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What Insurance Do Farmers Need?

June 16, 2020
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Farming and agriculture is the most important industry not just in the United States but in the whole world. Farmers bring food to household tables, restaurants, hospitals, and even other farms. Running one poses a lot of risks and hazards like any other business out there, so you have to be prepared for any untoward incidents that may arise. A study last year stated that 2 million farms are in operation and only 85% are insured; the remaining 15% are the ones that are more vulnerable for losses caused by many factors. These farms are usually managed by either young generation farmers or the ones that keep it old school.

Protecting your business is a farmer main responsibility; however, you also have to consider the fact that there are other things that may also be in need of protection as your family, your customers and other farmers that live nearby.

This article will help you understand the importance of having insurance; that will not just protect your business but will also cover the costs of any damages caused by any accidents in or out of your property. Since there are different types of coverages; let us uncover them one by one to choose the appropriate set up where you can most benefit from.

Identifying The Types of Insurances:

Personal Insurance – It works almost the same as standard insurance that every corporation or business provides to its employees. It pretty much covers a lot of aspects to support their employees in times of need. Some also cover early and full retirement packages. Since farmers normally run their own businesses here are some examples of insurances that you might want to include.

  • Life Insurance – Working in the farm every day can be dangerous; especially if heavy equipment such as tractors, plows, harrows, and baler is a part of your daily workload. So as the owner of the farm, you have to make sure that your family can still sustain to run your farm in the event that you died in a totally untimely manner.
  • Disability Insurance – Helps you avoid financial difficulties if you experience any accidents that cause you to completely lose your ability to do your daily job. This type of insurance will provide enough income while you won’t be able to work.
  • Health Insurance – We know for a fact that it is extremely difficult to find affordable health insurance, especially if you are below 65 years old and a seasonal employee. Normally, a farmer needs to get health care coverage from an employer or purchase private or personal insurance.
  • Dental Insurance – Although you might think that dental issues don't have anything to do with your farm, well you got it all wrong. A simple toothache sometimes is a sign of coronary health deficiency. Yes, you heard it right, dental and coronary health can sometimes be correlated. Frequent dental check-ups preserve your teeth and keep you healthy.

  1. Liability Insurance – When one of your employees got injured and will not be able to work, it is still expected for you to pay for his medical expenses and the number of days he is off work. This protects you from losing your farm due to overspending on medical bills or legal defense  (Compensation on legal fees also included) caused by an accident. Being said, this type of coverage plays a vital role in keeping your business secured for any untoward incidents. The following items can be a part of your chosen policy:
  • Product or Produce Liability Insurance – Since a ranch or farm’s main source of income is their produce, this will protect you if any of the products that you sell cause harm or illness to a consumer. This is very important especially if you do a farm to market type of selling since you are the one who transports and handles the produce. In the presence of third-party logistics, different insurance coverage needs to be discussed.
  • Workers Compensation Insurance – Is mandated by law and different specifications vary depending on which state you operate. This insurance covers your employee’s medical expenses whenever they get injured on the job. It can save you a lot of money and protects you from getting lawsuits.
  • General Liability Insurance – This coverage is suitable for farmers who offer land tours or any in the house or on-site market activities. It covers medical expenses to any injured visitor, consumer, or client within your property.
  • Commercial Vehicle Liability Insurance – Provides protection from any liability risks. If one of your farm vehicles happened to cause injury to another person, regardless if it is you or another person is driving the vehicle. This also covers damage to public and private properties.

You may also include all of your farm vehicles under one insurance policy.

  • Non-Owned Vehicle Liability Insurance – When you hire someone to transport your products or any items to and from your property. Also, if you allow your employees to use any vehicle which you do not own to be used for business purposes out of your own profit. Then this insurance policy will protect you from any liabilities if any accident happens when carrying out the job.

  1. Business Property Insurance – Insures any building structure inside the property, including but not limited to: Your actual home, stables, fencing, barns, silos, coops and even a small irrigation waterway. You know for a fact how expensive these structures are and the time that has been allotted to have them built. Hence, you might want to consider having them insured in the event that they are destroyed by any kind of perils.

Yes, this will not protect the structures physically, but it will somehow cover the cost of any reconstructions or repairs that will surely drain your savings.

  1.  Asset Insurance – Every business has its own assets, may it be living or non-living. It is best to make sure that all of these are insured so in the event that something happens to them you still can get something to help you replace these valuable farm items. It will be devastating to lose any equipment that you use in your everyday operation. The said insurance doesn’t just cover equipment, it includes livestock and crops, which also has the blanket and individual coverage, so it is a farmer’s utmost interest to secure this type of insurance.

  • Equipment – plow, tractor, water irrigation pumps, and spreaders are just examples of items that can be covered by this type of insurance.
  • Livestock – domesticated animals, cows, cattle, and some exotic animals can be included in your policy. This is important so you will not have to worry about replacements in case of any accidents involving these animals that result in losses.
  • Crop Insurance – if your main product involves crops it is imperative to secure this type of insurance as it protects you from potential losses. If your product gets damaged by natural perils such as fire, lightning, drought and the likes. This will give you a peaceful state of mind knowing that if any of these events happen, you have support on funds in purchasing new crops.

For example, an incident happened last year when a farmer was mid-way through harvesting his produce. A family broke into his barn where he keeps his pile of wood chips for smoking steaks. The trespasser's intention was only to stay for the night and leave at dawn. However, on their way out, one of them threw a lit cigarette to the side of the barn. This started a fire that engulfed the whole structure. It damaged the tractor inside it and a few livestock. Two months before that incident happened; an insurance agent reached out to them to offer services. But since they did not even consider to at least hear out a proposal and turned the agent away. They ended up losing 36% of their assets and around 27% worth of profit. So don’t be afraid of asking questions about how insurances work or how much it costs because there is a reason why insurances are created.

Being aware of the things that help you run your farm or ranch is a good thing. But being able to understand the fact that a certain help will always be at your side if you have insurance, gives you an upper hand and peace of mind. With that being said, a farmer or ranch owner should be knowledgeable about the different types of insurances that you can get. In order for you to identify what you really need the most and where you can be more beneficial.  Getting insurance might give you the impression that it is an extra cost; however, you also need to consider that in the farming industry a lot of challenges may occur that would hinder you from generating profit from what you have already worked for. 

In order to maximize your insurance coverage, it is important to discuss it with an authorized insurance agent so the best possible solution can be provided. Give us a call if you have any questions or clarifications.