Farm Insurance: The answers you need.
Why should I insure my farm?
Answer: If you have a mortgage on your property, your lender will likely
require that you carry insurance and the mortgage holder will be named as an additional insured on the policy. Your farm is probably the largest and most important investment
you have made in your lifetime. Insurance is to protect you in the event of a catastrophe or loss that you could not financially
afford. In the event of a loss, there could be damage to your
home, its contents, outbuildings, equipment, livestock, crops, etc.
Few of us have sufficient personal resources to cover these types
of loss. Insurance provides a means by which we can transfer this
risk of loss to an insurance company that does have the financial
resources to cover the costs. In addition, insurance policies can provide you with protection if someone is injured or hurt while on your property or if someone
has their property damaged due to something you did or failed
to do. The same applies if a person is injured or their property is
damaged by something you own or by someone that works for
You may also be able to purchase insurance that will provide
you with protection if someone becomes ill or hurt after eating or
using a product they receive or purchase from you (such as fruits,
vegetables, pies or jams). Insurance policies may also protect you
by providing you with an attorney to represent you at no charge if you are sued by someone making a claim that might be covered by your policy.
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What type(s) of insurance should I purchase?
Answer: The type of insurance you should purchase will depend on a
number of different factors; such as the type of farm you have,
the type of business you operate (growing crops, livestock, agri-tourism),
whether you have employees working on the farm, any
outbuilding you may have, the types of equipment you have, etc.
In order to determine what is the appropriate insurance coverage,
you should meet with a Beauchamp & McSpadden Agribusiness and Farm Insurance agent or broker and discuss in
depth with them the specifics of your farm operation so that we
can find the right coverage for you. It is important to remember
that a farm policy differs from a homeowners policy and you
should make certain that you have a clear understanding of what
is covered and what is excluded under your policy.
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What types of insurance coverages should I purchase?
Answer: Farm policies have many different types of coverages available. In
order to be sure that you have the appropriate type and amount
of coverage, it is essential that you talk with a trusted insurance
advisor. Our Beauchamp & McSpadden agents are licensed and experienced...in the business of farms and agriculture.
The following are some of the standard coverages available under
a farm policy:
• Property damage coverage protects your farmhouse and
outbuildings or household belongings if they are damaged or
destroyed by certain causes of loss. Some examples are fire,
lightening, hail or tornado.
• Liability coverage will pay if you unintentionally cause another
person to be injured or another person’s property to be
damaged or destroyed.
• Medical payments coverage will pay up to a specified amount
for medical expenses incurred by persons injured in an accident
on your property and, in certain situations, away from your
farm regardless of whether you were at fault for that person’s
injury. This coverage does not apply to you or a member of
• Additional living expenses coverage will pay for the additional
expenses you incur when you can not live in your dwelling
because of damage or loss that is covered by your policy. For
example, if you are required to move into a motel or apartment
while your home is being repaired, your insurance company will
pay the cost of this temporary housing.
In addition to these basic coverages, many companies offer a
variety of additional coverages for an additional cost. These
are generally referred to as endorsements to your policy.
Endorsements may be purchased to increase or expand some of
the basic coverages (i.e. changing from actual cash value coverage
to replacement cost coverage); to provide coverage for specific
types of losses (i.e. water that backs up from sewer and drains);
or to cover items that are excluded by your policy (i.e. particular
animals, outbuildings, farm equipment, etc).
Many of the items
that are typically covered under a homeowners policy (i.e. fences,
outbuildings, swimming pools, etc.) will not be covered under
your farm policy, unless you specifically purchase an endorsement
that covers these items. Please note that the types of coverage
you elect to purchase will determine the price of your policy.
Further, if you have employees working on your farm, you
may need to purchase workers’ compensation coverage. To
be sure you get proper coverage, you should have a list of all
your employees, their titles and a description of the work they
perform, as well as the number of hours they work and the
wages they earn, with a summary reflecting the total number of
employees and the total payroll in order to obtain a quote for
this type of coverage.
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If I have decided to allow the public on my farm for entertainment purposes, such as hayrides and petting zoos, do I need to purchase additional insurance for these activities?
Answer: More and more farmers are turning to agri-tourism in order to
generate additional revenue from their farms. If you do elect
to expand your business to include these types of operations,
you need to make certain that you have the appropriate type of
insurance and the appropriate amount of liability coverage to
protect you in the event someone becomes sick or is injured on
If you are operating a business at your farm (i.e. the petting zoo,
pick-your-owns, corn mazes, haunted barns, pumpkin patches,
farm stands or the hayrides), you may well need a business
policy as opposed to a farmowners policy. If you were to offer a
particular product for sale to your customers (i.e. jams, pies, fruits
or vegetables), you should also consider purchasing a policy that
will provide you with product liability coverage.
