All farmers and agribusinesses have a potential pollution exposure. Some of the largest risks can arise when transporting chemicals, operating heavy equipment or dealing with waste run-off from a hog or cattle operation. Also fires can erupt that release potential harmful gases. Smaller risks arise from spilled chemicals or noxious fumes. Vandalism also can cause a pollution loss. In fact, a good percentage of pollution coverage lawsuits in the Midwest come from agriculture business of some type or another.
What you think might be covered probably is not. Make sure you find out from your agent if you are protected from these risks. All standard CGL policies contain a pollution exclusion clause. Most recent policies do not cover any environmental losses at all. Others cover only very limited losses, such as fumes from faulty heating and cooling units, hostile fires (one that you did not create) and escape of operating fluids from your mobile equipment. These clauses do not cover chemical spills, pathogen claims, or environmental cleanup costs.
What has Nebraska case law deemed to be covered? It depends upon the language of your insurance policy – which always controls. However in certain cases the courts have denied coverage to the policyholder for such unexpected claims as:
- Carbon Monoxide from faulty furnace.
- Mercury present in building.
- Xylene fumes from cement sealant.
- Grease from a rendering plant.
- Herbicide/pesticide applications drift.
Ag Operations Takeaway Tip: All standard policies have serious coverage gaps for farmers and agribusiness. Check with your agent to determine the extent of your coverage. Consider purchasing a policy tailored for agribusiness or adding endorsements to your existing policy if your risk is more limited. The small cost for coverage to close the gap is worth it.
Anne Marie O’Brien
Anne Marie O’Brien is a partner at Lamson, Dugan and Murray, LLP. She has over 27 years of experience in litigating insurance coverage claims to victory. She represents both policyholders and insurance companies. She writes articles and has routinely lectured to other lawyers on issues such as transportation law, insurance subrogation and environmental coverage.