Alabama Insurance Adjuster Practice Exam

What type of insurance can protect a farmer from liability caused by waste runoff into a river?

1. Farm Product Liability insurance

2. Crop-Hail insurance

3. Commercial Property insurance

4. General Liability insurance

The correct answer is: Farm Product Liability insurance

The correct answer is the type of insurance that specifically addresses the risks associated with negligence or harm caused to third parties because of the activities of a farmer, including waste runoff. Farm Product Liability insurance is designed to protect farmers from claims arising from their products or operations that may negatively impact others, including environmental harm. In the context of a farmer causing waste runoff into a river, this insurance would cover legal fees and any settlements or judgments that arise from such liabilities. It focuses on the liability aspect rather than just protecting the physical assets or the crops themselves. Thus, it effectively addresses situations where a farmer could be held responsible for damages caused to the environment or third parties due to their farming practices. Other types of insurance listed do not offer the same protection in this context. Crop-Hail insurance primarily covers damage to crops from specific perils, and Commercial Property insurance focuses on covering physical assets rather than liabilities. General Liability insurance, while it does cover a broad range of liabilities, is typically not tailored to the specific nuances of farm operations and may not provide the specialized coverage a farmer would need for liability related to agricultural practices.