollution policy in place. But changing verbiage is generally a long process.
“That is why, working together with two agricultural-industry organizations, we have put together a program with a carrier willing to write a farm-pollution policy for $1 million,” Anderson said.l
The cost of this insurance for individual farmers would be $2,500 per year, and would cover manure spills and seepage.
In the Wisconsin court case, the farmers did have a nutrient-management plan in place. But having such a plan is no guarantee that a farmer is protected from liability or that it will necessarily reduce damages in a court verdict, Anderson added.
Farms with nutrient-management plans in place are protected from EPA enforcement activity by the Agricultural Stormwater Exemption NR 243 in the event of field runoff from significant precipitation events, Field said. But, he added, complying with a nutrient-management plan and the exemption are unlikely to provide legal protection against alleged property and bodily damages like those brought up in the Falk case.
Still, having a nutrient-management plan is still important, Erb said.
“If a case does end up in court, having a nutrient-management plan and being able to prove that you followed it shows that you are making a good-faith effort to reduce the risk of problems,” he said. “Having a plan and fudging numbers, applying more than it recommends, or not following it at all could show negligence on your part. Some of the newer insurance products that have arisen as a result of this court case require the farm not only to have a plan, but to follow it in order to be covered by the insurance.”
Erb recommended that farmers carefully evaluate their fields and make sure that any areas of high risk, such as tile inlets, neighboring wells and shallow soils, are noted on their nutrient-management plan maps.
“Make sure to review these maps closely every time you spread manure,” he said. “Over the past few years, the weather has really challenged us in terms of manure application in both spring and fall. From a practical perspective, we may need to look at adding some wheat acreage or shorter-season corn silage into the rotation to make sure we have places to go with the manure in early fall so we avoid applying at higher-risk times on frozen soil or in the wet part of spring.”.
Agricultural consultants and the Natural Resource Conservation Service can help farmers develop a Comprehensive Nutrient Management Plan or similar document to help identify and address areas of concern around the farm.