Here are the top reasons for why farmers need farm insurance and the type of coverage options you should expect to see in your policy.
You're a farmer who raises cows. The cows comprise a major portion of your income. One day, one of your cows escapes from your farm and enters a highway.
The cow causes a two-car pile-up, and one driver must go to the hospital. You guided the cow back to the ranch, but a police officer begins to question you.
He tells you that you're liable because you own the cow. You're surprised to hear that you're liable. You wonder if your farm insurance policy would cover your liability. Will a farm insurance policy cover you in case of an injury?
The answer is yes. Farm liability coverage extends to injuries caused by your livestock or machinery. Additionally, farming insurance will cover machinery, equipment, and livestock.
It will also protect any domiciles that you list under your policy, in addition to trees and shrubbery. With that, a farm policy can exclude certain objects, such as fencing and certain forms of fire damage.
This article will provide an in-depth review of a farm insurance policy. Let's explore.
How Does a Farming Insurance Policy Work?
Overall, a farm insurance policy provides commercial and personal protection. It will also protect you during farm duties in case of an injury of the job. It will also protect individuals under your policy, such as farmworkers.
Typically, insurance companies break down the policy into three categories:
- Farm products
When it comes to products, your policy will cover such items as animal feed, fertilizer, or pesticides. Livestock will include any farm animal that you use as a major portion of your income. The livestock can include such animals as sheep, goats, steer, or horses.
Farming equipment also includes machinery such as tractors or hay rakers.
You can choose a broad policy that covers the three categories, or you can customize the insurance package. With a custom plan, you can add various items to the policy.
- Example: You want to include your barbed-wire fencing in the policy. Farm policies generally don't cover fences outright
What you choose to add to your package depends on your needs as a farmer.
If you have high-valued animals on your property, choose an individual policy that lists them explicitly. You can cover each animal up to a certain value. A blanket policy will cover livestock, structures, and equipment in a general capacity.
However, make sure that all listed items and animals retain the appropriate coverage. Regardless of your policy choice, you may encounter various policy exclusions.
What Are Some Farm Policy Exclusions?
The policy doesn't include crops of any kind, including grains.
You must note all equipment under your policy to obtain property coverage. Carriers may deny rundown machinery, including equipment that's poorly maintained. Contact an insurance agent to ensure that your specific equipment or machinery qualifies under the policy.
Additionally, you also need to confirm if any domicile on your farm receives approval, especially when it comes to fires. Insurance companies will protect your farm if a fire occurs, but you may face exceptions. For example, carriers may reject a claim if your property has no road access for emergency vehicles.
Your insurance carrier may require a paved or a graveled road to obtain sufficient fire coverage. Moreover, a road or path that's unclear from a distance could exclude structures from fire damage. Despite the exceptions, you can include most farming activities under a policy, which could save you money in the long-run.
Why Do I Need a Farm Insurance Policy?
A farmer policy can cover damages or injuries that may cost you heavily in the short-term. Farming entails a variety of hardships and stresses, and you don't know when things can go wrong.
- Example: A pack of coyotes may attack your cattle and injure several of them. Since livestock constitutes a substantial portion of a farmer's income, your policy would cover the damages
The policies will cover attacks caused by wildlife of any kind, including stray dogs. A farming policy will also cover the death or injury of livestock caused by a car or train. Farm insurance policy is especially important if you rely on your livestock as a major income source.
Insurance for farmers is also imperative if you live in an area that's prone to tornados or hurricanes. Natural disasters can destroy your structures and farming equipment, costing hundreds of thousands of dollars in upfront costs.
For machine equipment like tractors, they typically value at around $200K. Moreover, they become more expensive as new tractors become more high-tech. Therefore, it's in your best interest to cover your machinery in case a natural disaster occurs. Natural disaster coverage also extends to flood or earthquake damage.
Finally, you'll need a farm policy if you have farmhands who work with you. A policy can cover liability incidents and workers' comp claims. With that, farm policy and employee coverage can vary by state.
How Do I Know If I Need a Farm Insurance Policy?
There's a difference between hobby farming for a profit and fulltime farming.
A hobby farm may include some animals on your property, such as chickens, and a sizeable garden. A hobby farmer falls into the following categories:
- Has a property of fewer than 500 acres
- Has no employees
- Has maximum annual farm receipts amounting to $10,000
A hobby farmer will benefit from a standard home insurance policy instead of farming insurance. If you farm as a primary source of income, you should obtain farming insurance instead.
The Best Farm Insurance Policies
The best form of farm insurance allows you to customize your policy according to your needs. If you have high-valued animals like horses, including them in the policy ensures that you receive sufficient compensation up to their value.
The same guidelines apply to machinery that suffers major damage, sparing you the hassle of exorbitant repair and replacement costs. With so many variables that can go wrong on a farm, farm liability coverage protects you against financial ruin in case the worst happens.
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