What to Know About Contract Farming & Care, Custody, and Control Insurance
November 21, 2019Care, Custody, and Control (CCC) is an insurance coverage that is being added to agricultural insurance policies with greater and greater frequency. One reason for this occurrence is that the financial arrangements around farming have been shifting and more families are operating their farms as contract growers. CCC is an important coverage for many farmers, and there are a few general things that farmers and agricultural business owners should know about CCC coverage. Here’s what to know about contract farming & Care, Custody, and Control Insurance:
What is Care, Custody, and Control Insurance?
Care, Custody, and Control Insurance is often referred to as CCC. In the world of agricultural insurance, this almost always is referencing non-owned animals (property) in the insured’s (you) care, custody, or control. In other words, the insurance coverage is protecting you from the financial losses that you may be responsible for paying if any of the animals in your care, custody, or control incur an injury or loss of life, due to your negligence.
The last part of that is key. Since CCC is a Liability coverage, it is limited to covering non-owned animals, or animals owned by a third party, for losses incurred as a result of negligence. If you own the animals, they will be insured under the Property portion of your policy and the coverage and limits could be different. Be sure to keep that distinction in mind.
How Does CCC Work?
Contract growers who raise poultry or hogs owned by a third party, and the animals are housed in facilities that the insured owns or rents, have a significant Care, Custody, and Control exposure. Imagine a situation where exhaust fans are turned off and forgotten about. Within a few minutes to an hour, a large portion of the confinement house’s population could be lost. This was a direct result of your negligence and could be covered with a CCC endorsement on your farmowners or agribusiness insurance policy.
On the contrary, too many integrators, growers, and even insurance companies, treat CCC as a Property coverage. If a tornado tears through your community and levels your confinement poultry house, it is hard to argue that this was a result of any negligence on your part. The integrator should be carrying Property coverage on their birds and submitting this claim on their own policy under the peril (cause of loss) of windstorm.
Too often integrators and insurance companies pay these claims under CCC, which puts the claim volume on the contract farmer’s policy and can affect his or her rates moving forward. Care, Custody, and Control Insurance is a Liability coverage, so make sure your integrator understands that negligence has to be present for the coverage to respond to a loss situation.
What are the Requirements for Care, Custody, and Control Insurance?
If you are purchasing CCC coverage, it is important that you are aware of and adhere to the policy requirements. In doing so, you will ensure that a loss is covered, should one unfortunately occur.
Many insurance companies who write CCC coverage for confinement poultry and hog operations will require that an automatic backup generator be installed and tested (under load) monthly. They may require a logbook to be kept to show the testing and maintenance record of the generator. Additional requirements may also be present, such as an auto-dial system that alerts the farmer’s phone when there is a power outage.
What Kind of Ag Operations Can Buy Care, Custody, and Control Coverage?
CCC coverage for agricultural types of risks is most common in situations where a farmer’s confinement houses are populated with contract swine or poultry. However, CCC is also available to cattle operations.
Equine farms and boarding stables can also acquire CCC from some insurance companies. However, the coverage is rated and written differently than livestock or poultry CCC. Equine-related business owners should be careful to differentiate between other types of liability coverage and CCC. Getting this wrong and ignoring CCC is one of the common mistakes to avoid when buying horse farm insurance.
For example, if the boarding stable owner or one of their employees forgot to latch a gate and a boarded horse got onto the road and was struck by a car, the farm general liability would cover the damages or bodily injury to the car or its driver. However, without CCC, the injury or death of the horse would not be an insured loss.
The horse owner could bring a suit against the owner of the stable for the negligence that led to the loss of their horse. Having Care, Custody, and Control coverage in place could help to protect the stable owner against this risk of loss.
Stable owners should bear in mind that equine CCC is often written with a maximum amount per horse and a maximum amount per loss. These limits might be $10,000 per any one horse with a $50,000 maximum payout per loss. In some cases, these limits may not cover the full value of the horse. In such circumstances, it may be a good idea to transfer risk by other means, such as hold harmless agreements.
If you have an agricultural operation that requires your care of other people’s livestock, it’s likely a good idea to purchase Care, Custody, and Control Insurance. This can be particularly helpful for avoiding coverage pitfalls when purchasing poultry insurance and other types of livestock insurance. The coverage is affordable and offers a valuable layer of protection for your operations.
It is one of the important types of insurance for contract livestock and poultry growers. If you would like to receive a quote for CCC coverage in conjunction with your farm or agribusiness policy, give one of our experienced agricultural insurance agents a call at 1-800-537-6880 or 717-665-2283.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.