When one thinks of crops, insurance, and risk, one may think of traditional crop insurance. The case of Three Rivers Hydroponics, LLC v. Florists’ Mutual Insurance Company, decided by the United States District Court of the Western District of Pennsylvania in 2021, illustrates a “business package” insurance policy application to a fast-growing area of agriculture: hydroponic agriculture.
In the Three Rivers Hydroponics case, the insured was engaged in the business of growing organic basil through a hydroponic ozone system. The ozone system treated and disinfected water utilized for crop production. On June 30, 2014, the ozone system caught fire, and the crop soon failed thereafter. Eventually, the insured lost its business.
The insured’s business package insurance policy in the case included an Equipment Breakdown Boiler and Machinery Coverage endorsement, in which the insurer agreed to pay for a loss caused by an “Accident” to “covered equipment.” An “Accident” was defined in the policy as a “mechanical breakdown.” Thus, the insured could only recover under the policy if the ozone system had a mechanical breakdown.
The insured contended that the ozone system failed due to an issue with the ORP controller. Two engineering experts of the Defendant concluded that only the ozone generator sustained damage in the fire and that complete replacement of the system was unnecessary. The insurer issued a payment for replacement of the ozone generator but denied the claim for mechanical breakdown.
The insured filed a breach of contract claim as well as bad faith claim against the insurer. In examining these claims, the Court noted that whether mechanical breakdown of the ozone system occurred is a “highly technical” matter. However, the insured did not produce any expert testimony of an engineer who opined on whether a mechanical breakdown of the system occurred. Thus, the Court found that the insured did not meet its burden to produce admissible evidence to establish a prima facie case that coverage existed and granted summary judgment to the insurer on the insured’s breach of contract claim. In addition, the Court also granted summary judgment to the insurer on the insured’s bad faith claim as the Court found that the insurer “conducted a substantial, thorough, and timely investigation” as a matter of law.
The Three Rivers Hydroponics case exemplifies a sometimes overlooked area in agricultural law – the significance of expert testimony in cases involving more technical matters.
Nothing in this article is intended to create an attorney-client relationship and does not constitute legal advice.
 See Three Rivers Hydroponics, LLC v. Florists’ Mutual Insurance Company, No. 2:15-cv-00809, 2021 WL 6133304 (W.D. Pa. Dec. 29, 2021).
 See Hydroponics, United States Department of Agriculture National Agriculture Library (2022), available at: https://www.nal.usda.gov/farms-and-agricultural-production-systems/hydroponics
 See Three Rivers Hydroponics, LLC V. Florists’ Mutual Insurance Company, 2021 WL 6133304 at *1.
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 Id. at *1.
 Id. at *10.
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 Id. at *15.
 Id. at *16.
Chad Marzen, Florida State University
American General Insurance Associate Professor of Insurance Law
Marzen, Chad. “Hydroponic Agriculture and Insurance Coverage.” Southern Ag Today 3(1.5). January 6, 2023. Permalink