picture of a water drop causing a splash

Water Damage And Claims

Water.  it is an essential part of our lives and we could not live without it; however, when water gets into places it is not supposed to be, it can wreak havoc in our lives.  Unwanted water can enter our homes through a variety of sources.  Some of them are covered by your homeowners insurance, some are not, and others have limited coverage.  The following is a brief description of how a Homeowners Policy typically responds to water damage.  Each company can differ, and one should consult their specific homeowners policy for exact coverage.

Water that backs up through sewers, drains, or sump pumps.  Water that backs up through drains can be from a widespread disaster, such as six inches of rain falling on the region, or the sewer or septic line being plugged.  This type of damage is excluded from the Homeowners policies; however, most companies have an optional endorsement to add coverage for an additional premium.  There is a limit on how much coverage you can buy.

Flood.  All Homeowners policies exclude flood.  The only way to insure for flood damage is through the National Flood Insurance Program (NFIP).  You don’t have to be near a river or stream to sustain damage by flood.  A “flood” can be overflow of inland or tidal waters or “an unusual and rapid accumulation or run off of surface water from any source”.  For example, if during periods of heavy rain, water accumulates in your yard or driveway and runs into your house, this would be considered flood and not covered by a Homeowners Policy.

Rain entering through the roof, walls, or windows.  Some homeowners policies are what we call an HO3 Special Form Perils, which does cover this type of damage for the full limit of the policy.  Another type of policy is called an HO2 Broad Form Perils; under this policy, the water damage is only covered if the wind caused the damage which allowed the water to enter.

Ice Dam.  This happens in the winter when ice builds up in the gutters and starts to back up under the shingles.  As the ice melts, it can leak through the roof and cause water damage to the ceilings.  Ice dam is covered on an HO3 policy; it is not covered on an HO2 policy.

Water below the surface of the ground that seeps in through the basement walls.  There is no coverage for this; however, if at the same time, water is backing up through the sewers or drains and you have the water and sewer backup endorsement, it is possible that you could get coverage.

Mold. Whenever you have water damage, there is potential for mold.  There may be limited coverage for mold, or no coverage at all.  Each company has their own parameters for mold coverage and you will need to find out how yours is handed.

This information has been a discussion on part of the coverage for a Homeowners Policy (the home that you live in).  If you own rented property or commercial property, many of these comments still apply but there are some differences.  


picture of combine unloading corn into hopper being pulled by tractor

Farming and Workers Compensation

Farming is one of the most hazardous occupations. If a farm employee gets injured on the job, it can put the entire farming operation in jeopardy. This article will discuss the ways to protect the employer and the employee in a farming operation.

The Workers Compensation statutes in Illinois require ALL employers to provide worker’s compensation benefits to employees injured on the job.  There is an exception for farming: “The Worker’s Compensation law does not apply to an “agricultural enterprise” employing less that 400 working days of agricultural labor per quarter during the preceding calendar year, exclusive of working hours of the spouse or other immediate family member residing with him.”

Example: If your employees work 6 days per week, it would take a little over 4.5 full time employees to hit the 400 working days per quarter.

If you are over the 400 working days per quarter, you are required to provide workers compensation benefits to your employees.  If you are under the 400 working days of labor, you have two choices to address injuries to farm employees:

  1. purchase a work comp policy even though it’s not required
  2. Farm Liability policies have an option to add “liability to farm employees” coverage

These two policies work very differently from each other.  Work Comp is likely the best choice; it is also the most expensive.

With farm liability coverage to employees, the employee has to prove the injury was caused by negligence.  If it determined to be cause by your negligence, the court system will decide how much to award the employee.  Regardless of how high of liability limits you carry, there is always the possibility the courts could award the settlement in excess of your limits, in which case, the excess would come from your assets.  If the injury occurred and there was no negligence on the employer’s part, then the employee has no benefits under farm employee liability.  The farm liability policy may provide nominal medical payments benefit, however, other than this, the employee would be on his own.  This could put a strain on the employer-employee relationship.

Workers Compensation coverage is no fault insurance.  In other words, the employee is entitled to benefits if he is injured on the job.  He does not have to prove negligence in order to collect.  In addition, the work comp policy will pay the employee whatever is entitled to him.  There is no maximum limit with a work comp policy.


Another issue that we see more and more is the blurring of the term, “agricultural labor”.  Many farm operations are expanding into other areas of revenue.  Although the exception in the work comp act for agricultural labor is not defined, some examples of work that could fall outside the exception are:

  • trucking for hire
  • bulldozing for hire
  • seed corn sales
  • custom farming
  • repair/maintenance of rental property
  • welding/machine repair for hire
  • construction of new farm buildings

In short, if a farm employee is performing other duties other than farming, they could be entitled to work comp benefits.  If you have liability coverage for farm employees, it will not apply if the duty is ruled to be a work comp claim.  If you do not have a work comp policy, you would have to pay the benefits out of your pocket.

The final determination as to whether the employee is entitled to work comp benefits rest with the Workers Compensation Commission of the State.

Example: To give you an example of how this can play out, we had a claim in our agency several years ago where a corn crib was blown over by a windstorm.  The farmer had an employee help clean up the debris and the employee was injured,  The employee hired an attorney who argued the demolition of a building is not part of an agricultural enterprise.  Therefore, the employee was entitled to work comp benefits.  There wasn’t a work comp policy, therefore, the employee paid out of pocket.

Another thing to consider is a farm injury to the farm owner himself.  Some health insurance policies will cover work related injuries, some will not.  You should check with your health insurance provider to see what your policy covers.  If your policy does not provide coverage, you can buy a work comp policy on yourself.

To summarize: you must carry workers compensation if:

  • you have 400 working days of labor per quarter, or
  • your employees are engaged in non-farm duties

You may choose to carry workers compensation even though not required.  The advantages of work comp over farm liability are:

  • No limit on coverage
  • Employees do not have to prove fault
  • Better safety net if the employee does non-farm duties or falls outside the exemption for any reason.

The only disadvantage to work comp verses farm liability is cost.  Liability to farm employees costs a few hundred dollars.  Work Comp will cost about 6-7% of payroll for grain operations and 10-12% of payroll for livestock operations.