Check policies to avoid the risks

Catchwords: Business law, all risks insurance policy, exclusion clauses, disclaim liability, domestic purposes, public liability

Farmers thinking that they are covered for “all risks” insurances should check their insurance policies. In particular, the “public liability” insurance may not cover the farmer for all the risks that they presume are covered.

There are two common ways that risks may not be indemnified.

“Exclusion clauses” in the policy are things that are not covered. There is a right to “disclaim” liability, or refuse a claim and cancel a policy. While all policies are different, generally there are some potentially risky situations for the farmer, which might be excluded in an average policy. But, you should get advice on your own particular policy.

Public liability concerns injury, death or damage to other people or their property, not the farmer, or the family living with the farmer. So you can’t claim against your own policy.

People living with you in the farm home, other than tenants or borders, cannot claim against your policy either. This may cause concern if you have friends or guests living in the homestead.

Where liability arises out of a trade or any other business conducted on the site, it may also be excluded. The site may be defined in your policy as only the farm homestead and the yard around it, used solely for “domestic” purposes.

So this would exclude the farmland used for farming, which is a business. So an injury to someone in a paddock may be excluded.

Where you should have held compulsory workers compensation insurance to cover your liability, it may be excluded.

Public liability insurance is no substitute for workers compensation insurance.

Farmers should also be wary of independent contractors who work on the farm, claiming to have their own cover. This should be separately covered by the farmer.

Other common exclusions may be from injury caused during a sporting activity, including a recreational sport, such as equestrian activities or shooting; an injury caused by an animal, say a feisty bull; someone using a car on the farm and having an accident; and injury caused by vermin, such as a bad case of insect bites.

An insurer may seek to “disclaim” liability if you don’t keep your home well-maintained, in good repair and condition.

So blindly relying on your “public liability” may be risky business if you are a farmer. If you are in doubt, consult your insurer and if you are still in doubt, consult a solicitor for specific advice.

Jonathan de Vere Tyndall

Article updated 7 January 2015, originally published in The Land on 5 October 2000

Editors note: The articles published contain comment only and not legal advice, for which you should retain a solicitor. No responsibility is accepted for the accuracy of the contents.