I believe Pollution coverage may be missed in most cases when discussing coverages that farms should have, and also from what I have learned from anyone in the industry! As a farmowner, you spread, store, and apply substances regularly that are considered a pollution. But what is the definition of pollution, or a pollution incident? Well, that depends on who you are asking. One state defines a pollution incident on a public road to include any substance that is accidentally spilled except for water and bird feathers. That leaves a lot of substances that could be considered a pollutant, but more importantly is how does your insurance define pollution?
*Commercial General Liability and Farm Liability define it as:
The emissions, discharge, release, or escape of pollutants into or upon land, the atmosphere, or any watercourse or body of water. “Pollutant” is defined as any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, and waste. “Waste” includes materials to be recycled, reconditioned, or reclaimed.
*Environmental Liability define it as:
The discharge, dispersal, release, escape, or illicit abandonment of any solid, liquid, gaseous or thermal irritant or containment, including, but not limited to, smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, hazardous substances, low-level radioactive material, electromagnetic fields, medical waste and waste materials.
*Note- these are standard definitions for insurance written by ISO. Some insurance companies can and will alter the definitions to either broaden or limit insurance coverage further.
These definitions include substances such as pesticides, herbicides, animal waste (manure), gas, oil (bulk storage), and even dust from tractors and livestock. It’s important to review what your policy is or, in most cases, is not providing coverage for when it comes to pollution. Without any endorsements, a standard farmowner’s policy is offering very little coverage for your property, or anyone else’s.
There are two endorsements that can be added to a policy that would allow for some extra coverage, but once again it is still limited- Amendatory Endorsement and Crop Dusting Limited Pollution Endorsement. These endorsements provide pollution coverage for very specific events that could cause a pollution incident. Amendatory Endorsement buys back coverage for bodily injury or property damage caused by heat, smoke, or fumes from a fire set by the insured on an insured’s location for purposes of burning off crop stubble or other vegetation. The Crop Dusting Endorsement will cover damages to another party’s crops or animals when applied from ground or aircraft using a licensed contractor.
Your auto insurance limits coverage for pollutants as well. The Auto Liability will only cover a pollutant that the vehicle is using to operate, such as antifreeze, gas, and oil. It does not cover pollutants you are transporting. It’s important to review wording and possible endorsements on this policy with your agent.
Since pollutants and pollution incidents have very limited coverage, what can you do to make sure you are covered? The answer is a Pollution and Environmental Liability Policy. The thing to remember about this type of policy is it needs to be reviewed closely because there is no standard for these coverages. When presented with many proposals, it’s essential to read and compare them. The lowest premium may be giving you the better coverage, or it may not be. Insurance companies have a little more leeway with the ability to word the policies to cover or not cover a certain risk.
If you are looking for pollution coverage, make sure you are getting covered for damage to your property, to someone else’s property, and the cleanup of the pollutant. Cleanup of the pollutant could be the costliest part of the incident depending on who is doing the removal. With pollution, the government (ex. the EPA) has a lot of say in determining who is responsible, how it gets cleaned up, and how much it’s going to cost.
As organic farming, urban development, and government laws and regulations continue to become very close neighbors with traditional farming, pollution coverage has become a crucial coverage to have for anyone, especially a farmer.
Resources: IRMI Risk & Insurance AFIS, ISO