Across the northern half of the United States in 2012, tart cherry farmers had a difficult year. From New York to Wisconsin, you were more likely to purchase cherries imported from Poland or Turkey than local varieties. A dose of warm weather in March allowed everything to thaw and the blossoms to bloom. This was then followed by freezing temperatures in April which almost completely destroyed chances for a profitable autumn harvest. In Michigan, over 97 percent of the crop was destroyed by the odd weather patterns. Hopefully, farmers had the right farm insurance.
For Dale Seaquist, whose family produces over half of the tart cherries in Wisconsin, their yield for the year was less than ten percent of what they generally produce. He remarked, “It’s sort of a sickening feeling when … you’re watching the thermometer and the temperature is going down, down, down,” Seaquist said. “And you know if it goes down another degree or two, it’s going to take care of the profit for the rest of the year.”
Farming and ranching can be big business, but it also means a lot of risks. You may be used to working with big machinery, dealing with the eccentricities of your livestock, and maintaining your outbuildings. Yet, you also know that there are a lot of things that can go wrong- a combine may break down, your pigs could contract an illness, or bad weather could knock down your barn. Financial losses can be incurred from every one of these events, but having the proper insurance can help to protect you.
It may seem silly, but it’s important to determine whether or not your land qualifies as a farm. There are many hobby farms, smaller farm operations, and retirees. This only adds to the confusion of defining a farm. The insurance company will want to know what you produce, in what quantity, and for what profit. Some insurers maintain that if any sort of production and sale is occurring, even if you simply grow vegetables on your property and sell them at a roadside stand, you need farm insurance.
There are differences between qualifying for homeowners insurance or farm insurance. This is due to the fact that homeowners policies usually have limited incidental business coverage. For example, generating beyond a certain limit in gross annual revenue. As stated by the Insurance Journal, “If a building is being used in a manner that exceeds the special limits…, the building then is a commercial building. It may not be covered under a homeowners policy as an appurtenant structure, because its use exceeds the special limit set forth for incidental business. The same concept applies to all of the owners activities. The question to review is whether the scope of the exposure fits within the special limit of incidental business.
Other than a pool or a garage, are there other buildings on my property (like barns, stables, and equipment sheds)? Will those buildings be used in farming operations?
Will crops be grown or livestock raised?
Will I sell my products to the public?
Will equipment be used, and will it be leased?
What type of animals do I have on your land and who owns them?
Am I boarding horses for neighbors, friends, and/or clients?
Who is working on my property and what are their duties?
These questions are a helpful in identifying all operations related to your land and to start to determine if you qualify for farm insurance, or even require specialized coverage.
Farm policies are unique- the coverage is based on homeowners insurance, commercial business insurance, and specialty insurance. Another term for this type of insurance is a Commercial Package Policy (CPP). It exists to protect your commercial and business interests. The basic coverage includes:
Property: In the event of a weather catastrophe or fire, this coverage will protect your home, additional buildings, personal property, and machinery. Have an independent insurance agent visit your property to assess all activities and buildings. This will help them to create a list of all structures and contents to be covered under the policy. It is important to note that if an item, like a lawnmower, is covered automatically under homeowners insurance, it won’t necessarily be insured by the farmers insurance unless its specifically listed in the schedule.
Liability: If you or one of your employees accidentally damages another person’s property or causes bodily harm, then this coverage would cover such a loss. It would help cover any legal costs in the event that the injured party presses charges.
Medical: If someone were to injure themselves on your property, this would help to cover their medical expenses.
Living Expenses: If your home is damaged during an event (which is covered by your insurance), then this aspect of your policy would help to pay for the costs of your temporary housing or hotel stay.
Essentially, farm and ranch insurance is homeowners insurance with the additional protection for the business activities conducted on the property. In just one policy, both your home and business are covered.
Of course, there are alternative routes to coverage. You could also purchase a Business Owners Policy (BOP), which is designed for smaller businesses with lower operations and lower risks.* A broader policy, like Farm Combination Coverage includes liability and property coverage for all farm structures associated with the business.
You don’t want to find yourself in a scenario like this:
“A thoroughbred breeder asked a neighbor to care for horses during his vacation. The neighbor agreed. One of the horse worked open a fence door and all of the horses left the fields and were gathered on a nearby road. A truck killed several of the horses. The horse’s owner was reimbursed by his insurer for over $100,000. The insurer pursued the neighbor. The neighbor turned the claim into his insurer only to find that a $90 per year endorsement for boarding animals was not purchased and there was no coverage.”
