It’s a dark and stormy night—as all good horror stories begin—and the driver of a car speeding down your road doesn’t see that your fence has been knocked down by a tree and your black Angus steer found its way into the road. There’s a collision, your steer has to be euthanized, but the driver of the car is OK. His car is totaled, and his insurance company wants you to pay for it. Think that story is far-fetched? It’s not: Livestock cause accidents. Likewise, food causes illnesses, horses cause injuries and farm chemicals cause water issues.
Each of these scenarios are begging for farm insurance. People can find reasons more tame than these to object to your farm activities and sue you for all you have. This all sounds terrifying, but this article is not meant to scare you into getting insurance, rather to explain to you the farm-insurance-coverage options that you have available.
Do I Need Farm Insurance?
If your farm is simply a hobby and you don’t receive income from farm activities, you might think you’re exempt from needing farm insurance. The reality is that farming is a dangerous activity, and farmers have dangerous equipment and animals that are not always within their control.
For some hobby farms, a homeowner’s insurance policy will cover farming activities, but this is not always the case. In investigating farm insurance, start by talking with your homeowner’s insurance agent to find out what’s covered.
If your farm is a legitimate business, then yes, of course you need farm insurance—possibly several kinds. If it’s a hobby that’s not covered by your homeowner’s insurance, if you don’t have homeowner’s insurance or if your farming activities are a small side business, you might need umbrella insurance, liability insurance or another option below.
Types of Farm Insurance
If you’re like most farmers—or really most people—and don’t like to deal with the intricacies of business, insurance and mountains of paperwork, getting to know the different types of farm-insurance coverage available is going to be tedious. Presented here is a simple summary of some of the insurance types that are out there. One or more of these might sound like something your farm needs, and you should explore those options further with a farm-insurance company. Every insurance company has their own fancy brand names for their insurance packages, so be sure to discuss the meat of the insurance policy rather than just the tagline.
If you own and live on your farm, you can go one step above typical homeowner’s insurance with a farm/ranch homeowner policy. This should cover:
- your house
- personal property
- living expenses if your house is damaged
- theft of personal and farm property
- damage to farm equipment
- farm assets (such as stored grain, if you were to farm commodity crops)
It should also cover liability, medical expenses for injuries that occur on your farm, livestock losses and chemical drift. This type of insurance is applicable to every scale of farm.
If you own a farm property but do not live there, you can find insurance that will cover the same items as farm homeowner insurance, minus the house coverage.
If you rent and live on a farm property, this insurance pretty much works the same as farm homeowner insurance.
Farm Liability Insurance
“Liability” is an important word in insurance. Liability coverage protects you against lawsuits, and this is one area you want to be sure you’re covered. While the typical farm homeowner, farm property or farm rental insurance would include liability, it might have a limit that’s too low for your needs. You can purchase additional farm liability insurance or umbrella insurance (see below) in this case.
Product Liability Insurance
Your jams, cider and cheese—all of your farm-made goods—would be covered here.
Vehicles and Equipment
You already have insurance for your car or truck, but you might need more than the basic comprehensive-and-collision insurance plan if you are using your vehicles for business, if you have an employee who uses your vehicles or if you have an employee who uses his vehicle for your farm-related business. For expensive equipment, you can get equipment insurance to cover damage or theft above and beyond your farm property insurance policy. Some insurance companies also offer insurance to cover the cost of fixing certain types of equipment and to cover lost income if you need to halt your operation while the equipment is being fixed. Your equipment might also be covered under your property insurance, so ask lots of questions before purchasing a separate policy for your equipment.
If you have an agritourism operation, commercial liability coverage is necessary. Be honest with your farm-insurance company about all of the activities that take place on your farm, as not all agritourism activities are covered under every policy. Keep looking until you find one that meets all of your needs. If someone were to twist an ankle while walking in your corn maze, slip while getting on your hayride or get sick from eating strawberries from your U-pick, you want your insurance to cover that.
There are two general types of umbrella insurance: personal property and liability. These go above and beyond your standard property insurance. The personal property umbrella insurance covers more high-dollar items, and liability umbrella insurance covers you against legal claims.
Crops Vs. Livestock: Different Insurance Needs
Whatever is happening on your farm, basic property and liability insurances are smart. The levels of each you need will vary based on the size, scope and location of your farm. Livestock and animals are more dangerous to work around than tomato plants. There’s the cow that gets in the road, the horse that kicks the farrier and the herding dog that goes after the delivery man. But on the crops side of farming, you might be holding a large crop inventory in a grain bin, there’s the danger of contaminated produce sold at a farmers market, and chemical drift is a real issue.
A farm that has crops will have different insurance needs than one that has livestock, but talking with an insurance agent is the only way to sort out the details for your specific situation.
Finding A Broker
When you last got bids for your car insurance, you might have done so over the Internet or by calling a toll-free number from a TV commercial. It’s a less good idea to use this method when finding an agent to handle your farm insurance.
According to United Policyholders, a nonprofit resource for insurance consumers, there are two types of insurance agents: captive agents, who only offer insurance products from one insurance provider, and independent agents, who can sell insurance products from a range of insurance providers. An independent agent might charge a commission fee—7 to 15 percent on top of your premium. You need to decide whether having someone help you navigate the maze of farm-insurance options and working with a wider range of options is worth that cost to you.
Talk to fellow farmers—particularly those who have operations similar to yours—for insurance-agent and insurance-company recommendations. Get quotes from multiple insurance providers, but be sure every provider is quoting the same insurance options for you. Finding an insurance agent who is familiar with farming is nice. It’s even better when the agent is familiar with your kind of farm. You should have a good rapport with this person, because when you need his help, you want to know you can trust him with the best interests of your farm. United Policyholders offers a list of questions you should ask in choosing an insurance agent.
What To Expect When You Get A Quote
Your insurance agent should talk with you at length about your farm and farm-business activities. He will make recommendations based on this information, and he’ll present a quote with each area of insurance broken down, just like when you get a quote for your car insurance. Don’t be afraid to ask many, many questions about this quote and the farm-insurance options presented.
It’s important to note that this article does not provide legal advice, and that you should be working with your lawyer and insurance agent on the right type of farm-insurance coverage for you. You’ll want to do this today, before your steer ends up in the road.
About the Author: Freelance writer Lisa Munniksma blogs each week about ag news and opinion at “The News Hog” and about farming and traveling around the world at www.freelancefarmerchick.com.