# insurance question



## farm_friendly (Jul 17, 2014)

Hi. We own some property and are leasing it out to a farmer to gain a lower tax bill as its now considered agricultural use. Just come to realize that the farmer does not have liability insurance and we were wondering if most people agree that the insurance is a must. We have been advised that the lesee should be covered and should name us as additional insured. We understand chances of a claim are small but because of today's world of lawsuits we think we should insist on this. Any experience with this? 

Thank You.


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## Molly Mckee (Jul 8, 2006)

I've never heard of a farmer or rancher carrying liability insurance on land they rent, unless there are buildings involved. I have never heard of anyone that owns rented land being sued either, by someone who got hurt on the land. I would think requiring insurance would mean reducing the rent, unless it is really cheap. I would buy it myself, maybe in an umbrella policy, if I wanted it. Your county agent can tell you what is normal in your area.


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## farm_friendly (Jul 17, 2014)

We called 4 insurance agents and they all told us they will not sell us the insurance that covers anything related to the farmer. They said the farmer must purchase it on his own and name us. We asked 3 different attorneys and all the same answer, that he needs insurance. We were able to purchase vacant land insurance but that only covers any liability not related to any commercial farming on the property. What everyone is saying is that because it is farmed, it is now considered commercial and not residential property. Very confusing. And yes it's really cheap. $30 an acre cheap so we can't pay for this either way.


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## opportunity (Mar 31, 2012)

$30 an acre would put me out of business I would stop renting all the land I have rented. My homeowners insurance covers me on the other's property but it doesn't cover anyone outside of my family on the property we use, that liability still goes to the land owner.


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## farm_friendly (Jul 17, 2014)

Opportunity, as the land owner we've been told we are responsible for the liability. Thanks for confirming that is at least true. Even at $30 an acre, we only cover the taxes. Where we are, the insurance companies wont sell us coverage even if we wanted to eat that cost. So what do the land owners that you rent from do about liability or is it just not an issue?


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## TerriLynn (Oct 10, 2009)

We carry an umbrella policy on our own farm that would cover any liability on land that we lease for crops/hay.

The only time I have heard that proof of additional liability insurance is needed is where livestock on leased land is involved.


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## Molly Mckee (Jul 8, 2006)

farm_friendly said:


> Opportunity, as the land owner we've been told we are responsible for the liability. Thanks for confirming that is at least true. Even at $30 an acre, we only cover the taxes. Where we are, the insurance companies wont sell us coverage even if we wanted to eat that cost. So what do the land owners that you rent from do about liability or is it just not an issue?


Are you figuring the additional taxes if the land is not farmed? In some areas that is a very considerable amount of money. 
Your County Agent can tell you what is normal in your area as well as look at your property and give you the best information on what fair rent is and what you should do about insurance. He does not have any interest in the outcome, lawyers and insurance agents do.
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## rambotex (May 5, 2014)

OK, too many responses here to quote each one. I will say that some of the information posted is correct and some of it is not. I have been in the Insurance business for 30+ years and can answer this question with 100% confidence. I'd like to start by saying I'm NOT an attorney and you should consult with competent counsel on legal matters. 

If you are leasing your property to a 3rd Party you should have them enter into a Lease Agreement with you detailing your mutual agreement for leasing the property. This agreement should include a Hold Harmless Agreement and an Indemnification Agreement to the lessor. There also should be Insurance requirements of the Lessee to provide Liability Insurance naming you as an Additional Insured on their policy.

Now, before the Lessee's freak out; adding this to your current policy isn't going to cost that much. The key words here are "current policy". If this lessee doesn't currently have a policy, it's going to cost more; not because he's leasing from you but because he is finally purchasing insurance for his operations, etc. As Terri Lynn said; her "CURRENT" policy would extend liability coverage over to leased and rented premises. I'm also 99% sure that Terri Lynn's carrier wouldn't have a problem naming the lessor as an Additional Insured on Terri Lynn's policy for any Bodily Injury or Property damage that she or her Employees, if applicable, were to cause to a 3rd party who might bring suit against the Lessee.


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## farm_friendly (Jul 17, 2014)

Thank you to everyone for your input. While it is true that insurance agents and lawyers do have something to gain, there comes a time when we must listen to someone who knows more about this then we do. Each and every professional we have spoken to has said in order for us to be fully protected, the person leasing the land must have some sort of liability insurance and name us as an additional insured. Reality of it is that the chances of a problem are quite slim. Everyone agrees with that premise. However, there is too much at stake and with our society being so litigious today, we have opted to insist the lessee get the insurance. While it's true the taxes might go up, we can always find someone else. And in fact, with a vacant land assessment, they won't go up dramatically. In reality, the farmer gets the better deal because he combines this land with his own to reduce the taxes he pays to agricultural on his other properties, so it's in his best interest to just comply. Regarding the suggestion of the hold harmless agreement, we have been advised by an attorney that it really doesn't do much. Explained to us as kind of like a person buying a ticket to a baseball game. The ticket says the team is not responsible for any injuries sustained by a spectator but in reality, they get sued anyway and can lose. But again, you all helped because we now understand that the farmer leasing the land should know that he needs insurance, it shouldn't be too expensive and if doesn't want to get it, we need to figure something else out.


