As your insurance agent, we want you and your farm to remain safe so here are some facts to keep in mind when it comes to shopping around for farm insurance.
1. Not Standardized
Many people assume that a farm insurance policy is just a large bundle of predetermined coverages. While this is often the case when shopping for other kinds of insurance, like health, auto, or even homeowner’s insurance, that is definitely not the case with farm insurance.
That’s because each farm is so unique. This is in terms of what kinds of coverages are needed and what animals, buildings, and equipment need to be covered. Each farm insurance policy is built around the needs of the farm – everything is customized to meet your needs.
2. Limitations on Commercial Buildings
This is an area in which it’s worth figuring out what your homeowner’s insurance costs. Most homeowner policies limit the amount of coverage you get for commercial buildings. Most farm insurance policies, even hobby farming policies, do not. In most cases, you’ll need to think about what the building is being used for.
Often, if the building is being used in a way that exceeds the special limits outlined in the policy conditions – it may be considered commercial. Therefore, it will require additional protection in your insurance policy. This is often based on the form of gross annual revenue generated.
3. Livestock Not Included
Another pitfall that people come across when purchasing farm insurance is in assuming that their animals are automatically covered. Livestock insurance is similar to crop insurance and can be partially funded by the USDA. However, this depends on the types of animals you have, so you may need additional coverage.
You can purchase individual coverage, scheduling animals individually, or you can purchase blanket coverage (or unscheduled coverage). Blanket coverage is ideal if you have animals that are all of roughly equal value. Individual coverage is smart if you have certain high-value animals (such as those used for breeding or show). When it comes to livestock, it’s also important to note that insurers will consider what your livestock is being used for.
For example, if you have a horse that is strictly kept as a pet, you probably won’t be able to insure it. However, if you use that horse to ride and herd other animals, you could argue that it is a vital part of your livelihood – and you can insure it.
4. Other Things That Aren’t Covered
There are a few other things that are not included in farm insurance. For example, fencing is rarely covered. Some insurance companies offer policy additions for fencing, but these require significant up charges to your premium. In addition, farm machinery and equipment that is not maintained will not be covered, nor will technical malfunctions.
5. Know Your Fire Insurance Limitations
It’s also important to research what your farm insurance might cover in terms of fire. You need to be certain that your home and other buildings will be covered if there is a fire. Though farms are generally insured, certain things can activate an exclusion.
For example, if your farm structures aren’t accessible by road (sometimes even by gravel or paved road) then many insurance companies won’t cover them. Some require that there be water sources on the property – and a pond doesn’t always check off that box.
So, do you need farm insurance? Consider the tips above and call an agent to discuss whether farm insurance is an investment you want to make for your farm.