One might ask, "What do blueberries in California, cattle in Texas, and citrus in Louisiana have in common?" The answer lies in unforeseen claims exposure. Three recently-filed cases illustrate the above commonality.
Delta Blue Blueberries filed suit in California against Wilbur-Ellis Company, Semi-Tropic Water Storage District, and Alpine Helicopter Service Inc. for negligence and trespass. (Case No. 39-2015-0032670-CU-NP-STK in the Superior Court of California, County of San Joaquin). Delta alleges that herbicide intended for a neighboring farm was negligently sprayed on Delta’s farm causing a total loss to their blueberries. Occasionally, incidents like this occur, causing crop loss, and that is why it is likely that Delta, like many farms, carries crop insurance to mitigate the risk of crop loss. Here, however, the damages sought are not limited to just the total loss of this crop, but rather, because it is an organic blueberry farm, the spraying of herbicide onto the fields may render the fields useless for years or decades to come. Do you think the insurer factored that kind of exposure into the premium?
Gary Frank Price, Sue Price, and Gary Lee Price filed suit in Texas against Helenda Chemical Company, Lauderdale Aerial Spraying LLC, L&H Aviation LLC, Justin Davis, Lane Aviation Inc., and Transland LLC for negligence, trespass, and nuisance, as well as design defect claims. (Cause No. 91800 in the District Court of Elis County, TX, 40th Judicial District). The Prices alleges that herbicide, intended for a neighboring sunflower farm, was negligently sprayed on the Price farm, rendering the cattle raised there and the grass that grows there contaminated. Again, it is likely that the Prices have coverage for the loss of the cattle, but were the ground contamination, the market value of the “stigma” now associated with the contaminated farm, and other losses contemplated by their insurer when pricing the policy? Alternatively, do you think the defendant’s insurer contemplated this level of risk?
Frederic Julian Schwarz and Peggy Wieland Schwarz filed suit in Louisiana against Golden Ranch Aviation, Plaquemines Parish, Syngenta, the State of Louisiana and others for negligence. (Cause No. 62-198 Div B 25th Judicial District Court). The Schwarzes allege that through the alleged negligence of the Plaquemines Parish animal control and health departments, insecticide and fungicide were sprayed onto their 130-acre organic citrus farm, rendering all of the citrus contaminated and thereby no longer organic. Furthermore, all of the fruit trees and the ground in which they grow is also allegedly contaminated and cannot produce organic fruit, or possibly any fruit for years to come. Like the California and Texas cases, did the Schwarz’s insurer contemplate this range of loss? Did the Parish’s?
When writing property casualty policies to cover agricultural products, underwriting must be mindful of these issues. Organic and all-natural products are gaining traction in the marketplace and so many more suppliers are lining up to produce products that fit this designation. With these suppliers comes new exposure and new areas and levels of liability.