Farm Insurance Basics: Coverage, Plan Options, and Exclusions

Farm and ranch insurance is similar to a standard homeowner’s insurance policy, except it adds commercial protections. It covers the home, its contents, personal liability, your machines, and livestock. For crop protection, you’ll need separate coverage. Here’s a look at how farmers and ranchers can benefit from this insurance.

What Does A Farm Insurance Policy Generally Cover?

Since every farm is unique with its land and means of production, each insurance policy needs to be carefully customized. Your coverage options will be based on the amount of land you own, your equipment, location, number of employees, and other factors. Farm insurance will cover your property, product liability, pollution, and vehicles. Here are examples of what a standard plan covers:

    1. Farm Machinery and Equipment

An insurance professional may visit your site to conduct a detailed assessment of your machinery and equipment to recommend the coverage you need. You can select specific coverage that fits your farm or ranch rather than a one-size-fits-all package. Farm and ranch insurance protects equipment such as tractors, pickers, and planters.

                2. Livestock

A broad coverage spectrum exists for livestock, such as reimbursement if an animal is killed or injured due to a peril stated in the policy. Different coverage options are available for different types of animal deaths, such as by shooting or getting struck by a vehicle. Certain perils such as earthquakes may require extensions to the standard plan.

Since farm or ranch animals are investments, it’s important to protect the value of your investments with animal mortality coverage. This insurance protects the value of animals if they become ill and die due to a disease. Horses, in particular, are valuable animals since they perform tasks for owners, so it’s important to have liability coverage that protects against theft and vandalism.

              3. Farm Products

Your farm insurance protects farm products such as feed and grain while they are stored. However, it doesn’t cover crops while they are grown, which can be covered by a commercial insurance policy. Field crops can be covered by multi-peril insurance. It’s essential to protect your crops if they are a significant source of your farm income.

            4. Farm Liability Coverage

Your standard farm insurance policy includes liability coverage for bodily injury if someone is hurt on your property. It covers the victim’s hospital bills and attorney fees if the case goes to court. Accidents can happen on any farm or ranch, such as when someone trips over a rock and falls.

What Isn’t Covered by Farm Insurance?

Farm insurance, like all types of insurance, has limits as to what it covers. Many policies list “exclusions” that aren’t covered. Here are key examples of what farm insurance doesn’t cover:

    1. Fencing Not Automatically Included in Farm Insurance

Fencing is usually not included in a standard farm insurance plan due to the various types of fencing available. Barbed wire fences are much cheaper compared to woven wire fences. Some farms have miles of fencing, while others have almost none. So insurance companies leave it up to policyholders to choose fencing coverage as an extension. While many farm owners avoid fencing coverage, it’s crucial to get coverage for high-end fences such as electric gates.

               2. Note on Covered Perils in Farm Insurance Policies

Be aware that your equipment is only protected from disasters stated in your policy. The equipment must be in good operating condition to be covered, as you will not be reimbursed for technical malfunctions. Farm insurance policies sometimes require that farm vehicles be driven on paved roads to qualify for coverage.

Your farm property is covered for perils such as storms and fire but usually requires extended coverage for severe floods. Consequently, many farms and ranches in regions with regular hurricanes and tornadoes pay much higher flood insurance than places where flooding is rare. Any type of peril that is high in a particular region usually requires extensions to the standard plan.

Should You Get Farm or Ranch Insurance?

There are various factors to consider on whether to get farm or ranch insurance. It starts with the size of your property and workforce. If you own income-earning livestock, grow crops, hire employees, or have multiple structures, you should get farm or ranch insurance. The level of investment and planning for the future are influential factors as well.

If your income from livestock exceeds “incidental income,” you should get farm or ranch insurance to protect your assets. Losing several cows to a disease can wipe out a significant amount of revenue unless you have the right insurance coverage in place.

Discussing your farm or ranch insurance needs with an insurance expert is the best way to ensure all your valuable assets are fully covered. If you hire employees, you’ll need Workers Compensation insurance, which is separate from a standard farm insurance policy.

You should consider custom farming insurance if your business model is to lease or rent farming equipment or provide services to farms. Custom farming is a special endorsement added to a standard plan.

Before signing a farm insurance policy, make sure you understand all the details. Be aware of exclusions to perils, such as not all types of fires are covered under a standard plan. Think about coverage limits based on specific risks that your farm faces.

Farm and ranch insurance encompasses a wide range of perils. To maximize your coverage, you should customize it for the specific needs of your farm or ranch. Contact us at Advanced Insurance Group to learn more about different types of insurance designed to protect farms and ranches.

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