How does Farm Insurance Work?

Apr 28, 2021 | Business Insurance

If you have a family, house, car, children, pets, or properties, you are prepared to do whatever it takes to protect it. If you willingly shell out money and time to readily protect non-livelihood aspects of your life, then farms and ranches should be no different! Having a farm is simply not just owning a piece of land or livestock to gain income from.

A farm is not a business that depends on internal factors alone, such as its management, workers, equipment, or vehicles used to operate on acres of land. A farm and its production depend on several other factors like the surroundings, season, and even the current status of the economy. In reality, these are unpredictable matters that cannot be controlled by you as the farm owner. 

Unfortunate events lead to problems in production, and problems in production lead to business losses. Who would want to lose money because of uncontrollable circumstances? The best way to get back into the business without giving up much of your resources is to prepare farm insurance against any unfortunate things that could happen. 

What is farm insurance?

Just like any insurance, farm insurance or ranch insurance offers protection for your properties. It protects the properties within your farm or ranch and its operations. It covers the most important things on your farm which would provide personal, financial, and economic benefits for you as a farm owner. Standard farm insurance protects your farm equipment, farm buildings, livestock, and produce under a single insurance policy. Insurances cover almost all farm sizes insurance nowadays, although the packages from different insurance companies are not uniform.

What does farm insurance cover?

Agencies offer different packages of farm insurance, but what does standard farm insurance include? The following are some common coverages of farm insurance:

  1. Farm contents and structures (e.g., machinery, equipment, buildings, vehicles)
  2. Livestock and poultry
  3. Products
  4. Liability

Farm Contents and Structures

Farm insurances cover the most important contents and structures of your farm. This would include all kinds of machines and equipment directly used in the business, even from preparing livestock up to distribute the products. The covered machinery and equipment are the tractors, pickers, plows, wagons, mowers, rakers, and many others. Since this is just about anything found on your farm, it also includes your mobile homes and household personal property.

The coverage for vehicles does not include your personal vehicles. The insurance does not cover vehicles you use on the public road as auto insurance takes responsibility for this.

Livestock and Poultry 

Your farm livestock and poultry include your animals such as cattle, chicken, turkeys, swine, oxen, pigs, donkeys, goats, horses, and other domesticated farm animals. These are the animals that your farm relies on for production. The list of qualified animals for the insurance may still depend on the insurance company.  

Products

This insurance type may cover the farm produce that you have on your farm. These are feed, seeds, or grains that you have already harvested and stored on your farm, waiting to be replanted or to be sold. All unharvested products are excluded. 

Liability 

In case of an accident or unexpected injury to a person, this is the coverage that would save you. Insurance companies recognize the dangers within the business, so this kind of insurance exists. The liability insurance protects you as the owner of the farm or the agricultural establishment. This applies to the unexpected events within the premises of your farm. Once you have signed up for insurance, your insurance company will pay some legal or medical expenses for the damages that occurred within your farm. An example of this is when farmworkers under your operation get into a major accident in your farm feed miller and you have to pay for their medical expenses.

How does farm insurance work in general?

Insurance for your valuable farms or ranches works just like any other insurance. In simple ways, this is how a farm insurance policy would work: 

  1. Research about the Insurer

Seek agencies that provide farm insurance for the components of your farm that you want to get protected. Each insurance company offers different sets of packages, so you have to be aware of what you are looking for. Get to know companies that offer farm insurance that would be suitable for you. 

When searching for an agency, have a brief list in mind of the components of your farm that you want to get protected. However, if you do not know where to start, you can contact an independent insurance agency like Advantage Insurance Solutions that can help you find out the best insurance policy to fit your needs. Insurance companies can offer lists and lists of surprising coverages that might make you realize that there are components of your farm that could easily recover if you would only insure it. 

  1. Getting to know the insurance company

Get to know the insurance on offer. After seeking information about the different farm insurance coverages, it is possible to get a brief list of terms and quotations to help you on how to decide on the best farm insurance that you should get.

  1. Letting the insurance company get to know you

Undergo underwriting or profiling with the company and tell them what you need and want with your farm. Be open to their suggestions as well, in case you might miss out on anything. If you are sure that you have expressed all your needs to the agency, be willing to undergo some underwriting.

Underwriting is a process done by the company to make sure that you can pay for the service that they offer. After you have researched their company, this is the chance for the company to get to know you and to check your qualification for the insurance. It is important for them that you are ‘fit for their services as much as it is important for you to have a company that will take care of business. 

While the insurance company gathers information from you, they would also analyze how much you should pay them and how much they should pay you once you file for a claim. In consideration of your farm needs and your ability to pay, they also have the responsibility to complete the set of circumstances in which they can make a payment to you. In other words, these are the events that the insurance can cover.   

