Farmers First Party Pollution vs Third Party Pollution Liability
What are they? What is the difference between the two? And why do I need these coverages for my farm?
What is First Party Pollution?
This coverage is meant to cover cleanup costs and damages when there are pollution damages done to your own property. The key to First Party Pollution is that the coverage will only respond if the pollution is done to your own property. For example, if you have a fuel tank on your property and the tank were to get damaged, spill fuel and contaminate the soil, there would be costs to clean the fuel up. First Party Pollution would cover those costs, up to the policy limit. In Ontario, most farm policies have a limit of $5,000 for First Party Pollution. This is not a lot of coverage for most pollution incidents and that is why most insurance companies give you the option to buy that coverage up. With many insurance companies, the highest limit available is $100,000.
What is Third Party Pollution Liability?
This coverage is meant to cover the costs and damages you cause to a third party property. The key to Third Party Pollution Liability is that the coverage will only respond if the damages are caused to someone else’s property and not your own property. For example, if you owned a sprayer and were operating on someone else’s property and you were to overturn the sprayer and contaminate the soil, Third Party Pollution Liability would cover the costs to clean the pollutants up. Similarly, if you were spreading manure and you contaminated a nearby creek, the Third Party Pollution Liability would cover this cleanup as well, up to the policy limit. In Ontario, most farm policies will have a limit of $2,000,000. However, you should look at your policy to see what your farm is covered for.
As you can see, there is a big difference between these two coverages. You should make sure you talk to your broker to discuss your options in regards to both of these coverages. It is very serious if you were to pollute soil or nearby water, there can be significant costs to clean the pollutants up and I would hate to see anyone have to pay those costs out of pocket.