When you work the land or farm the water, you face unique risks beyond the standard business exposures. These include property risks that extend to animals and specialty equipment along with harvested crops or livestock that haven’t yet been shipped. And they include liability risks, such as pollution and product liability that have hefty potential regulatory elements. Agriculture and forestry insurance is built to help in all these areas alongside standard business insurance coverages. Here are the protections your farming, timber or aquaculture business may need.
Property Insurance for Agriculture & Forestry Businesses
Each region and each segment of the agriculture and forestry industry has its own particular risks, but there are some broad property insurance needs all of them share. Those include buildings, equipment, stock or inventory (depending on where you are in the supply chain), and income. For food manufacturers, there may also be cargo insurance needs. Here are the broad categories, with the understanding that coverage can be tweaked to fit your specific business’s perils.
Perils Generally Covered by Property Insurance
While flood, crops in the ground and, in some regions, wildfire and earthquake require separate insurance policies from commercial property insurance, there are some perils that are commonly covered across agriculture, aquaculture, and forestry property policies. These include:
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Fire
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Weather
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Explosion
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Theft
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Water pipe burst
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Vandalism
In some regions, separate deductibles may be required for hail or other weather-related perils. You can typically add coverage to your property policy for equipment breakdown, as well.
Building & Contents Insurance for Agribusiness, Aquaculture & Timber
No matter whether you are growing, manufacturing, or processing products, you are sure to have high-value equipment and structures that are vital to your operations. For equipment used inside your buildings, such as conveyors, incubators, refrigerators and computers, your contents insurance will provide coverage based on either actual cash value (ACV) or replacement value. While most agribusinesses opt for replacement value of structures, many choose actual cash value (which has a lower premium) for contents. ACV calculates in the depreciation of the item lost, and your claim payment will reflect the age and wear and tear of the damaged or destroyed contents. You will need to provide an accurate assessment of the value of your buildings and contents and insure to their full value to avoid a penalty at claim time.
You may also wish to get ordinance and law coverage so you have the extra financial protection to deal with rebuilding structures in compliance with code upgrades. Without this clause in your insurance policy, you would likely have to pay for those upgrades, such as improved wiring and storm fortification, on your own.
A commercial property policy for agribusiness can be strengthened with business income protection, which provides revenue flow if a covered peril damages your building or contents and curtails your operations. It can be written to provide extra expenses for renting equipment or space to put you back online.
Mobile Equipment Insurance for Agribusiness, Aquaculture & Timber
For mobile equipment, such as tractors, skid steers, forklifts, harvesters, chippers, and self-propelled irrigation equipment, you need to enhance your agribusiness property insurance with a mobile equipment policy. This coverage applies to tracked or wheeled vehicles that are not meant for use on public roads. It does not cover road-use vehicles, which fall under commercial auto.
Mobile equipment insurance typically covers the same perils as your main property policy but often will also cover damage sustained in a collision and may offer flood coverage and equipment breakdown coverage.
If your irrigation is solid set or otherwise permanently or semi-permanently installed, you may need to consider a stand-alone agricultural irrigation equipment insurance policy, which may offer specialized benefits, such as fire department response fees and debris removal.
Equipment Breakdown Insurance for Agribusiness, Aquaculture & Timber
While agribusiness property insurance covers equipment damaged by fire and other such perils, it doesn’t cover equipment breakdown. For that, you need a specific equipment breakdown policy so that in the event your non-mobile equipment suffers a mechanical or motor failure, you have financial help to repair or replace it. Equipment breakdown insurance also can provide a revenue stream if the equipment failure shutters your operations for a lengthy time period. If you opt for extra expense coverage, it can also help with the cost of rental equipment while yours is being repaired or replaced. Though it doesn’t cover wear and tear or failure to maintain, it often will cover product lost due to spoilage or another consequence of the breakdown.
Equipment breakdown insurance can also be written to cover loss of utility services due to a covered peril, such as a storm or vandalism, for example.
Stock & Livestock Insurance for Agribusiness, Aquaculture & Timber
Property insurance typically doesn’t cover crops and livestock to the extent farmers, fisheries, and timber plantations need.
For livestock operations, you have many options that cater to your particular needs, for example:
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Livestock transit insurance, which covers animals being hauled
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Theft insurance
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Insurance for animal death due to natural disasters, hypothermia and contamination of feed or water supply
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Auction market insurance
If you wish to cover post-harvest risks for crops or logs that remain on your property before going to the processor or mill, you may be able to enhance your property policy to gain protection, but a stock throughput policy could be a better option. It is more comprehensive and covers inventory from harvest through delivery at the purchaser’s destination.
Crop Insurance for Agribusiness & Timber
Crops and timber still in the ground are not covered under property insurance and need stand-alone policies. Crop insurance is a federally backed program that protects farmers for losses due to weather. Your insurance agent or broker will work with you on whether you need standard crop insurance or multi-peril crop insurance, which can cover flood, drought, pestilence, and other dangers to your crops.
