Understanding Agricultural Liability: General Liability Insurance

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Preventing all legal risks is impossible, but purchasing general liability insurance is one way farmers can manage risk in their operations and minimize costs associated with litigation. Risk is the probability of an action that causes negative consequences. A general liability insurance policy is a contract between an insurance company and an insured person or business. If a lawsuit occurs that falls under the terms of the policy, the insurance company has a duty to defend the policyholder and assumes the covered risk. 

General liability insurance policies specify what actions and consequences the policy covers, any exclusions to what the policy covers, who the policy covers (aka the policyholder), when the policy applies, what property is relevant to coverage, the maximum amount of liability that the policy covers, and the cost of the policy. To ensure sufficient coverage in case of an accident, farmers should ensure that the details of their general liability insurance policy are the best fit for their operation. 

What does general liability insurance cover?

A claim can only be made on liability insurance when an accident results in damage or injury, and the policyholder is legally liable for the damages. Accidents are unexpected or do not occur deliberately. A liability insurance claim does not cover damages caused by intentional or reckless illegal activity or fraud. The insurance company pays the injured person for losses. The insurance company does not reimburse the policyholder for losses (Farm Liability Insurance, 2019). 

General liability insurance always covers the legal defense costs for the policyholder for covered claims. The insurance policy also states the maximum dollar liability per occurrence and maximum dollar liability for all occurrences of each coverage category (Farm Liability Insurance, 2019).  Common coverage categories include property damage, third-party bodily injury, and liability for compensatory damages in a personal injury case (Farm Liability Insurance, 2019).

Negligence

General liability insurance covers the policyholder when the policyholder is legally responsible for negligence. Negligence occurs when the policyholder unintentionally causes harm to a party in their duty of care by not implementing reasonable measures to prevent the harm. The duty of care that the owner or tenant owes to a visitor on their property depends on whether the visitor is a trespasser, licensee, or invitee. 

A trespasser is someone who enters the landowner or tenant’s property without their consent and remains without their consent (Goeringer, 2015). The duty of care that the policyholder owes a trespasser is to refrain from wanton or willful injury. Willful means “performed with the actor’s actual knowledge or with what the law deems the equivalent to actual knowledge of the peril to be apprehended, coupled with a conscious failure to avert injury” (Wells, 1998). Wanton means “conduct that is extremely dangerous and outrageous, in reckless disregard for the rights of others” (Wells, 1998).

The two types of licensees recognized in Maryland are bare licensees and licensees by invitation. A bare licensee has permission to be on the property but is there for their own purpose. An example of a bare licensee would be someone permitted to hunt on the property by the policyholder. The duty of care that the policyholder owes to a bare licensee is to refrain from willful or wanton injury from creating new and undisclosed sources of danger without warning (Rivas, 2000). A licensee by invitation is someone invited onto the property by the policyholder. A party guest would be an example of a licensee by invitation. The duty of care that the policyholder owes to an invited licensee is to fix known problems or warn the licensee about dangerous conditions that are not easily discoverable (Rivas, 2000). 

An invitee is someone invited onto the property for the policyholder’s economic benefit. Customers are considered invited licensees. The duty of care that the policyholder owes to an invited licensee is to protect them from unreasonable risks and keep the property reasonably safe (Rivas, 2000). 

In Maryland, the Recreational Use Statute says that the policyholder does not have a duty of care to keep premises safe or provide warnings to any recreational or educational guests on the property. A recreational or educational guest is someone that the policyholder invites on the property, for no charge, for an educational pursuit or “any recreational purpose” (Nat. Res. § 5-1101(f)). The duty of care that the policyholder owes to a recreational or educational guest is to refrain from willful or malicious failure to guard against dangerous conditions on the property (Goeringer, 2015).

