Crop vs Livestock Insurance

Crops vs livestock

If your agribusiness has crops, livestock, or both, you may be wondering how exactly to insure your agribusiness properly. Don't worry, an independent insurance agent can help.

Your independent insurance agent is a knowledgeable resource when it comes to insuring all aspects of your commercial farm, including your crops and/or livestock. Knowing how coverage works and where to get it is essential in running a business, so let's start with a little background to get you off on the right foot.

How to Insure Your Agribusiness's Livestock

Insuring your farm is one thing, but your livestock? How does that even work, you may be wondering. But there are policies for your animals, and protecting them is key to making sure your agribusiness is a successful, operational business.

First, you'll need to have your independent insurance agent look at pricing and coverages for your herd's specifications. So whether you have a prize-winning steed or typical grade-A beef cattle, your coverage needs to apply adequately.

Your independent insurance agent will need to know the following to get started:

  • Your herd's specifics: What are they? What are they registered as? What will you be doing with them?
  • What is your livestock worth: This isn't the sentimental worth, this is what you can get in the marketplace for these animals, and what their replacement value is should you need to replace them.
  • What preemptive protection do you have in place: Is there proper fencing? Do you have a way for the livestock to avoid predators? How do you keep them healthy?

How to Insure Your Agribusiness's Crops

Insuring your crops is a bit different than insuring your livestock. Since the two products are so different, they also require different insurance coverages to support them when there is a claim.

Your independent insurance agent will need to know the following to get started:

  • Your crop's specifications: What is your crop? Where will you be storing your crop? How much is there? How many acres will your crop be occupying?
  • What is your crop worth: How much will it cost to replace your crop, before, during and after completion of your harvest?
  • What preemptive protection do you have in place: Are there special measures you take to ensure your crops are safe from pests, wild animals, and predators? Are you using pesticides? What equipment are you using to care for your crop? 

Agribusiness: Crops vs. Livestock

Now, if you work with both crops and livestock, you'll need policies for both. They're separate policies, but together they'll go into one comprehensive farm insurance package.

What your livestock insurance generally covers:

  • Accidents: This can be anything from coverage for electrocution, fire, smoke, to accidents loading and unloading livestock.
  • Natural disasters: This would include volcanic eruption and sinkholes. Typically, floods and earthquakes are covered under a separate policy.
  • Weather events: Lightning, wind, hail, tornados, and more are covered.
  • Crimes and civil unrest: This is for your theft and vandalism of livestock.
  • Collision or other death while transporting: This is in-transit coverage for your livestock.

There is typically an endorsement or included coverage depending on the carrier for the following:

    • Accidental shooting
    • Drowning
    • Attack by wild animals
    • The collapse of a building on livestock

What your livestock insurance doesn't cover:

    • Old age
    • Death by natural causes
    • Disease

What your crop insurance generally covers:

  • Crop-hail policies: This is provided by insurance carriers and can be obtained through your independent insurance agent.  Crop-hail coverage is popular with many farmers because hail has the ability to totally destroy a significant part of a planted field while leaving the rest undamaged. If you're in a part of the US where hail is frequent, you may find yourself purchasing a crop-hail policy to protect high-yielding crops. Unlike other crop insurance, a crop-hail policy can be purchased at any time during the growing season and will protect your crops against hail damage.
  • Multiple peril crop insurance (MPCI) policies: These must be purchased before planting. They cover loss of crop yields from all types of natural causes including:
      • Drought
      • Freeze
      • Disease
      • Excessive moisture
      • Yield protection — if a loss in revenue occurs
      • Price protection — if a change in market price occurs and there is a loss
      • While in transit
      • Fire
      • Wind
      • And more, depending on the policy and carrier

What your crop insurance doesn't cover:

  • Some flooding — not all flooding is covered by crop insurance, so knowing your policy offerings is imperative.
  • 20% — there can be a type of coinsurance that is on a crop insurance policy where you'd typically owe 20% of the claim and the insurance company would pay for the remaining 80%. 

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Cost of Insuring Your Crops and Livestock

Take a moment and gather some cold, hard facts on crop and livestock numbers in the United States. As you can see, the value of your products is incredible. And protecting that income is key to your business's success — one of many reasons the cost of crop and livestock insurance is worth it.

All cattle and calves: Inventory and value, by state and United States, Jan 1, 2009 to 2010

Total value of crop insurance premiums paid by farmers in the United States in 2016, by state (in thousand US dollars)

 The cost of insuring your crops and livestock all depends on a number of factors, including their value and the amount of coverage you need. And since every farm has different crops, amounts of crops and needs, establishing an estimated cost is nearly impossible. Speaking with your independent insurance agent will get you in the ballpark on coverage and pricing. 

The Benefits of an Independent Insurance Agent

Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility, and competitive pricing while working for you. And as your farm grows and your needs change, they'll be there to help you adjust your coverage, up or down, to make sure you're properly protected without overpaying. Find a independent insurance agent in your community here.

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