A Saskatchewan farmer has won a five-year legal battle over insurance coverage following an accident involving his farm-plated vehicle.
But an official with Saskatchewan Government Insurance has warned that the court’s ruling might result in higher costs for farm plates.
“I think this decision obviously broadens the criteria under which a vehicle is eligible for a farm plate,” said Alan Cockman, vice-president of SGI’s Saskatchewan Auto Fund.
The major reason farm plates have lower premiums is that those vehicles are used for limited purposes and so incur limited mileage and limited risk, he said.
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If that changes, so could the cost of farm plates.
“If the end result is that vehicles with farm plates spend more time on the road, then that will mean increased risk, increased claims and increased costs, which could mean reduced discounts,” he said.
In a unanimous decision handed down Feb. 20, the Saskatchewan Court of Appeal upheld a lower court decision that farmer Kevin Willms of Hepburn, Sask., was insured for damages arising from a January 1998 accident between a truck with trailer, driven by Willms, and a Canadian National Railway freight train.
The accident resulted in derailment of two locomotives and six cars. No one was injured and no criminal charges were laid.
CN filed a lawsuit seeking compensation for damages and SGI refused to provide insurance coverage to Willms on grounds that he was not engaged in farming activity at the time of the accident and therefore had violated the conditions of his farm plates.
A Court of Queen’s Bench judgment in July 2002 found in Willms’ favour and the Court of Appeal upheld that judgment.
Cockman said SGI is assessing the ruling’s implications and a decision on possible rate changes won’t be made for some time. He also promised that the decision-making process will include consultations with farm groups.
The lawyer who represented Willms said the judgment makes it clear that farmers aren’t given enough information by SGI about exactly what is covered by farm plate insurance.
“It’s very difficult to know in advance whether something you are doing is considered by SGI to be farming or not,” said Saskatoon lawyer Dan Shapiro, adding that Willms was “very surprised” to be told he wasn’t covered.
He said he hopes the decision prompts changes by SGI.
“They have an opportunity and an obligation to provide clarification as to when coverage will apply and when it won’t,” he said.
While it’s clear that a farmer is covered on his farm or when hauling products to or from his farm, beyond that things can get murky.
“Any time you stray from that in any way, shape or form, there’s a risk you could be considered a commercial carrier and need a commercial plate or special permit,” Shapiro said.
At the time of the accident Willms was a full-time farmer who owned 150 acres of land on which he grew barley. He also kept 40 head of cattle at a feedlot in Tessier, Sask.
He had verbal agreements with several area farmers to bale straw on their land, using his own equipment. He paid for the bales and hauled them away to be sold, again using his own truck and trailer, which were licensed with farm plates.
SGI argued that Willms kept no livestock at his farm and that his farming operation did not require the transportation of straw bales. It said he was transporting the bales for resale and profit, not to feed his own livestock, and therefore the use of his truck and trailer was for commercial purposes.
But the Court of Queen’s Bench judgment stated that Willms’ activities at the time of the accident were an “integral and normal part” of his farming operation since he owned the bales he hauled.
Terry Hildebrandt, president of Agricultural Producers Association of Saskatchewan, said his organization has received no questions or concerns from farmers about farm plate insurance coverage.
“I think for the most part farmers know what they can and can’t do.”
