Experts Discuss Liability
As It Relates To Burning

By Colleen Schreiber

KERRVILLE — Prescribed burning has proven to be one of the most cost effective management tools for rangeland maintenance. Among its biggest hindrances, however, is the issue of liability. This and several other topics dealing with prescribed fire brought several fire experts together at a recent prescribed burning workshop here.

Richard Conner, ag economist at Texas A&M University, discussed the feasibility of liability insurance from the insurance company’s perspective.

One of the things that makes fire attractive, Conner noted, is that it is reasonably inexpensive compared to the many other methods. It is touted by many economists as being the most cost effective tool.

Fire can become less cost effective, he pointed out, when insurance costs are figured in.

"If we have to jack up the price of fire in order to cover the insurance, then we may price ourselves out of the market, so to speak, and other tools like herbicides and mechanical treatments become more cost effective because they don’t have the risks that are associated with fire.

"That may or may not be the case," Conner added, "but nonetheless it’s something we need to keep in mind as we solicit the insurance industry in helping us provide some liability coverage."

Fire is a tool that can be used to accomplish many goals, and it can impact an entire population — even urbanites — in a positive way, such as through water management.

"The question," Conner said, "is how much of the cost should be born by the public as opposed to the landowners who have to apply this practice on their land? We’re talking about public goods on private land when we’re dealing with water."

Conner reminded listeners that insurance companies are not interested in writing policies unless they can make money.

For insurance companies to become interested in prescribed fire, Conner said, they will want a few safeguards in place. Insurance companies will look first at qualifications and requirements that have to be met by the person responsible for conducting the prescribed burn. They are also interested in the application specifics or location specifics that perhaps make one fire more risky than another.

Conner said it is unlikely that blanket rates will be the rule. Instead, insurance companies are more apt to offer application-specific rates.

"I don’t think we’ll find that one policy covers everyone in all situations," he stressed.

In applying rates, one of the problems deals with economy of size.

"If we have to go through all those steps to insure the safety of a 10-acre fire, the cost per acre for that fire may be very high compared to, say, 1000 acres.

Tim Howard, representing Texas Farm Bureau Insurance Companies, agreed that the "law of large numbers" comes into play in this situation.

"For insurance companies to take the risk, they have to have a large enough base that they can apply a rate accurately. I think that’s a problem here. You would likely have to have a company that could insure all over the U.S. so that they could insure enough to get an affordable rate."

He told listeners there are other ways to shift the weight of risk besides insurance. Hold-harmless agreements and negative liability partnerships are two such alternatives.

David Nardecchia, with the Texas Department of Insurance, told listeners that farm liability and general liability policies do not specifically exclude prescribed burning exposure.

"There is the pollution liability exclusion," Nardecchia added, "and it does include smoke, which could present a problem in a farm or ranch policy. The old policy did not include the pollution liability exclusion; some of the newer ones may. This last session, farm and ranch policies became deregulated policies. That’s why new policies may have this exclusion," he explained. "But in general, I would say that a regular farm liability policy should protect a landowner if there was an accident while conducting a prescribed burn as long as they were doing it within defined parameters."

Some companies will write a policy for specific prescribed fire situation, but the question is at what cost.

Texas Tech professor, Dr. Rob Mitchell told listeners that he has personally pursued liability insurance for himself which would cover him while conducting a prescribed burn.

"I found an insurance company willing to write me a liability policy that would be a blanket liability, but the policy they came up with, in my opinion, was way too expensive — $2500 year."

Another speaker commented that in 1990 he was quoted a figure of $3500 for the same kind of policy, indicating that rates have come down somewhat.

Rick Larkin, representing the Texas Chapter of the Wildlife Society, said he knew of a company in East Texas that provides a blanket liability policy. One of the problems, he noted, is that a wildfire in the Piney Woods is potentially damaging because valuable timberland is destroyed, whereas in other areas, rangeland is not as valuable and the money lost on a rangeland wildfire can be recovered in a couple of years.

"That’s one of the worries I hear from landowners in East Texas," Larkin said. "Now there’s even some who are saying that there is no benefit from burning in East Texas. In the past it was for fire suppression, but because the Forest Service has done a good job in controlling wildfires, many no longer see a threat and consequently don’t see a need for prescribed fire."

Nardecchia didn’t offer much hope for the private contractor who wants to obtain insurance from a standard company. A standard company is one licensed by the Texas Department of Insurance. A private contractor, however, should be able to obtain insurance through surplus and excess lines companies no matter the exposure. The problem with those companies, Nardecchia told listeners, is that their policies and rates are not regulated.

"I would guess that’s why those who offer a policy can charge such large rates," he said.

Nardecchia said insurance companies are more likely to insure someone if a company knows that they can minimize their exposure, or if they know that certain laws or regulations will help minimize that exposure.

"That’s the way they will come into the market. People dying, socking in an airport or a Braves game, those are the kinds of catastrophic losses that will make insurance companies shy away," he said.

Legal liability and negligence will be determined by a court or a jury, and which way a jury will rule may depend on the extent of the damage or injuries.

"I don’t think you’ll ever totally get rid of the liability, but a training program or a certification process should help reduce it."

Kirby Brown, representing the Texas Parks and Wildlife Department, voiced concern that if the certification process isn’t mandatory and individuals without training or certification continue to burn, that could possibly create more of a liability for those who are not trained or accredited.

"We need to be careful of that as we go through a planning process," he stressed. "There are different issues and different factors that affect different parts of the states. We have to walk away from this hand and hand, because everyone who lights a match has to face the liability issue."

There was also some discussion on the possibility of creating a self-insurance risk pool.

"The idea for the risk pool is a good one," Nardecchia said, "and it may not be a bad idea for contractors or even state agency personnel to form some kind of pool."