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## rambotex (May 5, 2014)

I must disagree on the Hold harmless and Indemnification agreements. Good luck; I'm happy for you that you decided to have them provide insurance.


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## farm_friendly (Jul 17, 2014)

We probably will still add the hold harmless clause to the lease agreement because it just doesn't make sense not to. Just reiterating what the lawyer told us about relying on it as a way to protect ourselves. Have you seen or heard of it actually be beneficial?


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## rambotex (May 5, 2014)

Not on a personal basis but I've had it occur to some of my Contractors while working at locations and they were unable to request restitution and their Insurance company was unable to request money back from the Property Owner due to a waiver of Subrogation clause in the contract. 

case in point:

My Electrical Contractor was at a Plywood Mill and one of the Plywood Mill employees damaged his truck with a forklift. the plywood Company denied the Contractors request for damages due to the Hold harmless in their contract. Once the Insurance Company paid to repair the pickup their claim for reimbursement(subrogation) was denied due to the Waiver of Subrogation clause in the Contractors agreement.

******* Once again, let me point out that I am not an Attorney nor licensed to practice law. Please contact competent counsel for Legal advice******


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## edcopp (Oct 9, 2004)

About 3 miles away from where I live lives farmer "deep pockets". One saturday farmer DP pulled out of his farm lane, on an older Farmall tractor. He got up to 20 MPH or so quickly.

In a few seconds he was hit by a motorcycle driven by Mr. High speed, father of two and now very dead. His speed was estimated at 70-80 MPH at the time of impact.

Farmer deep pockets is well known in the community, and the fact that he has a 7 figure net worth is not a secret.

Somebody is dead, and somebody is known to have money. The chances of farmer "deep pockets" being sued are very high. The farmer does have liability insurance, and you can be sure that an insurance company will fight very hard before turning loose of any money, protecting the farmers "net worth".


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## rambotex (May 5, 2014)

edcopp said:


> About 3 miles away from where I live lives farmer "deep pockets". One saturday farmer DP pulled out of his farm lane, on an older Farmall tractor. He got up to 20 MPH or so quickly.
> 
> In a few seconds he was hit by a motorcycle driven by Mr. High speed, father of two and now very dead. His speed was estimated at 70-80 MPH at the time of impact.
> 
> ...


I'm not quite sure how you're tying this story into this thread. Totally different discussion.


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## Alice In TX/MO (May 10, 2002)

The story addresses the need for liability insurance.

I am a landowner. I have liability insurance on ALL my properties. Home, leased pasture, rentals, and timber. ALL OF THEM.


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## rambotex (May 5, 2014)

Alice In TX/MO said:


> The story addresses the need for liability insurance.
> 
> I am a landowner. I have liability insurance on ALL my properties. Home, leased pasture, rentals, and timber. ALL OF THEM.


Alice- To me(thread) it was more about Risk Transfer and Contractual Liability. 

If the old Farmer had that much he should have had an Umbrella Policy over his underlying limits. With regard to Edcoop's snide remark about the Insurance Companies hanging on to their money: they will pay up to the policy limits if said Wealthy Farmer is found to be Legally liable according to State Laws.


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## farm_friendly (Jul 17, 2014)

rambotex, you're right about my original thread. But, let's face it, edcopp's post does illustrate yet another example of our litigious society and why it's best to prepare for the unlikely.


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## rambotex (May 5, 2014)

farm_friendly said:


> rambotex, you're right about my original thread. But, let's face it, edcopp's post does illustrate yet another example of our litigious society and why it's best to prepare for the unlikely.


No doubt FF. You're preaching to the Choir. let me give you an illustration of what you're talking about:

I have a Contractor that specializes in Remodels of Sams Clubs while they are in operation. They were in a Southern Gulf Coast State and part of the project was to replace some of the large freezer units in the store. They completed the job as per the Architects plans and had already been paid and gone for several months. 

They're at the office one day(Texas) and are served with suit papers. Apparently Sams had run out of storage space and one of the employees pointed out to the Mgr. that there was plenty of unused space on top of all the Freezer units so the Mgr tells them to use the space. An employee stepped off of one of the units and seriously hurt himself in the fall. They paid him 1.5M; 1/2 from the Architect and 1/2 from my Contractor beacause they should have painted bright yellow lines around the tops of the Freezers and also installed handrails around the top. Keep in mind these Morons brought in portable ladders to access this area. My Contractor only did what he was asked to do and it cost his insurance company $750,000.

I cannot type on here what I told the Insurance Company Claims Mgr. He told me they were prepared to defend with trial starting on Monday. My Contractor and his wife already had their plane tickets out of Houston and he told me he(Claims Mgr.) received a phone call Friday afternoon basically letting him know he better take the deal on the table or it would be a lot worse if he showed up in their court.


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## edcopp (Oct 9, 2004)

rambotex said:


> Alice- To me(thread) it was more about Risk Transfer and Contractual Liability.
> 
> If the old Farmer had that much he should have had an Umbrella Policy over his underlying limits. With regard to Edcoop's snide remark about the Insurance Companies hanging on to their money: they will pay up to the policy limits if said Wealthy Farmer is found to be Legally liable according to State Laws.


What part do you consider to be "snied"?


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## rambotex (May 5, 2014)

edcopp said:


> What part do you consider to be "snied"?


I misread your post. My apologies


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