In a typical tenant farming relationship, the tenant farmer and the landowner commonly both have liability insurance coverage. But how can a landowner protect himself or herself from exposure to liability for the acts of the tenant?
One simple protection for landowners is to be listed as an additional insured on a tenant farmer’s policy. A lapse in a tenant’s insurance coverage may expose a landowner to unwanted liability. If a third party seeks damages from a tenant farmer, only to find out that the farmer’s insurance coverage has lapsed, the third party will undoubtedly next seek recovery from the landowner. A landowner can prevent this liability exposure by being listed as an additional insured on a tenant farmer’s insurance policy. This will put the landowner on notice of any lapses in the farmer’s insurance coverage. It is also good practice for landowners to include in the farm lease a provision for being listed as an additional insured on a tenant’s insurance, with failure of the farmer to do so resulting in a breach of lease.
Another recommended protection for landowners is to have a tenant farmer’s insurance carrier issue a waiver of subrogation in favor of the landowner. Subrogation means one party has the right to "step into the shoes" of another party for the purposes of bringing a claim for damages. A waiver of subrogation is a special endorsement in an insurance policy which prevents the insurer from seeking restitution from a third party causing any kind of loss to the insured. If a tenant farmer is involved in an accident and files a claim, the tenant’s insurance carrier may pay the claim but then step into the shoes of the tenant through subrogation and seek recovery from the landowner if they feel the landowner was to blame for the accident. This can be an unwelcomed surprise for a landowner who had no knowledge or control over the accident that precipitated the damage claim. If a waiver of subrogation is signed in favor of the landowner before an accident, the tenant farmer’s insurance carrier is prevented from seeking recovery from the landowner. This type of waiver is referred to as a unilateral waiver. Alternatively, a landowner and tenant farmer may each choose to execute mutual waivers of subrogation which would prevent both insurers from seeking damages from the respective parties.
To maintain a mutually beneficial working relationship, landowners and tenant farmers should address potential gaps in insurance coverage and take preventative measures before the unfortunate occurs.