In order to enjoy good profits, be adequately covered for liability exposures, and for “peace of mind”, farmers need to assess and minimize their risk.
First Determine if You are in Fact a “Farm”
This may seem like a silly question, but with the growing number of hobby and small operations throughout the U.S., it’s becoming more and more pertinent. Are you a farm if you’re simply raising prize vegetables and selling the excess at a road stand? What if you’re making wine in your garage to gift to family members? The answer is “Maybe”. A standard homeowners’ policy may cover certain hobby activities that are not conducted at a profit. However, some insurers maintain that once production and sales of a product occur, then a farm policy is necessary.
A clear explanation detailing what you do at your farm, including things such as: what you produce, how much income is generated, and if it is sold to others. These are just a few examples of information that would be needed for your insurance agent to be able to tell you if your homeowners’ policy will provide proper and adequate insurance for you. If not, a farm policy may be the best option.
Identify all Operations that will Take Place on Your Farm
One of the biggest mistakes made by farm owners is failing to plan in advance for all operations that will take place on the farm. For example:
- Will you grow crops and/or raise livestock?
- Will products from the farm be sold directly to the public?
- Will employees work on the farm?
- Will equipment be used and/or leased?
- Will the farm have visitors? (children or otherwise)
- Will animals be boarded for others?
- Will land be rented?
- Will buildings be used in farm operations?
Only by identifying all operations can the farm be properly insured. Your answers to the above questions will help to determine whether a standard farm policy will be sufficient, or if you may need to look into other coverages to protect yourself and your farm.
The Standard Farm Policy
Standard farm policies are a mixture of homeowners’ coverage, commercial business insurance, and specialty insurance. You will want the following basic coverages included in your farm policy:
- Property Coverage – Protects your home, outbuildings, belongings, and some equipment in the event of loss.
- Liability Coverage – Covers a loss unintentionally caused by you or your employees to another’s property or person.
- Medical Payments – Provides payments for medical bills sustained by a visitor or guest injured on your property.
- Additional Living Expenses – Provides for the costs of temporary housing in the event that you must relocated because your home was significantly damaged by a covered event.
Common Additional Coverages
Your Gunn-Mowery agent will work with you to assess exactly what is covered by your basic policy, and if additional coverage may be applicable to your specific situation. Some common coverages that may be worth considering include:
- Replacement Cost Coverage on personal property will pay on a loss at the replacement cost instead of the actual cash value.
- Water/Sewer Backup Coverage can add protection for sewer or water backups to the home.
- Coverage for Buildings (other than your home) located on the farm.
- Coverage for Livestock that you own.
- Coverage for Farm Equipment that you own and use to operate the farm.
- Boarded Animals Coverage can be added both as a property endorsement and liability endorsement. Under a standard policy neither liability nor property damage is covered if the loss is caused by or to a boarded animal.
Every farm is different and our farm practice has over 20 years of experience to understand the unique risks you face.