FARMERS who wish to sell their machinery may be forced to offer it as scrap even if it is in good wo

31 Jan, 2007 08:45 PM
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As well, those involved in modifying farm machinery have been left vulnerable to higher insurance premiums.

Industry insurance specialists suggest premiums could range up to $80,000 a year for profes-sional indemnity cover.

And while a review of the Occupational Safety and Health Act is before government, no changes have been made to the relevant sections which define a farmer as a manufacturer if he or she modifies any farm equip-ment then on-sells it.

Under this description, a farmer¹s normal liability insu-rance policy will void any cover from prosecution.

The interpretation of the Act also drags in retired farmers.

Country Wide Insurance Brokers representative Ray Ball said with clearing sales now starting to be held in earnest, farmers should urgently review their insurance liability policies.

³I don¹t think many farmers are aware of what their policies do and do not cover, but it¹s pretty clear when it comes to issues relating to people suing over accidents or death caused by machinery,² he said.

Under the act, a farmer is deemed a manufacturer if he alters the original design of any machine on the farm.

Not only does a farmer then have to comply with essential legislation relating to manufac-turing, he also must have pro-fessional indemnity insurance.

But in most cases, insurance companies would not be inclined to provide this sort of cover to farmers, unless they could demonstrate a profes-sional ability to manufacture.

Mr Ball said a current case he was handling highlighted the extremes of interpretation of the Act.

³A farmer was involved in a header fire,² he said.

³In making inquiries, it was ascertained by the insurance assessor that the farmer had tightened a wiring harness too tight and this had caused the fire.

³Because the farmer tightened the harness he effectively altered the design of the header and therefore was deemed a manufacturer.

³It cost the farmer $15,000, but it could have been way more if the fire had got out of control.²

Mr Ball said farmers often took a casual approach to farm safety and believed their liability insurance policy was a coverall against all claims.

Farmers should seek profes-sional advice on what insurance liability cover is applicable in their liability policy.

³If they are adding or remo-ving equipment from any machines, they will need a very good liability policy commen-surate with the value of the machine,² Mr Ball said.

³If it¹s a header that¹s worth $300,000, an insurance company will probably seek a high pre-mium to cover the risk and you would probably be talking more than $50,000 for a year¹s cover.²

Under the Act, retired farmers are not exempt from prosecution if they sold machinery, particularly at clearing sales.

According to Landmark Kat-anning agent Tom Bowen, auc-tioneers also are caught under the umbrella of the Act as agents and therefore liable for prosecution.

³We instruct vendors holding clearing sales that we will inspect all machinery prior to auction,² he said.

³If there is anything we con-sider unsafe or dangerous, we place a card on that machine to announce it is to be sold for parts only, even if it is a going concern.

³And the purchaser has to be aware of that condition of sale.²

The problem for farmers is that any machine in working condi-tion listed as parts, or scrap or for wrecking only, will attract a lesser value at auction.

This is where the strict interpretation of the Act is ludicrous because many old tractors, which do not meet current safety requirements, are very useful workhorses around the farm and therefore present a better-than-parts value.

³Liability insurance covers negligence, but if you¹re knowingly negligent, the policy will not provide cover,² he said.

³It¹s like drink-driving.²

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