Farm Liability for Damage by Fire

Similar to the CGL form, the farm liability policy provides fire legal liability for damage by fire to a rented premises. We have a farmer who leases a field on which he grew a crop. During harvesting, the machinery he used caught fire and burned the crop. The policy would pay for fire damage to leased premises for which the insured was liable, but what about the crop? Is the crop part of the premises?

In another situation, our insured was baling hay at another person's farm. When he was finished, he had the last bale of hay sitting on a hillside. The bale rolled down the hill and struck the claimant's outbuilding. The siding was damaged and needs to be replaced. Under the farm liability policy, is this damage a covered loss or is one of the property damage exclusions applicable, such as the property damage to your work exclusion, or the faulty work exclusion?

Iowa Subscriber

In answer to the first question, the word “premises” is not defined on the farm liability policy, so you have to check the regular dictionary. The dictionary defines premises as a building or part of a building or a tract of land with buildings on it. Based on that and a reasonable interpretation of the word “premises”, we are of the opinion that crops are not premises. They are a product of the premises since they were grown there, but that does not make them premises.

As for the second question, the building was damaged, but the insured was not working on the building. He was baling hay which had nothing to do with the building. The insured's work caused damage to another's property and that is what is meant to be covered by a liability policy. Neither of the exclusions you mentioned would be applicable in this instance. The damage to the building is covered under the insured's liability policy.