Timber growers may be wise to purchase standing-timber insurance — known as reforestation insurance — to protect their forests before harvest. Rather than covering the value of the wood, it covers the actual cost of replanting and labor if a young forest is destroyed by a catastrophic event. This policy can insure against fire, lightning and aircraft perils among other hazards, so delve into options you may need with your insurance agent or broker.
Liability Insurance for Agriculture & Forestry Businesses
Whether your business grows, harvests, processes or distributes agricultural, fishery or timber products, your liability risks share some similarities, which can be insured under liability policies tailored to your specific concerns.
General Liability Insurance for Agribusiness, Aquaculture & Timber
A general liability policy gives basic coverage for injuries to visitors at your operational premises along with some response to damage your employees might do while on the premises of others or to their property while they are at your location. For example, if your employee drops something on a visitor’s car or a guest slips and falls on your property, you might have to pay for repairs or medical treatment. General liability insurance would help with these costs. Talk to your insurance agent or broker if you offer any pick-your-own or other agritourism type events. Those could change your general liability needs.
Product Liability Insurance for Agribusiness, Aquaculture & Timber
One of the biggest risks food growers and producers face is that one of their products causes — or is alleged to have caused — an illness or injury once on the market. Product liability insurance responds by helping with legal fees, medical costs, and other victim compensation.
Related but separate from product liability is product recall insurance. You would need this coverage if a product you made had to be pulled from distribution. It helps pay the costs of notifying the public and vendors as well as refunds and, potentially, the destruction of the product.
Pollution & Environmental Liability Insurance for Agribusiness, Aquaculture & Timber
From spraying chemicals to fuel spills and leakage to animal waste runoff, agribusinesses face profound risks of damaging the environment or polluting nearby properties. Costs can be astronomical. A pollution or environmental liability insurance policy for your sector of the farming or forestry industry can cover cleanup, disposal, restoration, regulatory investigations, victim financial losses and public relations, among other benefits.
Excess Liability & Umbrella Insurance for Agribusiness, Aquaculture & timber
Liability claims in these areas can run into the millions of dollars and, coupled with commercial auto liability, could put your company at risk of exceeding your limits of coverage. To protect yourself against uninsured liabilities, you may wish to increase your coverage limits through the purchase of an excess liability policy or commercial umbrella insurance. An excess policy will enhance the dollar limits for a single underlying coverage, while an umbrella will do so for multiple policies at once.
Workers compensation insurance for agriculture and forestry businesses
Worker injury and illness are common in both agribusiness and forestry operations. A workers compensation insurance policy can help pay for the medical and disability needs of injured or sickened workers and prevent your being sued for costly liability claims. Workers comp insurance requirements and payment benefits and rules vary by state, so working with a knowledgeable insurance agent or broker will help you stay in compliance.
If you use H-2A visa workers, remember that they are entitled to workers comp as well.
Commercial auto insurance for agriculture and forestry businesses
Insuring all vehicles owned or operated by your employees is essential for your financial health. There are two main components to auto insurance: property damage and liability.
Property damage insurance for your farm or timber business’s vehicles can cover collision damage to your vehicle as well as non-collision damage, which is typically insured when you elect comprehensive coverage. Collision insurance covers the cost to repair or replace your vehicle when you are at fault for an accident. Comprehensive steps in when your vehicle is damaged by flood, vandalism or being struck by an object or if it is stolen. You can insure all your vehicles under a fleet policy.
Auto liability insurance helps pay for damage or injury your driver inflicts upon others outside your company in an accident. Costs for liability claims, especially those involving trucks, are often extreme, so consider adjusting your limits of insurance upward or getting excess liability insurance to increase your coverage.
You may also wish to secure uninsured motorist coverage, which steps in if your vehicle is damaged by an uninsured or underinsured motorist, as well as non-owned auto coverage, which helps with liability costs if an employee is found at fault for a work-related auto accident when using his own vehicle.
Cyber Insurance for Agriculture & Forestry Businesses
Cyber risk is endemic to agribusiness. Business assets; feeding, planting and spraying schedules; chemical mixes; and production lines are all vulnerable to cybercrime if their accounts or systems are connected to the internet. A first-party cyber insurance policy can help your operations recover from a cyberattack and get you back up and running without massive cost outlays on your part. Third-party cyber liability insurance can step in if a hack of your systems allows for exfiltration of data that financially harms a vendor, partner or customer. Insurers these days understand risks better than ever and offer significant assistance in improving policyholders’ cybersecurity, so you get not only a financial backstop against losses but also advice on stopping cybercrime in the first place.
Agriculture, Aquaculture & Forestry Businesses Need Professional Insurance Advice
With all the risks involved in both the property and liability sides of the farming and timber industries, insurance can become a tangle of legal documents. Using a program insurance policy can somewhat ease the complexities, but there are still dozens of options to sort through. An independent insurance agent or broker can help you find and understand your choices and can advise you on filling gaps in your coverages so you are less likely to take a heavy financial hit after an accident or disaster. Find an insurance agent near you who can help with coverage for your farming, fishery or timber business.