Poultry Farm Liability Insurance is vital for any poultry farming operation. It’s important that the farm insurance program is structured for each chicken farm to ensure adequate cover.
Poultry farming presents distinct characteristics regarding liability risks when compared to other agricultural practices. This discussion will thoroughly explore the various factors to consider and offer guidance on securing the most suitable liability coverage for your farm.
While poultry farms typically face similar risks related to personal injury or property damage, the presence of animals under care, custody, and control significantly heightens the liability risk.
What Are The Farm Liability Risks For Poultry Farms
Poultry Farm Processor Contracts
A liability policy does not extend coverage to contractual claims. The responsibility lies with the farm, which is tasked with the cultivation and care of the birds.
Negligence serves as a trigger for a liability policy. Should a poultry processor demonstrate that a farm has acted negligently concerning the mortality of poultry, the farm may face the potential for a liability claim.
It is crucial to clarify the legal obligations of the farm and to ensure that the insurance policy is specifically designed to address these risks. There may be risks associated with the processor contract that do not fall within the parameters of liability coverage. Depending on the size of the farm and the stipulations of the contract, these risks might be more appropriately covered by a comprehensive 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 as part of the insurance process. It’s important that farm has contingency plans in place in the event of breakdown, 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. A farm with 8 sheds that connect to the same power, gas and water supply may have a higher exposure.
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 poultry farm 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
As the risk exposure wasn’t considered for the farm this has resulted in the farm being underinsured by $820,000.
The true 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
The use of labour hire on poultry farms is growing fast. It is recommended that labour hire activities are confirmed with your farm insurance broker. The use of labour hire on poultry farms increases exposure for potential liability claims from Workcover.
There are a number of other liability risks that need to be considered within a poultry farm insurance policy. It’s important that a farm deals with a farm insurance broker who is highly experienced in poultry farm insurance.