Under no circumstances would I be covered on my farm insurance to let an employee borrow any machine for their own gain. It would make no difference if I charged him for the use. I wouldn’t even be covered if I went and did the job for him as our insurance policy only covers me/the business for use in connection with the nature of the business, eg farming.
He could take out his own insurance on the machine for the day, but this apparently is also a very grey area. It is likely that it would cover him for accidental damage to our machine or to a third party’s property but they said that I would still be responsible for the condition of the machine as the owner and were something to happen that would cause this to be questioned or an accident happened with an injury to somebody where the potential claims can be huge, then our own insurance company would not be in any position to honour a claim as the machine is not being used in connection with our own business.
I’m absolutely astonished that this should be a surprise to anyone!