In today’s market choosing a farm insurance carrier can be one of the most overwhelming yet critical business decisions farm families will make. Unlike making choices between John Deere or Case IH and Pioneer or DeKalb – subjects in which the average producer has some authority – insurance is an area many farmers know little about.
What makes this even worse is that insurance is often considered a minor part of running a successful operation. As a result, many farmers give insurance needs minimal thought and resort to hoping that claims will be covered.
As agriculture continues to change, so do the insurance needs of its farms and farm families. Agri-tourism and agri-tainment have brought the producer and consumer closer than ever before. Things such as roadside stands, u-pick farms, corn mazes and equine activities bring consumers onto farms and drastically change the farm landscape from an insurance liability prospective.
Farm policies are unique in the insurance industry. They package all the personal coverage that a typical homeowner would need with the commercial coverage that a business owner requires. The standard farm policy offers coverage for liability and property, including dwellings, farm buildings, machinery and livestock.
Liability is not an optional coverage for farm owners today. If someone is hurt on your farm or injured as a result of your actions, you may be held liable. Likewise, you may also be held liable if someone becomes ill as a result of a product you produce. The liability portion of your policy covers expenses that you are legally liable to pay, due to bodily injury or property damage. Farm liability coverage also includes attorneys’ fees, which can be among the most important aspects of this protection. These liabilities make it critical to find a farm insurance professional that knows and understands their business.
Property coverage protects your farm from physical loss. It’s important to know which perils, or causes of loss, your property is protected against. Most policies allow you to choose between three categories of perils – basic, broad and special. These categories range in the number of perils covered by each, with the basic category covering the fewest number of perils, the special category including coverage for the greatest number of perils and the broad category falling in between the two. It’s important to note that the perils categories build on each other. For example, if you choose to insure your property for the broad category, you would also be protected against perils in the basic category. On typical farms, livestock are insured in the basic category; farm buildings and structures in the broad category and dwellings are covered in the special category.
What can you do to overcome these challenges? Find an insurance agent who is trained to work closely with producers to identify farm risks and help prevent losses before they occur. In addition, you should look for a financially strong farm insurance company who can serve you well over the long term. Having a serious conversation with your agent about liabilities, property coverage and the company’s commitment to agriculture can significantly reduce confusion when you have an insurance claim and, ultimately, benefit the financial longevity of your business. PD
—Excerpts from Ohio Ag Manager, February 2010
Justin Holbrook is an associate agent withPaul Hall & Associates. Email Justin Holbrook.
