Dec. 11, 2013 – Dairy farmers who used manure to fertilize their fields are covered by insurance for any liability in the pollution of neighboring aquifers and water wells, a state appeals court has ruled, reversing a circuit court ruling against the farmers.
Farmers Robert and Jane Falk had a farm insurance policy with Wilson Mutual Insurance Company. But when several neighbors demanded compensation for the Falks’ hand in polluting their water wells, Wilson Mutual denied coverage.
Specifically, Wilson Mutual said that the farm policy contained an exclusion for damage caused by “pollutants,” including “waste,” and the manure that polluted the water fell into this category. The Washington County Circuit Court agreed with Wilson Mutual.
But in Wilson Mutual Ins. Co. v. Falk, 2013AP691 (Dec. 11, 2013), a three-judge panel for the District II Court of appeals reversed, siding with the Falks.
Under the policy, a pollutant is any solid, liquid or gaseous irritant or contaminant. But manure is not a pollutant in this circumstance, the appeals court explained, because the reasonable insured farmer does not see manure as “waste” or a “pollutant.”
“Manure is certainly gaseous, often liquid, solid in winter, and can be both an irritant and a contaminant,” wrote Judge Paul Reilly.
“But our supreme court has instructed us that we must do more than rely on this ‘undeniably broad’ and ‘virtually boundless’ language, ‘for there is virtually no substance or chemical existence that would not irritate or damage some person or property.”
To determine whether manure falls under the pollution exclusion clause, the court examined whether a reasonable person in the position of the insured would understand manure to be a pollutant. And in the case of farmers, manure is viewed as a nutrient.
The court distinguished another pollution exclusion clause case involving bat guano (excrement) that damaged a northern Wisconsin home beyond repair.
In that case, Hirschhorn v. Auto-Owners Ins. Co., the Wisconsin Supreme Court ruled that a reasonable homeowner would understand that bat guano is a pollutant. But in the case of manure and farmers, the result is not the same, the appeals court concluded.
“Manure is a matter of perspective; while an average person may consider cow manure to be a ‘waste,’ a farmer sees manure as liquid gold,” Judge Reilly explained.
“While bat guano is ‘waste’ to a homeowner, and lead paint chips are universally understood to be dangerous and pollutants, manure is beneficial to a dairy farmer.”
Because the Wilson Mutual policy insured farm equipment to spread, collect, or hold manure for fertilization purposes, the appeals court said Wilson Mutual could not seriously contend that the Falks did not consider manure as a liability risk.