Poultry Farm Liability Insurance is vital for any poultry farming operation. It’s important that the cover suits the individual farm and that time is taken to review of the liability risks associated for the farm.
Poultry farming is unique in term of how the liability risk differs from other agricultural operations. There are a number of considerations that should be reviewed when sourcing the most appropriate liability cover for the farm.
Poultry farms will still have the same risks in terms of personal injury or property damage but the significant difference is the liability cover for animals in care custody and control.
What Are The Farm Liability Risks For Poultry Farms
Poultry Farm Processor Contracts
While a liability policy will not provide cover for contractual claims, there is still an onus on the farm that they are responsible for growing the birds within their care and control.
A trigger under a liability policy is negligence and should a processor be able to prove that the farm has been negligent in terms of the loss to birds- the farm is at risk of a claim, or at least the legal costs incurred to review a potential claim.
It’s important to distinguish the legal responsibility of the farm and ensure that the insurance policy is tailored to cover such risks. A farm may have risks within the processor contract that fall outside the triggers of a liability cover and these risks may need to be insured in an alternative manner such as a full mortality livestock insurance policy.
Poultry Farm Size & Layout
The size and layout of the farm is an important factor to consider under a liability policy. Larger farms can have more contractors, pick up crews and labour hire which all need to be considered as a risk. The layout of the farm is important as the risk can differ based on the number of sheds that are supported by the same services (gas, power and water).
The services on the farm should always be reviewed and it’s important that farm has contingency plans in place in the event of breakdown or failure to these services, as this can help to reduce the risk of a liability claim from processors.
Bird Numbers
The total bird numbers of the farm is relevant as this can help to determine the maximum loss exposure.
For example, an 8 shed farm that utilises the same power, gas and water supply is exposed to a loss of birds in all 8 sheds.
If the processor values these birds at $3 per head and there is a loss to the birds in all 8 sheds, this could result in a potential liability claim of upwards of $500K- depending on stocking density at the time of the loss.
This is an example of why a standard limit of liability for Goods In Care Custody and Control (animals) may not be sufficient for the farm.
Maximum Loss Exposure for Poultry Farms
A number of insurers will limit their farm insurance liability insurance cover for Goods In Care Custody and Control for animals. It’s important to understand that this limit may not be enough for a potential claim against the farm for a number of reasons;
- The farm could experience a loss that impacts more than a single shed
- Legal costs may not be in addition to the limit of liability
- The processor values the birds more than the growing fee the farm receives
Poultry Farm Liability Insurance Claim Example
8 shed poultry farm with a capacity of 50,000 birds per shed- 400,000 birds in total. The farm has a standard poultry farm liability cover that has a policy limit of $100,000 for animals in care, custody and control – inclusive of legal fees.
The farm manager inputs the incorrect temperature settings for the poultry sheds and they fail to respond to the shed alarm systems- resulting in the loss of 300,000 birds.
The farm receives a liability claim from the processor for the loss of their birds due to the negligence of the farm manager. The processors claim is for $900,000 based on $3 per head.
The farm has a policy limit for $100,000 for liability claims arising from goods in care custody and control (animals);
- Liability Claim $900,000
- Legal Fees $20,000
- Farm liability cover policy limit $100,000 inclusive of legal fees
The farm liability claim results in the farm being underinsured by $820,000 as the actual risk exposure wasn’t considered for the farm when the insurance was established.
The actual risk exposure for the farm based on 400,000 birds would be closer to $1.2M- based on $3 per head plus any legal fees incurred.
Poultry Farm Liability Cover- Labour Hire
It is a growing trend for poultry farms to utilise labour hire for bird mortality collections and any labour hire activities need to be declared to the insurance company. This may leave the farm exposed for potential liability claims from Workcover given the farm is not deemed to be an “employee” of the injured person- thus exposing the farm to any personal injury to labour hire personal.
There are a number of other liability risks that need to be considered within a poultry farm insurance policy and it’s important that a farm deals with a farm insurance broker who is highly experienced in poultry farm insurance.