Farm insurance refers to various policies that help protect farms. Farmers need property and liability coverage for their residence and business. They may also need crop, livestock, equipment, commercial auto, pollution liability, and workers’ compensation insurance.
While farm insurance is sometimes sold as a single coverage, it is often composed of several types of insurance that are bundled to meet the needs of an individual farm or agricultural operation.
Farm policies can be all-inclusive
If you own a small farm, a farm policy may satisfy most of your needs. These policies cover both your operation and your residence. They help pay for any losses to your buildings or land, and they cover liability claims.
Farm property policies usually cover claims for fire, lightning, vandalism, theft, hail, wind, burst pipes and other losses (or “perils”) that are either named in the policy or not specifically excluded in an “open-perils” policy. You may have multiple structures and pieces of equipment to insure. Coverage could include your house, barns, silos and sheds.
It’s important to set the proper “limits” for your policy. The limits are the maximum amount a policy will pay out once you’ve met your deductible. If the limits are set too low, you may find yourself underinsured if there is a significant loss such as a fire.
Property insurance considerations
You must also consider whether to insure your property at its replacement cost or actual cash value. Most residences are covered for the replacement cost, which means your home will be repaired or replaced using the same kind or quality of materials. Actual cash value is the replacement cost minus depreciation, which may pay significantly less depending on the age and condition of your property.
You can insure some property at its replacement cost and other property that is older using actual cash value. For example, barns and sheds that aren’t used much may be good candidates for actual cash value coverage.
Pay attention to what is excluded from your farm policy so you can decide if you need additional insurance. Talk to your Bravera Insurance Advisor to make sure all of your risks are being considered.
In addition to property insurance, farm policies have general liability coverage that pays your legal expenses if you’re sued for bodily injury, property damage or personal injury — subject to the limits and terms of your policy. General liability typically covers your attorneys fees, court costs, medical expenses and any judgments against you.
General liability insurance will also cover you if a nonemployee suffers a physical injury or property loss due to the operation of your business.
Other coverage you may need
Crop production and prices, government regulations and global markets can also affect your farm’s ability to thrive. With your livelihood on the line, crop insurance is a way to offset economic damages that could result from these variables.
Crop insurance protects your farm against losses that occur during the crop year. Losses must be due to unavoidable issues beyond your control, like an extreme weather event. Insurance companies have also introduced protection that combines both yield and price coverage. These safeguard a crop’s loss in value due to a change in market price during the coverage period.
If a loss should occur, insurance payments are disbursed immediately following the loss. This could be before harvesttime (in the case of prevented crop planting or replanting payments) or after the harvest (in the case of a shortfall in crop yield).
From an economic standpoint, you and your farm play an important role in the U.S. and global economies. In fact, according to the American Farm Bureau Federation, one U.S. farm feeds 166 people around the world annually.
Lastly, you will likely need workers’ compensation insurance if you have employees. Workers’ comp pays for lost wages, medical expenses and the cost of rehabilitation if an employee gets hurt on the job.
Remember, farm insurance is a broad term. It might include many essential coverages, but not all of them. You may need to build it out with additional policies, depending on your operations. A Bravera Wealth Insurance Advisor who specializes in farming can help you get the full protection you need.