Farm Insurance: 9 Essential Policies to Know

Running a farm includes managing risk at the lowest cost to stay competitive.

Whether you run a small hobby farm or an expansive operation, consider these farm insurance policies to protect your business.

Here's a quick summary of the nine essential farm insurance policies to know:

1. Farm Property Insurance

2. Commercial Farm Vehicle Insurance

3. Farm Liability Insurance

4. Product Liability Insurance

5. Farm Machinery Insurance

6. Workers’ Compensation

7. Crop Insurance

8. Livestock Insurance

9. Loss of Income Insurance

Farm Property Insurance

Farms often have many structures other than a residence and garage. You may also have outbuildings such as a stable, barn, shed, silo, or greenhouse to house animals, crops, and supplies.

Insuring all property against losses such as theft, vandalism, fire, lightning, smoke, explosion, and water damage from an unexpected event is very important.

A good farm property insurance policy should not only cover structures, but items necessary to your business. This could include coverage for feed sitting in the fields or stored in a barn or silo, or chemicals, fertilizers, and produce.

Itemizing items of value is a good first step to ensure you buy a good policy.

Your agent or broker reviews your list to determine appropriate coverage and they’ll also point out any potential issues and close insurance gaps.

Commercial Farm Vehicle Insurance

When you or an employee uses your vehicles for the business you’ll need commercial insurance. Your personal policies do not provide coverage.

Coverage options include what you’d typically find in a standard auto policy. If you or an employee causes an accident, liability coverage helps pay for medical expenses and repairs to another person’s property. It also covers court and defense costs in a lawsuit.

Comprehensive coverage protects against perils such as vandalism, theft, fire, and hail, while collision pays for damages to your farm vehicle if it’s involved in a collision or overturn. Uninsured/underinsured motorist coverage protects you, your employees, and your passengers from other drivers with no or insufficient insurance coverage.

Provide your agent or broker with a list of any trucks, tractors, trailers, or vans you use for work. They will also need to know whether you only use these vehicles on your farm or for trips outside your property too. This information allows them to tailor your policy for the best coverage and price.

Your agent or broker may bundle your commercial vehicle insurance with your property policy to save you money.

Farm Liability Insurance

Farming is dangerous since farmers often operate heavy equipment, deal with chemicals, and may handle unpredictable animals. Farm liability insurance protects you from any claims arising from injuries or damage to other people or property.

Unfortunately, many farmers assume a $500,000 or $1 million umbrella policy offers adequate protection, but this might necessarily be true. Risk protection should reflect your total farm assets to protect them from exorbitant losses.

Commercial liability insurance is a necessity if you run an agritourism operation. Talk to your agent or broker, because not all policies cover all agritourism risks.

Product Liability Insurance

Many farms sell their products on-site or in farmer’s markets or stores to earn extra income. Consumers enjoy freshly-made cheese, cider, jams, and other products, but sales to consumers come with inherent risks.

Even if you follow safe procedures, a person could file a claim for personal or property damage caused by the products you sold or supplied through your business. Product liability insurance pays legal and court costs arising from claims.

Farm Machinery Insurance

Many farms rely on their machinery to generate income. If you own a tractor, seeder, combine, sprayer, baler, or thresher you’ll probably want to protect your expensive investments.

Typically, basic coverage includes protection against perils such as fire, lightning, and explosions. However, you can also buy optional coverage for loss of use until you can repair or replace your machine.

You may also be able to buy additional coverage to replace tools at today’s prices if they’re lost, destroyed, or stolen.

Workers’ Compensation

Workers’ compensation requirements vary by state or province and the size, structure, and payroll of your business. Some states or provinces do not require workers’ compensation for migrant or seasonal workers, but many do.

Don’t assume anything. This NFIB website is a good starting point to check basic requirements and to contact your state’s appropriate authority.

This CCOHS (Canadian Center for Occupational Health and Safety) website is a good starting point to find your provincial contact and Workers' Compensation Board.

However, even if you think workers' compensation might not apply to your workers discuss it with your agent or broker. They have industry knowledge and stay on top of legislative changes.

Crop Insurance

Crop insurance is confusing and complex, but necessary if you’re a grower. You cannot control fire, flooding, drought, hail, blight, or crop prices, but you can reduce your risk of major losses.

A crop insurance policy should fit into your farm management plan so you do not duplicate coverage or create insurance gaps. Many private and government crop insurance policies exist, but they must work together for total protection.

By combining government and private coverage, your agent or broker can find products to protect you against losses through natural causes, and lost revenue due to low yields or market price changes, if you wish.

Livestock Insurance

Home insurance policies have low limits for incidental income. If you own animals that produce substantial income you’ll probably need livestock insurance.

Typically, livestock insurance policies cover risks such as losses caused by electrical outages, drowning, or an accidental shooting. If you own a very expensive animal such as a bull or stallion you use for breeding you can insure the animal separately.

Herd insurance is also available if you own many animals.

Loss of Income Insurance

Many farmers are the sole income provider for their family. If you’re unable to work due to an accident or illness, you’ll want compensation so your business can survive until you’re able to return.

Loss of income, or business interruption insurance, covers your lost income and day-to-day operating expenses. If you have workers on your payroll, you can also buy additional coverage for wages during the period defined in your policy.

Final Thoughts

Farm insurance varies based on the size, scope and location of your farm. You won’t get an accurate quote online due to the complexity of risks and coverage. Every farm requires tailored coverage.

Choose an agent or broker with experience in farm insurance and connections to reputable farm insurance companies to navigate farm insurance options.

They understand the insurance industry and they'll ensure you’re properly covered for the survival of your farming business and continued well-being.