Type of Visitor	Definition	Duty of care owed by the landowner or tenant (the policyholder)
Trespasser	Someone who enters the farmland without the policyholder’s consent and remains without consent. Note: There are differences between criminal and civil trespassers, but the duty of care owed to each is the same.	Refrain from wanton or willful injury.
Bare licensee	A person invited onto the property for the person’s economic benefit.	Refrain from willful or wanton injury from creating new and undisclosed sources of danger without warning.
Licensee by invitation	Someone who has permission to be on the property but is there for his/her own purpose.	Fix known problems or warn the licensee about dangerous conditions that are not easily discoverable.
Invitee	Someone invited onto the property for the policyholder’s economic benefit.	Protect the invitee from unreasonable risks and keep the property reasonably safe.
Recreational or educational guest	Someone that the policyholder invites on the property, for no charge, for an educational pursuit or “any recreational purpose”.	Refrain from willful or malicious failure to guard against dangerous conditions on the property.

What might be excluded from a general insurance policy?

The policyholder should ensure that their general liability insurance policy covers all risks that might occur during business. If the policy does not cover all risks applicable to the policyholder’s operation, the policyholder may want to purchase an endorsement or an umbrella policy. An endorsement is a modification to an insurance policy that covers special circumstances. An umbrella policy covers liabilities that cost more than the maximum amount set in the general policy (Farm Liability Insurance, 2019). Risks often excluded from general insurance policies include nuisance, environmental, and trespass claims.

Nuisance

A policyholder is liable for nuisance when the activities on their property unreasonably interfere with the use and enjoyment of other people’s property. A nuisance may be either private or public. A private nuisance occurs if neighboring property owners are damaged. Right-to-farm statutes may afford some protections to policyholders from private nuisance actions when the operation meets the requirements in the law (Landowner Liability: An Overview).  In Maryland, a public nuisance is a criminal offense that occurs when the public is impacted.  A public nuisance is similar to a private nuisance, but the nuisance has a common effect and common damages on the public. An example would be manufacturing illegal drugs (Md. Crim. Law Code Ann. § 5-602).

Environmental 

Policyholders are potentially liable for actions that violate federal, state, or local environmental regulations. Applicable regulations might include the Clean Water Act, the Clean Air Act, the Endangered Species Act, the Federal Insecticide, Fungicide, and Rodenticide Act, or the Comprehensive Environmental Response, Compensation, and Liability Act (Landowner Liability: An Overview).  These types of claims are often excluded from most general liability insurance policies.

Liability from environmental damage is also a possibility when the production methods of one landowner cause harm to a neighboring farmer. For example, pesticides drifting from a non-organic crop field to an organic crop field could cause damage to the organic crop farmer if they lose their organic certification (Landowner Liability: An Overview). 

Environmental risks like spraying chemicals or spreading manure are often excluded from general insurance policies because putting a dollar amount on fines associated with environmental problems can be challenging for insurance companies (Farm Liability Insurance, 2019).

Trespass

Policyholders may be liable for trespass for activities on their land. A trespass occurs when an unpermitted physical invasion of another’s land interferes with their property rights. Trespasses from agricultural lands could include groundwater contamination, odors, dust, or wayward livestock (Landowner Liability: An Overview).  It is important to check with your insurance provider to determine if the policy would cover these types of claims.

Agritourism and other activities

Some insurance providers may not accept the risks of an agritourism enterprise (Schilling). Other common exclusions in general farm liability insurance include farmers market sales, boarding dogs or horses, non-farm activities such as snow removal or landscaping, and custom farm work (Farm Liability Insurance, 2019).

Who does general liability insurance cover?

The farmer is responsible for their actions and those of those acting on their behalf, including employees and independent contractors (Schilling). Therefore, the policyholder is always covered by the general insurance policy, and legal business entities included in the policyholder's business must be listed. The policyholder should confirm that their relatives are included, if applicable, and that the total number of farm employees is included. If applicable, the policyholder should also confirm that short-term or seasonal employees are covered because these employees may be compensated differently or work for multiple farms (Farm Liability Insurance, 2019).

