Farming And Ranching Insurance Policies

Mineral Wells insurance lawyers are in an agriculture setting and thus are more likely to see insurance situations involving farm and ranch insurance policies. A U.S. District Court case from the Southern District of Texas, Houston Division should be read. It is styled, Mid-Continent Casualty Company v. BFH Mining, Ltd.
Mid-Continent issued an insurance policy (the “Policy”) to BFH covering BFH’s Middleton Ranch located in Fort Bend County, Texas (the “Property”).
Francois Bellon, a potential client of Cathexis, was at the BFH property. While there, he was injured in an accident involving a Polaris RZR all-terrain vehicle (“ATV”) owned by BFH and driven by Sahil Gujral, a Cathexis employee.
Bellon filed a lawsuit against Cathexis, BFH, and Gujral. BFH settled with Bellon for $1,000,000.00, the Policy limits under the Mid-Continent insurance policy.
Mid-Continent filed this lawsuit seeking a declaratory judgment that it has no duty under the Policy to indemnify BFH. Mid-Continent argues specifically that coverage is excluded under the Policy. BFH counterclaimed for breach of contract, violations the Texas Insurance Code and breach of the duty of good faith and fair dealing.
The Policy excludes coverage for bodily injury “arising out of the ownership, use or maintenance of any part of the “farm premises” that is “used for nonagricultural purposes.” “Farm premises” is defined as the location identified in the Policy Declaration and “operated for ‘farming’ purposes.” “Farming” is defined in the Policy to mean “the operation of an agricultural or aquacultural enterprise ….”
Both parties filed motions for summary judgment.
The parties have presented evidence that creates a fact dispute regarding whether the Property was used for farming purposes or only as a ranch. For example, Mid-Continent has presented evidence that the Policy identifies the Property as “Location 3” with the classification “Farms over 500 acres (Premium Basis: Per Farm).” BFH has presented evidence that its insurance agent informed Mid-Continent’s underwriter that the Policy was for a “working ranch.” Mid- Continent has presented evidence that BFH applied for and obtained agriculture exemptions from property taxes in Fort Bend County and in the state of Texas. It is undisputed that BFH grows, cuts, and bales hay on the Property, which it uses to feed the cattle raised on the Property. This evidence creates a genuine issue of material fact regarding whether the Property was “farm premises” for purposes of the Farm Premises Liability Endorsement exclusion.
Additionally, there is a genuine issue of material fact regarding whether the property was being used for nonagricultural “business”–as opposed to social, recreational, or personal–purposes at the time of the accident. Mid-Continent has presented evidence that Bellon and Harrison were at the Property at the time of the accident to discuss Bellon becoming a client of Cathexis. BFH has presented evidence that Harrison and Bellon were at the Property just to “hang out” and any business discussions were secondary to the social use of the Property. There is no evidence that business was being discussed while Bellon was on the ATV.
The Court did not find that the Policy is ambiguous, but finds that there are genuine fact disputes that preclude summary judgment in favor of either party regarding whether the Basic Farm Premises Liability Endorsement exclusion applies. As a result, each Motion for Summary Judgment was denied.
The Policy excludes coverage for bodily injury “expected or intended from the standpoint of the insured.” An injury can be considered “expected” for purposes of insurance coverage if circumstances confirm that the resulting damage was the natural and expected result of the insured’s actions, that is, was highly probable. Texas courts have stated that an expected or intended injury exclusion in an insurance policy does not exclude coverage for grossly negligent conduct.
Mid-Continent argued that BFH, by and through Harrison, could have expected Bellon’s injury to occur. In support of this argument, Mid-Continent presented evidence that Harrison knew that Gujral did not have a driver’s license, knew that the ATV had experienced roll-overs before the day Bellon was injured, and knew that the safety net on the ATV had been removed. The Court could not determine from this evidence whether Bellon’s injury in the ATV accident was reasonably foreseeable because it would naturally follow from BFH’s conduct. The Court thus denied summary judgment on whether BFH reasonably could have expected Bellon’s injury to occur as required for application of the Expected or Intended Injury exclusion.