When your farm is both your home and your business, insurance can seem like a complicated topic. In fact, it’s an opportunity to get a single policy that meets all your needs. The key is being certain what you want from a farm insurance policy and making sure your insurer provides it.
How can farm insurance protect you?
Use the yellow hot spots and explore how farm insurance can help protect against common risks.
ATV / Utility Vehicles
Utility vehicles or ATVs designed for use on farms can increase liability. This is mainly because these vehicles are known to be associated with high-risk behaviors, such as operating the vehicle without the use of protective equipment.
If you routinely ride your ATV or utility vehicle, be sure to always use good judgment and wear proper protective equipment, such as a helmet. Additionally, avoid behaviors that are known to increase risk of injury, such as riding on roads that are intended for automobiles.
Products Liability Exposure
Say, for example, that the beef produced from the cows raised or kept on a farm causes illness in a consumer when it’s eaten.
To combat this risk, add an endorsement that modifies your insurance policy to protect you from these potential mistakes.
Equipment used on a farm has a high risk of mechanical breakdown. For example, a farmer's combine could ingest a rock causing equipment failure. These types of breakdowns have the ability to shut down farming operations longer than you want or expect, which could ultimately result in a delay during harvest.
Add intake coverage and/or an endorsement for business income and extra expense. This will pay for additional costs in excess of normal operating expenses, which may be incurred due to a covered cause of loss. This would allow the farm to continue operations while its property is being repaired or replaced.
Coverage for Peak Season
During harvest, a farmer often stores grain in grain bins, and this grain usually sells within a few months. Coverage is needed while the grain is onsite, but it could get expensive to fully maintain this coverage during the rest of the year when no grain is present on the farm.
Cover the grain under peak season. This option tailors your coverage to provide increased amounts of insurance during the months in which you have grain on your farm. This type of coverage can be applied to any harvested crop, not just grains.
Pollution is an increasing risk that can occur due to the improper storage or application of pesticides and fertilizers, runoff and above ground or underground storage tanks.
It is difficult to control pollution risks on your farm, but it is not impossible. You can protect yourself against this type of risk by obtaining environmental insurance that provides protection for both bodily injury and property damage caused by a farm pollution incident.
What happens when your farm faces a large liability loss that exceeds the basic limit of your standard policy?
A commercial umbrella insurance policy increases your liability limits by adding protection over and above your current farm policies - providing real financial value, as well as priceless peace of mind. Commercial umbrella insurance is available either by an endorsement to your farm policy or as separate coverage.
Care, Custody and Control
If you're caring for livestock owned by others on your farm and an unfortunate event occurs causing the death of some or all of this livestock, you may be held responsible.
To protect yourself and your farm from this type of risk, add care, custody and control to your insurance policy as an endorsement.
Custom Farming / Business Activity
Does your farm provide services for others? If so, you may be held responsible for the business activities related to these services.
To protect yourself from any type of incident relating to these business activities, add an endorsement for custom farming to your insurance policy.
There are many uncontrollable factors that affect the growth of field crops, such as weather. Are you prepared for what might happen if your crops are devastated by an uncontrollable incident?
You can protect your livelihood and investment from this type of unavoidable risk with the addition of multi-peril crop insurance.
If you have a barn or farm structure, a loss to these structures can be catastrophic, potentially putting the farm out of business.
Be sure you have adequate property coverage to protect your farm from potential catastrophic loss.
If your tractor, combine, harvester or other farming equipment has cab glass, that glass could break. It can be an expensive repair and cause your equipment to be unavailable for an extended amount of time.
Be sure you have coverage to help pay for repairs or other service work for broken glass.
The starting point is protecting your property and contents against damage such as fire, theft, flooding and other disasters. Some policies will cover everything, while others will specifically protect either your personal dwelling and possessions, or the equipment and buildings used in your agricultural business. In the latter case, make certain you check the definitions and exclusions.
Also consider insurance for livestock, harvested grains and so on. Ask how the replacement costs are calculated; specifically, whether lost profits are part of the calculations.
As with any business, you’ll also need to look into workers’ compensation for employees, liability insurance for visitors to your premises and specialty coverage for any vehicles you use for work rather than just for personal driving.
Two types of crop insurance are available to farmers in the United States: Crop-Hail and Multiple Peril Crop Insurance (MPCI). Stanberry Insurance works with multiple Crop Insurance Providers to offer all forms of crop insurance to our farming clients both large and small.
Crop-Hail policies are not part of the Federal Crop Insurance Program and are provided directly to farmers by private insurers. Many farmers purchase Crop-Hail coverage because hail has the unique ability to totally destroy a significant part of a planted field while leaving the rest undamaged. In areas of the country where hail is a frequent event, farmers often purchase a Crop-Hail policy to protect high-yielding crops. Unlike MPCI, a Crop-Hail policy can be purchased at any time during the growing season.
Multiple Peril Crop Insurance (MPCI)
MPCI policies must be purchased prior to planting and cover loss of crop yields from all types of natural causes including drought, excessive moisture, freeze and disease. Newer coverage options combine yield protection and price protection to guard farmers against potential loss in revenue, whether due to low yields or changes in market price.
Under the Federal Crop Insurance Program’s unique public-private partnership, there are currently 15 private companies authorized by the United States Department of Agriculture Risk Management Agency (USDA RMA) to write MPCI policies. The service delivery side of the program — writing and reinsuring the policies, marketing, adjusting and processing claims, training and record-keeping, etc. — is handled by each private company. The program is overseen and regulated by the Risk Management Agency (RMA). The RMA sets the rates that can be charged and determines which crops can be insured in different parts of the country. The private companies are obligated to sell insurance to every eligible farmer who requests it and retains a large portion of the risk on over 80 percent of the policies written.
The federal government also subsidizes the farmer-paid premiums to reduce the cost to farmers. In addition, it provides reimbursement to the private insurance companies to offset operating and administrative costs that would otherwise be paid by farmers as part of their premium. Through this federal support, crop insurance remains affordable to a majority of America’s farmers and ranchers.
By combining the regulatory authority and financial support of the federal government with the efficiencies of the private sector, the crop insurance program has succeeded in meeting and even surpassing the goals set forth by Congress for broad participation, diversity and inclusion. By using the private sector, risk is shared among the private companies as well as the government.
To take the next step in protecting your livelihood, contact us today.
Let’s discuss your farm insurance.
One of our insurance advisors will reach out to you to review your information and present you with the appropriate farm insurance solution. There’s no obligation, just good-old-fashioned advice.
Stanberry Insurance is an equal opportunity employer.