Operating a farm is dream come true for many Americans - and a risky business for others. Living as a farmer takes many hours and a major financial commitment - it's a lifestyle, not just a job. Natural disasters, crop failure and sick livestock can all threaten your livelihood. The key to a successful farming venture is identifying risks and planning for the worst case scenario with a well drawn out risk management plan and sufficient insurance coverage. You can use best practices, hire the right workers, and buy the safest equipment possible, but accidents still happen all the time. Do you have enough property and liability insurance if your barn roof collapses? What about disability insurance for workers who might get injured on a combine - do you know what resources you have to get this coverage at a low cost? Insuring your crops is also crucial if you're a crop farmer, because a bad year could bankrupt you without the proper insurance.
When you carry adequate farm insurance, you can focus on your farm knowing these hazards will be taken care of if necessary.
- 2,181,000: Number of farms in the U.S. as of 2011
- 86.5%: percentage of U.S. farms that are sole proprietorships
- 57.1 years: average age of farm owner/operators in 2007
What Is Farm Insurance?
The U.S. has millions of farms. Some are large agribusinesses and others are small farms that have been handed down from generation to generation. Every type of farm can benefit from farm insurance, although the coverage limits and some of the risk protections may be different.
A sound farm insurance policy will cover you in three main areas: Home or dwelling and contents coverage, farm property and operations coverage, and liability coverage.
Protect Your Home and Personal Property
As a general rule, most farm insurance polices will provide the following coverages:
- Dwelling or home protections: Covers your home in the event of major perils, such as windstorms, hail, lightening and fires
- Covers accidents, such as a vehicle damaging your home, theft or vandalism
- Covers personal belongings in the home
- Farm liability protection: Protects you from losing your farm due to liability issues
- Covers bodily injury to another person, medical payments associated with a third party's injury and damage to other people's property
- Provides for legal defense and payment of claims for which you are legally responsible
Barn Insurance and Other Outbuilding Coverage
Farm polcies can be designed to also insure outbuildings separate from your dwelling. These include barns, sheds, garages and other structures that store your equipment or livestock. Normally, these are covered against the same perils as your home. For example, weather events, such as windstorm, hail, lightening are covered and accidents, such as damage by a vehicle, theft or vandalism are included.
How Do I Cover My Livestock and Crops?
Livestock and crops make up a crucial part of your farm. In many cases, the production of livestock and crops is a farmer's main source of revenue. Most farm coverages provide protections for your animals. You can choose blanket coverage up to a specified coverage amount, or you can make a schedule of the individual high value animals you want to cover in the event of death. You can also have a combination of blanket and specific coverage. Covered losses include death by accidents and other events, but do not cover sickness and disease.
To obtain coverage for animals that pass away due to sickness or disease, you will need to carry animal mortality insurance. This insurance is available as blanket or schedule, and primarily covers high-value cattle and horses. You may find some specialty coverages for other animals as well.
Crop insurance protects you if you have a crop loss due to an unavoidable natural disaster, weather event, or spread of disease. You can also protect your crop prices from commodity market price volatility and cover specific crops with a crop insurance policy.
Farming can be an unpredictable business, as there are many factors that can threathen your livelihood. The elements, natural disasters, and the market can all pose risks, but the good news is that insurance can help give you peace of mind, and keep your operation going years into the future.
Covering Your Farm Equipment
In addition to your livestock, most farm policies will cover your farm equipment, supplies and other machinery. This includes items like combines, irrigation systems and feed.
As with your animals, you can cover the whole of the equipment under a blanket policy at a certain dollar limit or list the separate high cost items you want to cover on a scheduled policy. You can also utilize both types of coverage, which can be especially helpful if you have a very large operation and lots of equipment that needs protection from loss. An independent agent can explain your options and help you compare different policies to build an insurance plan that works for your farm.
Do I Need Business Owners Coverage for My Farm?
If your farm is also your business, it's a good idea to get protection from business loss. Here are some of the relevant coverages you may want to consider:
- Loss of Business Income: Protects you in the event of a covered business interruption; provides operating expenses and replaces lost income
- Workers Compensation: Covers your workers or employees if they are injured, get sick or die as the result of a job-related situation; state laws vary, so ask your Trusted Choice member agent about the requirements in your state
- Commercial Vehicle: Protects your over-the-road vehicles used for business purposes, such as trucks, vans, specilaized trucks, etc.; normally necessary for the vehicles that need to be licensed
- Errors and Omissions: Protects you if you make unintentional errors that cause financial loss to others; restricted to specific duties you perform in your business
Start Protecting Your Farm Today
As you can see, the proper farm insurance coverage is a complex mix of risk protections. As your farm grows or takes on new crops or livestock, it can become an even more intricate challenge to cover.
That's why it is a good idea to work with an insurance agent who is independent and knowledgeable. You may also want to work closely with an attorney who can help you valuate your farm and make decisions about liability coverage and other risks you face. An accountant is also a good person to consult with, as these professionals can help you understand your budgeting options, the measure of your assets, and how to best structure your insurance coverage to keep your farm going for years to come. With a great agent, accountant, and lawyer on your team, you can find an insurance solution that best meets your needs.
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