If there is one thing I wish I could get clients to understand is the fact that even if your farm has liability insurance, you are likely under insured with your current liability coverage. Essentially, if you have a million dollars of coverage, or several million, the coverage is peanuts now days. How big a bag of peanuts? Well, here in Indiana we recently had a whopping 35 million dollar verdict against a defendant for causing an accident that left the plaintiff a quadriplegic. Similar verdicts have been handed down across the country as of late. You can read about it here: https://www.theindianalawyer.com/articles/45836-recent-35m-verdict-is-among-largest-indiana-jury-personal-injury-awards
As one attorney stated “jurors are increasingly less offended by requests for million-dollar-plus verdicts” Whoa. Wasn’t it not too long ago society was up in arms about a woman in Texas getting several million for being burned by hot coffee? It sure was. But, as another attorney stated, “the shock of big money verdicts has been muted by seemingly daily news about lottery jackpots, athlete contracts and CEO compensation”. Thus, it seems plausible that any accident on the farm that creates a serious injury or death stands a good chance of seeing a multi-million dollar verdict if the farmer is found negligent or guilty.
As farmers, it is fair to say that most of us (knock on wood) have not been in a lawsuit. I get reminded of that by clients from time to time. However, we live in a new world, and some of the following plays a role now:
Machinery Size: I remember being able to drive the combine with the grain platform attached down the road and not take up the entire road. Now, just the combine alone is often the width of the entire road. Larger machinery taking up more of the road increases the risk of accidents.
Distracted Driving: As I drive farm machinery on the road, it never ceases to amaze me that practically every car approaching has a driver that is on their cell phone. We know distracted driving is a huge problem. However, if your machinery is over the center line, and there is an accident, no matter if the other driver really is at fault due to being distracted, you will likely be liable.
Semi Trucks: More and more farms have gone away from wagons and utilize semi trucks. Operating a semi truck for farm purposes usually does not require a CDL or DOT inspection. Hey, what can go wrong with a driver that is not fully trained, driving a vehicle that has not been inspected, loaded with 80,000 pounds of grain, traveling long distances?
Farm Unfamiliarity: At times prior, the general population had at least a basic understanding of farming. Now, the majority of the general population does not know a corn row from a fence row. Whether we are interacting with people on the road, on our farms, or in other areas, we can rest assured that there is a high probably if that people are much more prone to be injured when interacting with agriculture due to unfamiliarity.
Change in Jury Awards: As stated above, there appears to be a changing attitude among jurors. In the past a few million dollars of liability coverage could make up for a serious accident or death. Those days are now over.
At risk of coming across as a fear monger, I am hopeful that I am coming across as a realist. Meaning, there is a greater risk that as farmers we will be exposed to an incident that gives rise to a lawsuit, and these lawsuits can lead to massive verdicts against us if things don’t go our way at the courthouse.
Although liability insurance is something we should not go without, I highly recommend that we do not put all our farm eggs in the insurance basket. My advice to clients is to have a robust liability policy that affords for at minimum 1 million in coverage, better yet several million dollars. From there, have the farm set up with legal entities that will give protection. With the right set up, legal entities can, in a sense, provide tens of millions of dollars of protection. Spend some money upfront to get the farm set up in the right structure and you’ll be buying the cheapest, yet perhaps most effective, insurance out there.
In closing, liability insurance is a necessity, but the days of expecting it to save the day are over. To fully protect the farm, it is going to take insurance and having the farm structured property with the use of legal entities. We will discuss the proper structure of the farm in our next article.
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