There are many things that an insurance company will ask you. According to The Pennsylvania State University, these are some of the topics that they might ask you:

  • farm background
  • number of years that your farm has been operating
  • number of workers
  • number of livestock
  • the focus of your farm (whether you focus on producing dairy products, vegetables,  raising animals, etc.)
  • farm size
  • information of your ownership of other farms aside from the one you are intending to insure (if any)
  • how much involvement the farm owner has in the farming operations
  • list of all farm buildings, equipment, and machinery
  • specific physical information of the farm buildings, equipment, and machinery
  • records of major gains and losses of the farm
  • inventory of farm harvests or produce
  • distance from the nearest fire department
  • list of leased farm areas
  • areas of the farm used for free hunting (if any)
  • areas of the farm not fully owned by the farmer
  • bodies of water in the farm such as ponds, swimming pools, swamps, etc.
  1. Reaching an agreement with the insurance company 

After all, information has been exchanged with you and the company, they will now make a policy for you. The policy is a complete document containing all the details of your contract with the company. The policy includes all the details about your farm, the amount of money that you will pay them (called a premium), the events that are covered by the insurance, the claiming rules, and the amount of money that the insurance will pay you after you file for a claim. Basically, the policy is the complete answer to the question “what do I get in return for ensuring my farm and how can I claim my farm insurance?” You and the company should agree about the whole content of the policy. The agency will be in charge of revising and finalizing the policy. 

  1. The insurance premium

Pay the premiums to get the insurance going. A premium is what you pay the company in exchange for their offers. Based on what you have arranged, it can be every month, every six months, every year, and so on. The total amount of premium had been agreed by you and the company and you can only “activate” your insurance by paying it. The amount and duration of your payment shall be sufficient so that the company can also pay you back in the future. 

  1. Claiming farm insurance

With arising insurance-covered events, contact your agency to report a situation. Given that you have been paying your premiums regularly, and you have paid them for an appropriate length of time that finally qualifies you for insurance claims, you must contact your agency or insurance agent to report the situation. The agency will advise you on how to proceed with the situation.

In most situations, a farm insurance agent will ask the following:

  • claimant’s policy number 
  • specific location, date, and time that the situation occurred in case of loss or accident
  • contact numbers or references of anyone involved
  • a detailed description of the event
  • details about the farm vehicle (i.e., vehicle model, vehicle identification number, year, etc.) for any vehicle-related claims

Make sure that the events that you will report to your insurance agency are covered by your insurance policy. The agency cannot grant a claim if the event was not stated in the insurance policy. Review your insurance policy first before contacting your agent so that you would be able to tell them the details. This will also help you anticipate the amount that they would likely pay you, based on the agreed-upon policy.

  1. Farm Insurance Claim Investigation

After you report your claim to the company, they will then review the documents. This would include further questioning or physical inspections at your farm. They will base on the details that you have provided as well as what they stated in your insurance policy. Cooperate with them and wait until the assessment of your claim is finished.

  1. Payment from the Insurance Company

Once all investigations are done, and the insurance company has granted your claim. Payment is then arranged for the covered risks or the events covered by your insurance that qualify you to receive payment. 

What kind of events are commonly covered under farm insurance?

There are many common circumstances covered by standard farm insurance. These are the events in which farm insurance could help you with: 

  • fires, earthquakes, hurricanes, landslides, hailstorms, tornadoes that affected the farm, especially the equipment and buildings
  • damages not brought by the season or calamities such as insect infestations or damages caused by wildlife 
  • animals that died because of different causes (i.e., fire, electrocution, natural causes) or animals that were stolen
  • getting your identity is stolen, which caused you additional, unwanted expenses
  • machine or equipment replacement for those being used for a certain length of years
  • reimbursement or financial help from the company in case you opted to rent some while your machinery or equipment is being repaired
  • lost GPS or other mapping equipment
  • major farm damages because of some farm operations
  • recharging of primary farm fire extinguisher
  • attorney fees, legal fees, and other medical assistance if a physically harmed individual within your farm made you responsible to pay

Getting Farm Insurance

With lots of insurance agencies offering farm insurance, finding the right one can be similar to the proverbial needle in a haystack. The list could just get too long and you can end up with too many choices. However, a farm is a wide and complex business, so it is still best to find the insurance company that offers the worthiest packages that would attend to your needs and give back everything you negotiated for. 

Almost all insurance companies have the same strategies in finding clients and in persuading them, but they differ in structuring their farm insurance policies. Since every farm business is different, the needs and situations in every farm are different too. However, one thing is certain, every farm owner wants the most dependable way to protect the business that they worked hard for.  

If you need experts to give you advice on how to carefully choose the best farm insurance or ranch insurance in Denver, CO (or any other state for that matter, you can rely on Advantage Insurance Solutions (AIS). AIS has partnered with 45 big and small insurance companies. They can assist you in the decision-making process of choosing the insurance company that would be worth your money and time. Whether you have already decided or you are not yet sure about the aspects of your business that need protection, AIS can help you look for the most appropriate insurance that would best fit your farm and protect it against any uncertainties.