Though some endorsements may add to the cost of your policy, it may be worthwhile to consider applying one or more of the following:
Replacement Cost Coverage: The insurance company will pay for your loss at replacement cost instead of actual cash value. This means that depreciation of your original item is not taken into consideration.
Exclusion Coverage: This expands your basic coverage to include those animals or property types that were originally excluded from the policy.
Appurtenances Coverage: Do you have a swimming pool, outhouse, or fencing around your property? Generally, these items are excluded from the basic farm and ranch insurance. However, adding this endorsement will expand your coverage, making your policy a bit more like homeowners insurance.
Operation of Building Laws Coverage: When you experience damage to an outbuilding due to fire, hail, or any number of incidences, your local government will require you to rebuild the building to code. This endorsement will help to pay these additional costs.
Boarded Animals Coverage: As was pointed out in the scenario above, a simple endorsement for boarding animals would have prevented such a catastrophic loss of both life and expenses. Such a policy can be added as a property and liability endorsement.
Water/Sewer Damage Coverage: If you experience a sewer or water backup in your home or outbuildings, this endorsement will help to cover the repairs.
Other Insurance Options to Consider
Commercial Agribusiness Insurance
Nearly one quarter of the labor force in the United States works in the agribusiness industry. Agribusinesses range from family owned food manufacturing companies to large corporations. It includes owners working in management positions, performing agricultural analysis, or providing traditional farming services. Coverage options vary widely from property coverage and general commercial liability to commercial umbrella packages.
Crop-Hail and Multi-Peril Insurance
Farmers can experience a wide variety of unexpected catastrophes, like animal or insect infestation, or damaging weather conditions like a late-season freeze, drought, hail, or flood. In order to maximize profitability for their business and recover after a disappointing annual yield, they need quality crop insurance coverage. There are numerous options for crop-hail, and multi-peril insurance coverage and policies available on the marketplace today.
Dairy Farm Insurance
As a dairy farmer, you understand the unique risks associated with milk production. There are many pitfalls to avoid when working with cattle, like misapplication of chemicals, transportation, leakage from storage tanks, and disease. With dairy farm insurance, you can be assured that your assets are protected.
Farm Family Insurance
Farmers across America have realized the value of farm family insurance when they come across any type of mishap. This type of insurance is specific to each farm and covers exactly what you need as an independent farmer, whether you grow crops or have livestock, farm family insurance is the protection you need.
Farm Animal & Livestock Insurance
Farmers today generally specialize in a certain crop or animal. This increases the risk for losses because one incident of disease could destroy an entire herd. To protect themselves from financial ruin, farmers can choose a variety of coverage options, like commercial general liability (CGL) policy, along with liability coverage, specifically, and building insurance for any buildings on their farm property.
Farm Equipment Insurance
Depending on the crops or animals that they raise, different farmers have a need for different kinds of equipment, whether it be combines, aerators, or trucks. With all the equipment used, farmers should have commercial insurance coverage for any machinery on their farm, along with commercial auto insurance for their vehicles. Protection for all equipment can be provided either by adding on to a current policy, or purchasing specialized insurance.
Federal Crop Insurance Act
Federal crop insurance was first introduced by Congress in the 1930s. In the 1990s, the Federal Crop Insurance Corporation became a manditory requirement for all farmers who wanted to be eligible for deficiency payments. The farmer is then protected against all losses due to weather or other factors during that crop year. This includes lost profits due to lower than expected yields.
Federal Crop Insurance Rates
Under the federal crop insurance programs, farmers are given a say in choosing their premium rates. First, producers can choose from one of three guaranteed yield levels while at the same time selecting a price election level based on the expected market price. In total, the product insured, yield guarantee, FCIC’s estimate of farm yield, and premium rate determine the overall per-acre premium.
Animal Mortality Insurance
As a farmer specializing in livestock and animals it is important to have animal mortality insurance to have support through the many mishaps of life. Animals are susceptible to many different kinds of dangers that could result in a huge loss of money for a farmer. Animal mortality insurance provides the support necessary to survive financially.
Speak with Your Insurance Agent Today
As for farmer, Dale Seaquist, his difficulties with his cranberry crop is ongoing. “’We have signed a temporary truce with cranberries for one year only,’ he said, somewhat in jest. But, he added, ‘Our century-old battle with cranberries will never be over. In 2013, we will be back knocking them silly in the marketplace.’”
Speak with your local independent insurance agent today to see if farm and ranch insurance is right for you.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.