A latest Mississippi case reminds industrial and residential policyholders alike of the significance of updating insurance coverage protection when circumstances change to keep away from a protection dispute or the lack of protection altogether. Business insureds ought to coordinate with stakeholders inside their organizations to make sure immediate reporting of fixing exposures to the personnel answerable for insuring dangers. The insured didn’t accomplish that in Clark v. Alfa Insurance coverage Corp., No. 2022-CA-01251-COA, 2024 WL 3506638 (Miss. Ct. App. July 23, 2024), and located himself uninsured for liabilities arising out of a driver’s accident together with his newly bought cattle. The insured bought 10 black heifers and penned them inside a barbed-wire enclosure behind his residence moderately than on separate property used for industrial functions. The cattle escaped and wandered onto the adjoining freeway that very evening, inflicting a automotive accident that injured the driving force. The driving force sued the insured and Alfa Insurance coverage Firm, which had issued a owners coverage offering protection for harm to others “attributable to an animal owned by or within the care of an insured.”
The insurer didn’t dispute that the cattle triggered the driving force’s alleged accidents and thus fell throughout the coverage’s protection grant. The insurer as a substitute turned to a farming exclusion to bar protection. The coverage excluded protection for “bodily harm or property harm arising out of enterprise or farming engaged in by an insured” (emphasis added). The coverage outlined “farming” as “the operation of an agricultural… enterprise…” however didn’t outline the time period “enterprise.”
Regardless of the murkiness of the terminology, the court docket concluded that the insured’s buy and possession of the cattle constituted an “enterprise” throughout the scope of the exclusion — whereas acknowledging established Mississippi legislation resolving ambiguities in insurance coverage insurance policies in favor of insureds and narrowly construing exclusions to protect protection. The court docket reached this end result by turning to 2 dictionary definitions, which themselves outlined “enterprise” otherwise. The court docket didn’t focus on a latest Mississippi Supreme Courtroom case citing dictionary definitions of the phrases “irritant” and “contaminant” utilized in a air pollution exclusion to search out an ambiguity favoring protection(see Omega Protein, Inc. v. Evanston Ins. Co., 336 So. 3d 128, 132 (Miss. 2022)). As a substitute, the court docket thought-about the conflicting definitions after which, moderately than concluding that an ambiguity existed, stated that “[i]t shouldn’t be unreasonable that buying, elevating, feeding, breeding, promoting, and caring for cattle is an ‘agricultural enterprise’ even when no revenue is concerned” (emphasis added). The court docket famous that each enterprise should start someplace, revenue or not. The court docket thus indicated that its personal interpretation of “enterprise” was the one logical one.
The court docket cited the insured’s federal revenue tax return to buttress its conclusion. The insured owned 620 acres of timberland, separate from his private residence, and listed timber as his “principal crop or exercise” on tax returns. He additionally listed the price of the cattle and their feed as a loss to offset revenue from his farming revenue. Though the insured had by no means earlier than bought cows and “didn’t have any particular plans for the cows, apart from to buy them in hopes of trying to lift them together with his son,” his buy and possession of the cows constituted an excluded enterprise within the court docket’s view.
Clark offers a cautionary story to insureds who ought to consider protection when circumstances change. The appellate court docket stated as a lot, stating that the insured “ought to have notified Alfa earlier than the heifers had been delivered and obtained acceptable insurance coverage protection.” Though insureds sometimes consider liabilities at insurance coverage renewals, periodic checks on exposures — together with coordination with different stakeholders — can keep away from protection gaps just like the one on this case.
