What Is Farm Insurance?
Farm insurance refers to various policies that help protect farms. Farmers need property and liability coverage for their residence and business. They may also need commercial crop and livestock insurance, equipment and commercial auto insurance, and pollution liability insurance.
While farm insurance is sometimes sold as a single policy, it is often composed of several types of coverage. These coverages can be bundled to meet the needs of an individual farm or agricultural operation.
Because farms differ in their size and scope, it’s best to work with an insurance broker. A broker specializing in farm insurance will understand the risks you face and be familiar with the crop and livestock insurance programs available in your area.
Farm policies can combine multiple coverages
If you own a small farm, a farm policy may satisfy many of your insurance needs. These policies can cover your operation and your residence. They may help pay for covered losses involving your buildings and other insured property and provide liability coverage for certain claims involving bodily injury and property damage.
Farm property policies may cover claims due to fires, lightning, vandalism, theft, hail, wind, burst pipes and other losses (or “perils”). Covered perils are either named in the policy or, under broader all-risks coverage, may be covered unless specifically excluded. The coverage may include your house, barns, silos, sheds and greenhouses, depending on the policy. Some perils, such as flood and earthquake, may be excluded or subject to specific limitations. Separate coverage or endorsements may be available for certain risks.
As with any type of property insurance, you’ll need to determine how much coverage you need for your home, buildings, equipment and other insured property. This may involve an appraisal or other valuation method, depending on the property and policy. We can help you decide what to insure and how much coverage to get.
It’s important to set appropriate limits for your policy. The limits are the maximum amount a policy will pay for a covered loss, subject to the policy terms and deductible. If the limits are set too low, you may find yourself underinsured if there is a significant loss, such as a fire.
You may have multiple structures and pieces of equipment to insure. You can protect these using blanket coverage, which has a single limit that may apply to multiple items. Or you can insure your property on a scheduled basis, which lets you choose specific items to insure and the amount of coverage to get.
Property insurance considerations
You must also consider whether to insure your property at its replacement cost or actual cash value. Some residences and other property can be covered for replacement cost. This means eligible property may be repaired or replaced using materials of similar kind and quality, subject to the terms and conditions of the policy. Actual cash value generally takes depreciation into account, which may result in a lower claim payment depending on the age and condition of the property.
Different types of property may have different valuation methods. The appropriate coverage depends on the property, how it is used and the terms of your policy. Your insurance broker can explain the available options and help you determine appropriate coverage.
Pay attention to what your farm policy excludes, so you can decide if you need additional insurance. For example, will your policy cover irrigation systems, fences, driveways, outdoor lighting, specialized equipment and greenhouses? Coverage for these items can vary by policy. Talk to us to make sure all of your risks are considered.
Liability coverage
In addition to property insurance, farm policies can include general liability coverage. General liability coverage can help cover defence costs and certain damages arising from covered claims involving bodily injury, property damage or other covered liabilities, subject to the limits, exclusions and terms of your policy.
General liability insurance may also respond if a nonemployee suffers a physical injury or property loss arising from your business operations. For example, if a visitor is injured because of an incident involving an animal on your farm, a covered liability claim may be eligible for defence costs and damages, subject to the policy terms.
Employee injuries may be handled through workers’ compensation or other workplace insurance arrangements, while coverage for family members can depend on the circumstances and policy wording.
Certain kinds of liability risk may not be covered by a standard farm policy, although you may be able to purchase separate coverage or endorsements. These may include liability associated with farmers markets and agritourism, product liability for food you sell, and pollution liability from chemicals, pesticides and manure. Coverage varies by insurer and policy, so talk to your insurance professional about these exposures.
Other coverage you may need:
Commercial crop insurance
You may also need commercial crop insurance or other agricultural production insurance. Some crops and agricultural products can be covered under government-backed insurance programs, while private insurance may be available for other risks.
Eligibility and coverage vary by jurisdiction, crop and agricultural operation. Some crops or types of agricultural production may not be eligible for a particular government-backed program, while others may have specific requirements, coverage levels or deadlines.
Inland marine insurance
Consider inland marine insurance or other transit coverage to cover agricultural products, equipment or other property while they are being transported, depending on your needs and the policy.
Mechanical breakdown insurance
Equipment breakdown insurance can help cover certain losses resulting from the mechanical or electrical breakdown of covered equipment.
Business interruption insurance
Business interruption insurance can help replace lost income and cover certain additional expenses when a covered loss temporarily interrupts your operations.
Commercial auto insurance
You may also need appropriate commercial or farm auto coverage for vehicles used in your farming operation, including trucks used to haul products for sale or distribution. The type of coverage you need depends on how the vehicle is owned and used and the requirements in your jurisdiction.
Remember, farm insurance is a broad term. It might include many essential coverages, but not all of them. You may need to build it out with additional policies or endorsements, depending on your operations. We can help you get the full protection you need.
Have questions?
If you would like to learn more or need a farm insurance quote, contact Moore Hemsworth Insurance Group today at mhins@mhins.ca or 519-271-7747. We’re here to help you understand your options and ensure you have the protection that’s right for you.