General Liability Carriers

[Theinsuranceguys]

Although I have never quoted anything like this try giving Appalachian Underwriters a call. They have an array of surplus lines markets that might be able to help.

 

[billlacombe]

There isn't any small business insurance carrier that is going to take on this risk. This is a custom crop spraying and side-dressing operation with several chemicals that leaves the prospect with the chance to kill anywhere from $100,000 to a couple million dollars in crops for the person they are spraying for.

If he was to spray 35k acres of corn, and all somehow ended up incorrect, the loss would look something like this..

35,000 acres x 180 bu per acre x $4.62 (bu per acre price off 2014 spring multi-peril insurance)
Comes up to something like 29 million dollars of claim payment if they were to burn every acre they spray. Very good likelyhood that this would never, ever happen, let alone burning down a quarter section. But that's the kind of liability risk involved in such an operation.
The only company I could find to quote it was Allied General, which was high to say the least. None of my standard or preferred companies or even my brokers could find a place to put this.

Now, if he farmed 1000 acres himself, had 100 head of cattle, I could probably get it written with Nationwide Ag because the custom spraying is then a sideline of his primary income (farm), but as of now, he works off the farm and does the spraying seasonally when required.

I appreciate the thought though!

Very well said, that is tough placement. Let me know how it works out! I hope you get it figured out.

 

[Herkster]

Very well said, that is tough placement. Let me know how it works out! I hope you get it figured out.

Thanks! As of right now he is staying with Farm Bureau because they'll write a GL policy for a lot less (since it isn't excess and surplus lines as they have his farm policy). He has since gone out on his own and is doing some other stuff around the farming operation, so hopefully I'll get another shot at it next renewal!

 

[Soundadvisor]

Just thinking out loud, but what if the farm owner leased the plane and the pilot and did the spraying himself?

What would that cost the farmer? If the farmer had a plane and knew how to fly, wouldn't he spray his own crops?

 

[Herkster]

Just thinking out loud, but what if the farm owner leased the plane and the pilot and did the spraying himself?

What would that cost the farmer? If the farmer had a plane and knew how to fly, wouldn't he spray his own crops?

Not an airplane risk, it's a ground sprayer - like a tractor but taller and with 90'-120' booms to spray with.

 

[Soundadvisor]

That should make it even easier. Couldn't your guy lease(rent) his equipment to the farmer with an operator? Wouldn't he then come under the farmer's insurance?

I can understand this exposure may be difficult to underwrite but if the farmer had the equipment and employed a knowledgeable operator, wouldn't he spray the crops himself?

 

[Herkster]

That should make it even easier. Couldn't your guy lease(rent) his equipment to the farmer with an operator? Wouldn't he then come under the farmer's insurance?

I can understand this exposure may be difficult to underwrite but if the farmer had the equipment and employed a knowledgeable operator, wouldn't he spray the crops himself?

Yep, he could spray the crops himself if he owned the sprayer and had the man hours. However, a lot of guys don't want the expense to spray their 160 acres with a $150k sprayer, the ROI just isn't there. Once you start talking to guys that row crop 1000 acres, some do have their own sprayers, mostly pull behind. However, once the crop is over 2' tall, the pull type sprayers are useless because you are running over your crop.

That is where the custom sprayers come in, you pay a guy $5-$8 an acre, they get the chemicals you want, they take their time, they spray. The owners of the spray company will make more money, hand over fist, spraying themselves than leasing or renting it out. Plus, then you have more wear and tear that is hard to prove if someone that rented it caused it or if they did.

 

[Ocho]

Did you ever find someone for this? I've had a few in the past that I've quoted and working on one now, but they're already with Nationwide Ag (my go to in this type of scenario).