While many types of insurance policies such as homeowners insurance and auto insurance have become quite standardized, farm insurance policies should be tailored to the unique needs of your farm. This is because of the great variation between farm operations and the breadth of insurance options for agribusiness owners. However, there are several common coverage areas that farm operators should address to avoid any unnecessary risk.
We’ve compiled the following checklist of key farm insurance coverages to help ensure that your farm is adequately protected. Take a moment to review this information, then contact our farm insurance specialists to help you customize your own farm insurance policy.
Farm Liability Coverage
This type of coverage generally includes bodily injury, medical and legal expenses and property damage for activities related to your farm operations. If you’re starting a new farm operation, you may be surprised to know that while a general farm insurance policy includes liability coverage, the liability limits vary, so it’s important to review how much coverage you have and if it’s enough to protect your assets. If you have an established farm it’s equally important to ensure that the liability limits of your policy keep pace with the evolution of your operations.
Farm Personal Property Endorsements
Your farm insurance policy should also cover personal property directly involved in your farming operation. This coverage would typically cover farm machinery and equipment, livestock, and farm products (i.e. seed, silage, animal feed, fertilizers and other farm inputs). In general, you can select broad coverage or choose to schedule individual items with an endorsement or floater added to your general farm insurance policy.
Farm Machinery and Equipment Endorsements
Of the endorsement options mentioned above, coverage for farm machinery and equipment such as tractors, combines, and other major farm machinery assets should be a priority for farmers. This coverage protects you from financial loss related to damage to machinery and equipment due the specific perils covered by your policy.
Livestock Loss and Injury Coverage
If your farm has livestock, you may require an extended policy to protect yourself against their loss or injury. A general farm insurance policy usually includes coverage for the death of livestock in circumstances such as electrocution, drowning, accidental shootings, or wild animal attacks. For farmers with higher value animals such as horses and cattle, coverage for injury or death by other means may require a mortality policy and/or a major medical/surgical policy.
Coverage for Other Farm Assets
While a general farm insurance policy provides good basic protection, it’s rarely all that a farm operator needs to mitigate financial losses and risks. The following are some examples of items that are not usually covered by a standard farm insurance policy:
- Seeds that are planted and feed, grain and other crops that are growing on your property are not protected from natural disasters by general farm insurance (although they are usually protected against lightning, fires, vandalism, and other malicious acts). Crop insurance is needed to protect crops from natural disasters such as droughts and hail.
- Here’s another surprising fact: fencing is not usually covered by standard farm insurance policies. If your farm has a lot of fencing or it’s made of very costly materials, you may want to consider additional insurance to protect yourself against the financial costs associated with replacing it should it be damaged.
- One of the many reasons that you should work with a qualified insurance agent specializing in farm insurance is that most farm insurance policies do not cover a farm’s most important and highest value assets such as machinery and buildings for any and all damage or losses. They only cover losses due to a very specific list of perils. For example, losses due to fires or equipment malfunctions may be excluded if you don’t meet the very specific requirements in your policy. This is why it’s so important to review exactly what coverage you have for your farm structures, equipment and liability thoroughly and with the help of an insurance professional.
Were you able to check off all of the items on this farm insurance checklist? If not, or if you have any questions related to the liabilities and risks inherent in farm operations, let’s talk! Contact our farm insurance team today.
David Halsey, of Adrian, has been with Kemner Iott Benz for 30 years specializing in helping farmers protect their assets and develop risk management strategies to avoid losses. As a local farmer, David understands the unique challenges farmers face and can recommend the proper coverage to avoid financial loss. David works alongside his wife, Paula, and kids on their family farm in Madison Township raising beef cattle, row crop, and forage products.
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