Understanding Farm Insurance

Posted on: Wednesday, December 18, 2013

There are many unusual aspects involved in owning and maintaining a farm, and making sure that it is properly insured is certainly one of them. In fact, the first thing to be determined is if, in fact, you technically own a farm. 

There are many variations of agribusiness, and owning something which falls under the definition of what most insurers classify as a farm is a relatively small percentage of them. The weekend farm stand could qualify, but it just as likely won’t. If somebody has farm animals, and charges admission to families for petting and feeding privileges, this too could be a farm. The business owner would have to consult with the U.S. Department of Agriculture. “A farm is defined as any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the year. Since the definition allows for farms to be included even if they did not have at least $1,000 in sales, but normally would have, a system is developed by USDA's National Agricultural Statistics Service for determining when a farm normally would have. These are called point farms. If a place does not have $1,000 in sales, a "point system" assigns dollar values for acres of various crops and head of various livestock species to estimate a normal level of sales. Point farms are farms with fewer than $1,000 in sales but have points worth at least $1,000. Point farms tend to be very small.” (http://www.ers.usda.gov/topics/farm-economy/farm-household-well-being/glossary.aspx#.UqDvbMRDs7s)

Assets to protect

Livestock such as cattle, hogs, and chickens are often the most highly valued assets on a farm, and there are many distinctive considerations the farmer must take when purchasing a policy. Disease, predators, and theft are common problems with livestock, to say nothing of straying and injury due to transportation.

Farm equipment such as tractors and trucks may be covered under certain business or homeowners policies, but the farm owner doesn’t want to be underinsured. Farm owner’s insurance is a unique combination of personal, auto, and commercial policies. This includes property coverage on the farm dwellings, barns and land, as well as farm tools & equipment, and even produce.

Worker’s Compensation

The farmer is also an employer, except in extremely rare circumstances. This means that they are required to carry Worker’s Compensation Insurance, and Employer's Liability Insurance. They may also need to cover liability insurance for visitors, especially if they offer a pick-your-own area, or the aforementioned petting zoo. 

All farm operations, including all necessary elements of the raising of crops and livestock, must be covered. Damage, sickness, or injury to others is overwhelmingly the greatest risk that the farmer faces. Only by identifying all operations can the farm be properly insured. An experienced agent will know what to look for, and lengthy consultations are strongly advised. Endorsements and riders for certain operations are very affordable and provide excellent coverage for the risk. Consider everything. 

Got questions? Core Benefits Group has the answers. Please call us at 1-877-214-2969.

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