“All risks” insurance can be risky

Catchwords: Contract law, insurance contracts, public liability for other people not you, all risks cover, exclusion clauses, disclaim liability

Farmers thinking that they are covered for “all risks” insurance 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, if you don’t do certain things.

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. This may cause concern if you have friends, guests or visitors living in the homestead.

Where liability arises out of a trade or any other business, conducted on the “site”, it may be excluded. The site maybe 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. So public liability insurance is no substitute for workers compensation insurance. Farmers may be wary of independent contractors who work on the farm, claiming to have their own cover. This is a separate risk and 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; 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 farm home well maintained, in good repair and condition. So liability for a visitor falling on a dilapidated farm verandah maybe refused. Other ways your insurer may disclaim are if you are not truthful and frank in any statement you make about a claim; or if you admit liability to someone; or if you defend a claim without the insurer’s agreement or even attempt to settle it.

So blindly relying on your “public liability” insurance, without checking it out, maybe risky business if you are a farmer. If you are in doubt, consult your insurer and if you are still in doubt, consult your solicitor or barrister 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.