Have you ever noticed that people like to borrow and use your equipment not to mention your labor? My father-in-law’s hunting club has an annual work weekend near the end of every summer. Every year my labor and equipment gets recruited. Every year I load up the trailer and make the 40 mile pilgrimage to partake in this family tradition with many others.
Don’t get me wrong. We do have fun on this weekend and I enjoy the comradery, but have you ever stepped back and said “how does this affect my farm and my insurance?”
The two pieces that I take to the hunting club are the tractor and the Gator. Both items are common work tools used on the farm and both are typically scheduled on the equipment list. This is where the commonality ends and each piece of equipment comes under different definition in an insurance policy. Your tractor goes under the definition of “Mobile Equipment” and the Gator goes under the definition of “Recreational Motor Vehicles” (RMV). An RMV encompasses John Deere Gators, Polaris Rangers, etc. and endless models of golf carts to name a few. Basically an unlicensed all-terrain vehicle is a RMV.
Let’s look at the liability exposure that is present when moving equipment off of your farm or “premises.” In the insurance industry we refer to the farm as “premises” or “insured location.” These two terms are throughout the policy documents and a key component of the farm owners policy.
The base farm liability coverage form addresses each type of equipment differently. Yes, the farm liability is there to cover your negligent acts, but it is also full of exclusions. If you take your tractor off premises the liability coverage extends, but the same is not true for your RMV. Off premises liability coverage for RMVs is specifically excluded. Take your Gator to the hunting club…no liability coverage. Take the golf cart to the neighbors for dinner…no liability coverage.
Fortunately there is a fix, but the coverage has to be purchased. Endorsements are the insurance industry’s way to buy back coverage that was lost in an exclusion. The “Recreational Vehicle Liability Coverage Endorsement” will add back off premise liability coverage for RMVs. I feel that the reality is sooner or later all RMVs will be “off premises”. If only to ride from one section of the farm to another. Thus the endorsement extending coverage should be purchased. The premium for this endorsement will vary company to company and the engine size of the RMV is a contributing factor. I recently added the coverage to a policy for $85.00 annually.
Farm insurance is a complex legal contract between you and the insurance company. My suggestion is to be an integral part of your insurance program and know exactly what is covered and what breaches are present. It is always better to ask a question or concern before the claim happens. The farm is the family asset so don’t risk everything without consulting a professional farm agent.
So next time someone calls you and says “Hey! Don’t you own a Bush Hog?” or in my case recruitment by family, step back and think for a minute what liability you are incurring.
Nationwide Agribusiness Insurance Company’s Farm Liability Coverage Form was used for reference for this article. Farm liability insurance is highly standardized coverage and the wording of this form mirrors forms from the Insurance Services Office, Inc. (ISO) and American Association of Insurance Services (AAIS). This is a quick overview and is not intended to be a full review of insurance coverage or the policy.