In preparation for an evaluation of your business by one of our agents agent, you may want to consider
assessing your farm’s safety and security issues.
• What are the
What can you do to address those hazards?
the hazard physical (such as uneven paths where someone might
trip, where a simple repair may eliminate the risk)?
Is the hazard
contact with animals with the potential risk of animal bites, or
contact with manure with the potential risk of bacterial infection
and illness? Both of these hazards require you to educate your
customers so that they are aware of their personal responsibilities
for their own safety.
Discuss with your agent establishing a
safety plan for your operations. Also remember, it is important
to conduct periodic self-assessments and
discuss any changes in your operations.
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What is crop insurance?
Answer: The Risk Management Agency offers a federally subsidized crop
insurance program through private insurance companies. Crop
insurance covers disasters such as drought, hail, frost, hurricanes,
excessive moisture, fire, insects and plant disease, and wildlife
damage. For more specific information on a particular crop, contact your local crop insurance agent or visit www.rma.usda.gov.
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How much will my insurance cost?
Answer: The cost of insurance will depend on a number of factors. The
primary factor driving the cost will be the type of coverage you
are purchasing. The price will also reflect any prior claims history
and the amount of your deductible (the higher the deductible, the
lower the premium). Developing a farm safety and security plan
for your farm and performance of periodic self-assessments may
reduce your insurance premium.
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What should I do if I have a claim?
Answer: If you are the victim of a theft, fire, or other type of accident
or loss, you should notify the authorities immediately and then
contact your insurance agent or company as soon as possible. The
sooner you file your claim the sooner you can expect to receive
payment. You must telephone your insurance company or agent
first, but if you do not get an immediate response, write a letter
and send it in a manner to enable you to prove that it was sent
(i.e. certified mail or overnight mail). Your policy requires that
notice of a claim be in writing. In most cases, you will be given
complete instructions on how to proceed at the time you initially
call in the loss.
It is most important that you understand that your insurance
policy sets out specific time limits for getting certain things done.
If you do not fill out your claim forms promptly or if you fail to
protect your property from further damage or otherwise fail to
cooperate with your insurance company, your claim may not be
settled to your satisfaction and your coverage may be jeopardized.
Therefore, it is important to respond promptly to all your
company’s requests. If you have questions or concerns about the
way your claim is being handled, you should contact your agent or
Most policies tell you what you are required to do following a loss.
Generally, an insured is required to do the following:
• Give immediate written notice of a possible claim to your agent
or company. If the loss is a theft, you should notify the police.
• Protect your property from further loss or damage. If you make
temporary repairs, keep a record of what you do and save all
receipts for expenses you incur in undertaking the repairs. This
could include things like buying plywood and nails to board up
• Give your agent, adjuster and/or company a list of all damaged,
destroyed or stolen property. Be sure to keep a copy of this list.
In the case of theft, be sure to give a copy to the police.
• Show the damaged property to your agent, adjuster and/or
company if asked. Do not dispose of any damaged property
until your agent, adjuster and/or company say you can do so.
• If you feel that the amount of money offered by your insurance
company to pay for the loss is not fair, there are several
alternative courses of action that you may consider:
- you can demand an appraisal as per the terms of your
- you can file a complaint with your state's department of Insurance; and/or
- you can hire a lawyer to represent your interests.
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A company has said they do not want to insure me. What
do I do for insurance?
Answer: If you have been turned down by one company for your farm
insurance, try obtaining coverage through another company or other
companies. Do not assume that because one company turned you
down, all companies will turn you down. Just as companies have
different rates they charge, they also have different underwriting
requirements. So call around and keep trying to obtain an insurance
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Can my insurance company cancel or nonrenew my policy
if I gave inaccurate information on my application?
Answer: Yes. An insurance company may lawfully cancel or nonrenew your
policy if you misrepresent material information about yourself
or the risk they are insuring, such as your address, claims history,
driving record, accident history or farm operations.
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Can my insurance company cancel my policy for late payment?
Answer: Yes. Your insurance company may cancel your policy for
nonpayment of the premium, even if the payment is just one
day late. The company must provide you with a notice 10 days
in advance that your policy will be cancelled. Some insurance
companies have guidelines for accepting late payment and may
reinstate you when the payment has been made: however, this is
not a legal requirement. The best practice is to pay your premiums
by the due date in order to avoid being cancelled.
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