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The Basics of Insuring a Farm

Your farm with its building, machinery, equipment, buildings, livestock and crops are exposed to risks that could be damaging to the overall operation of the farm. If disaster strikes, how will you be able to carry on with the business?

Find out all about insuring your farm assets from factors that could damage them.

A farm, whether as a main source of income or a hobby, is a significant investment. Some people may even have farms as inheritance, holding not only financial, but sentimental value. The farm, its machinery, equipment, buildings, livestock and crops are subject to various risks of being destroyed by natural occurrences such as flood, fire, or lighting or to losses by theft. To protect it from such risks, insurance is necessary.

Basic Farm Insurance

A good farm insurance coverage is a combination of homeowner’s policy, and commercial insurance with extra coverage for significant risks. The most basic commercial insurance that a farm could purchase would be property insurance to cover for damage or loss to farm properties in case of common disasters; and liability insurance to cover for damages you, your employees, or your farm produce caused to other people and their properties. If you own a vehicle that you use for transporting vegetables, fruits, dairy and other farm products, you might need insurance for such purpose. For those that aren’t covered by these basic insurance, endorsements and riders for extended coverage can be used.

Farm Insurance Extra Coverage

The decision on what extra coverage to subscribe to depends on the operation of the business, and what assets are exposed to the most probable risks considering the nature of the farm activities as well as its location. To ensure that all the aspects of the farm that must be protected are insured, it is necessary to go down through every activity of the farm. Will the farm have employees? For a certain number of farm employees earning some wage threshold, and for many states, workers' compensation insurance is mandatory. Will equipment and buildings be used? Check on what buildings and are excluded in your basic coverage and whether you can pay for extra coverage for these. Will you be transporting animals? A special insurance could be used for this.

Farm Insurance Broker

To get the best advice regarding what insurance, and endorsements to get, consult an insurance broker. They could help you avoid the risk of being under insured for lack of proper evaluation on what your important needs are, and the risk of spending money for policies that have overlapping coverage. Their role is to help find the balance between what risks you can suffer without having to spend money for any coverage and what risks your farm should be properly covered from.

It is possible to receive subsidy for farm insurance. Check whether you can avail of state or federal insurance subsidy from the United States Department of Agriculture.

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