When hiring an independent contractor, a policyholder should request a written record of the contractor’s liability insurance coverage because if the independent contractor has an accident while working for the policyholder, both the contractor and the policyholder’s insurance agents would participate in the investigation. The policyholder should also have a contract requiring the independent contractor to compensate the policyholder if there is an issue with the contractor’s coverage. Policyholders should ask their insurance agent how an accident involving an independent contractor would be handled by the insurance company (Farm Liability Insurance, 2019).

When and where does general liability insurance apply?

General liability insurance covers accidents that happen while the policyholder’s operation is conducting business and actions that occur on the operation’s premises. Accidents that occur on roads are usually covered, but the policyholder can ask their insurance agent if a vehicle is considered part of the farm business and covered by the insurance policy (Farm Liability Insurance, 2019). 

Most policies are sold for one-year periods, but policies can be purchased for shorter amounts of time to cover specific events. The activity that caused harm must occur during the coverage period of the insurance policy to be covered. Also, general liability insurance is not designed to cover pre-existing conditions on an operation. An insurance agency might audit an operation before agreeing to an insurance policy (Farm Liability Insurance, 2019).

How much does the farmer pay?

The policyholder pays a premium to the insurance company to receive coverage. The premium relates to the amount of coverage and risk. If the policyholder negotiates for more coverage, the insurance company agrees to more risk, and the policyholder must pay a higher premium. If a lawsuit occurs against the policyholder, the policyholder pays for whatever amount the insurance policy does not cover (Farm Liability Insurance, 2019).

Conclusion

Policyholders should disclose information with the insurance carrier when obtaining the general insurance policy, when renewing the policy, and whenever a change occurs that could impact the insurance company’s risk or the premium they charge. Changes might include the size of the operation, the number of employees, the activities on the operation, or the technology used on the operation. A policyholder may want to have an insurance agent or attorney visit their operation to identify potential legal risks so they can make changes to their operation and risk management plan if needed. Policyholders can also limit their legal risk by building relationships with their neighbors, keeping accurate records, following permits and regulations, and having a list of attorneys to contact in case an accident occurs. Overall, general liability insurance is one tool that policyholders can implement to manage legal risk. Policyholders should work with their insurance agent to ensure that their general insurance policy covers all liabilities on their operation, and purchase an umbrella policy or an endorsement if necessary.

References

Goeringer, Paul. (2015, November). Understanding Agricultural Liability: Premise’s Liability.

University of Maryland Extension. https://extension.umd.edu/resource/understanding-agricultural-liability-premises-liability-fs-1001/

Md. Code Ann. Crim. Law § 5-602 (West 2025).

MD Code Ann. Nat. Res. §§ 5-1101 to 5-1109 (West 2025)

Rivas v. Oxon Hill Joint Venture, 744 A.2d 1076 (Md. Ct. Spec. App. 2000).

Schilling, Brian. Agritourism Liability. Rutgers University.

https://agritourism.rutgers.edu/pdfs/Module%205%20-%20Liability.pdf

The National Agricultural Law Center, University of Arkansas. Landowner Liability: An

Overview. https://extension.umd.edu/programs/environment-natural-resources/program-areas/woodland-stewardship-education/your-woodland/forest-stewardship/landowner-liability-and-recreational-access/

University of Missouri. (2019, March). Farm Liability Insurance.

https://extension.missouri.edu/media/wysiwyg/Extensiondata/Pub/pdf/agguides/agecon/g00455.pdf

Wells v. Polland, 708 A.2d 34 (Md. Ct. Spec. App. 1998).

This is material is based upon work supported by USDA/NIFA under Award Number 2023-70027-40447.

This is material is based upon work supported by USDA/NIFA under Award Number 2023-70027-40447. The image includes the Northeast Extension Risk Management Education Center logo and the USDA-NIFA logo.