Source: http://www.wisfarmer.com, May 12, 2015
By: Ray Mueller
If manure becomes “a pollutant” in the form of bacteria, any resulting claims by an offended party would not have to be covered by insurance companies under a commercial general liability policy, according to a 5 to 1 ruling on Dec. 30, 2014 by the Wisconsin Supreme Court.
When exercised, that exclusion makes farmers liable in an incident, such as a pollution of a well caused by manure they have applied, even if they have a general liability policy, attendees learned at the spring 2015 Extension Service farm management update for agricultural professionals.
The court’s ruling came in a Washington County (rural West Bend) case in which private wells were found to have been polluted by manure that was applied at rates approved in the farm’s Nutrient Management Plan.
The farmer’s insurance company refused to pay the claim for damages on grounds that manure is a pollutant when it enters a well as bacteria — a stance that was supported by the court as a reversal of an earlier ruling by a state appeals court.

Effects of the ruling

How this could affect farmers in other similar incidents and how insurance companies are responding to it was described at the update program in Kimberly by David Anderson, who is a commercial accounts executive at Vincent, Urban, Walker & Associates in Green Bay. As a longtime writer of insurance policies for farmers, he does not support the court ruling.
“Do the justices understand manure?” Anderson asked. “It seems that manure is a pollutant if somebody complains. This is a big problem. Every farm in Wisconsin is at risk.”
Because of the court ruling, which was based in part by liability cases dealing with situations in other states not related to manure, Anderson expects most insurance companies will not pay in similar circumstances.
Another concern is that the ruling will increase the number of similar claims, Anderson stated. He noted that current DNA testing is able to link manure to specific animals.

Seeking a solution

One way to address or reverse the court ruling would be action by the state legislature, Anderson said, but he predicted that at even “the best odds” this would take at least three or four years to happen.
The liability insurance industry has found a few major companies that are willing to offer a policy that will cover manure defined as a pollutant or a bacteria. He said the minimum coverage amount would have to be $1 million for a dairy farm with a $2,500 deductible.
But any such policy “will not be cheap,” Anderson warned. He quoted likely annual premium rates of $2,500 for any dairy herd of up to 160 cows and direct multiples of that cost for any comparable higher cow numbers until an “economy of scale” sets in at very high cow numbers.
“It’s like flood insurance for house mortgages,” Anderson said. “I hope this goes away in legislation.”
Anderson urged agricultural lenders to be aware of this situation and to address it when working with their clients. He also advises commercial manure applicators to become members of the Professional Nutrient Applicators Association of Wisconsin and to obtain a $10 million liability package through it to cover any manure spill they might encounter.