Hobby Farm vs. Farm

Hobby Farm vs. Commercial Farm FAQ

(You've got questions, we've got answers.)

Table of Contents

When would a hobby farm need commercial farm insurance?
If I sell a product at my hobby farm is it considered a commercial farm?
Do both my hobby farm insurance and commercial farm insurance cover business operations?
Are crops covered differently on a hobby farm policy vs. a commercial farm policy?

When would a hobby farm need commercial farm insurance?

As a hobby farmer, my hobby has grown into more of a substantial income than I was originally expecting. When do I need to reevaluate my farm insurance and do I need different coverages for my changing hobby farm?

Typically, a hobby farm is only a hobby farm if it's not your primary source of income if you are making or selling products or livestock.  Coverages of a hobby farm and a commercial farm are pretty similar, except that as your hobby farm gets larger and you obtain more income, your policy will need to adjust to the amount of inventory, livestock, crops, and products you are selling as well as any additional exposures that may be present. It will also need to account for any hired help by getting a workers' compensation policy in place. Adjusting your product, crop, heavy machinery or livestock coverages may be prudent as well. Ultimately, your best answer will be speaking with your independent insurance agent about the necessary changes and additions that your hobby farm specifically needs to implement .

If I sell a product at my hobby farm is it considered a commercial farm?

I have a small hobby farm that is my oasis. Recently I started making and selling goat milk soap online and through a local farmers market. Does this qualify as a commercial farm, since I am making some money off of selling this product?

Not necessarily. As long as your product doesn't account for a large or major part of your income and is truly a side hustle, then your still considered a hobby farm. A good rule of thumb is that if you lost all your hobby farm products tomorrow, would it impact your finances in a way that would be threatening, or would you just chalk it up to unpleasant experience? In other words, if you're depending on your hobby farm's product financially, then it may be time to speak with your independent insurance agent about some additional coverages and registering as an actual business. 

Do both my hobby farm insurance and commercial farm insurance cover business operations?

I need to know if both hobby and commercial farm insurance provide commercial or business coverages in their package policies. On the off chance that I decide to sell some crops or livestock, I will want to make sure I have the right coverage in place. 

The short answer is yes. Both a hobby farm and a commercial farm insurance policy would allow for both personal and business coverage in some form or fashion, depending on your farm's specifications. Discussing it with your independent insurance agent and knowing what your farm's exposures are will determine what coverages your policy will need in place.

Are crops covered differently on a hobby farm policy vs. a commercial farm policy?

What are the differences in crop coverage for a hobby farm vs. a commercial farm? Are their different policies for each farm type or are they all the same? How do I know what coverage I need for my farm?

No. Crop insurance is crop insurance and there are typically two kinds. The first is crop-hail insurance, and the name says it all. It protects your crops from hail damage when it may occur. The other is called multiple peril crop Insurance (MPCI) and will cover you for anything including weather, fire, theft, and even low-yielding crop years. The main difference you're going to see is the number of crops that need to be covered. Since a hobby farm is smaller, you probably won't need coverage for as much as a full-on operating commercial farm. Check with your independent insurance agent for more details.

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