Running a farm is a unique business that combines aspects of both a home and a company. Because of this, farms carry risks and liabilities that many other businesses and personal properties do not. Having the right kind of insurance is key to protecting your investment and livelihood.
So if you plan to or already operate a farm, what kind of insurance do you need? Here are six options to decide on.
1. Homeowners Insurance
Start with the family home. If you live on the farm property, as many farmers do, you need to protect your house and personal belongings separately from the business. Be sure that you have sufficient homeowners insurance to cover both the structure and your family’s belongings inside.
2. Farm Insurance
Homeowners’ insurance is designed to be a noncommercial endeavor, so it generally doesn’t provide coverage for business activity. This is where farm insurance policies step in. Some policies will provide coverage for both the home and business assets, but you should check coverage limitations to be sure.
Farm insurance will generally cover your business liability as well, including accidents that occur on the business property, injuries from farm animals, and damage rendered by your workers.
3. Flood Insurance
Your crops may be insured from flooding, as well as other natural disasters, by crop insurance. But traditional flood insurance extends to your farm buildings, some of which may be your biggest assets.
Farm structures can be covered from floods through the National Flood Insurance Program and through additional coverage by private insurers. Check your farm insurance policy first to see if flood coverage can be inexpensively bundled with it.
4. Product Liability Insurance
If you produce anything that you sell to others, you may need additional liability insurance against any unwitting damage — or perceived damage — that may be caused to a customer. This could be vital if you produce finished food and goods at your farm, such as candles, oils, canned goods, or prepared foods. Some product liability coverage may be included in farm insurance, so check on your particular policy.
5. Workers’ Compensation Insurance
Do you have workers on your farm? Then you probably need workers’ compensation coverage. This may even be mandated by the state. Workers’ compensation covers any accidents or injuries incurred by your farm employees while on your property or while doing your business (such as running a farmers’ market).
If you have nontraditional workers — like customers who pick their own fruit or family members who work on the farm, on or off the payroll — discuss specific situations with your agent so that you know exactly who is covered and for what situations. This will help reduce everyone’s risk.
6. Umbrella Insurance
A business umbrella policy is designed to take over when you hit the ceiling on coverage from other business insurance. For instance, if you’re sued for $300,000 in medical costs by a customer injured while on your property and your farm insurance only covers $100,000 of medical damages, the umbrella policy would take over to cover higher amounts. It may also cover things like libel against your business.
Umbrella policies are more important for some farm businesses than others. For example, this type of insurance may be particularly helpful if you have people coming onto your property to buy or pick vegetables or if you have a large farm that could attract frivolous lawsuits. If you have a higher-than-average risk or large assets, this coverage can be well worth a few hundred extra dollars per year.
Not sure what insurance your farm needs to be properly covered? Start with a visit to the insurance experts at Metropolitan Insurance Service Consultants, Inc, today. For more than 30 years, we’ve been helping Illinois businesses large and small cover their investments and lower their risk. We can help you too.