Why Do I Need Farm Insurance?

With over 2 million farms in the United States, farming is one of the largest industries in the country. Farms can vary in the type of farm, and the size of farm. According to the USDA, 97 percent of all farms in the US are family owned and over one third of all farms are small enough to be considered “hobby farms”. In theses cases, farm insurance is an often overlooked, but vitally important aspect to running a successful farm. Operating a farm, even a hobby farm, without insurance sets you up for potentially catastrophic damages to not only your farm property, but your entire financial portfolio.

Reasons for having farm insurance.

Liability Protection:

The main reason for carrying farm insurance, is for the liability protection. Whether you are operating a petting zoo, have a booth at your local farmers market, or you are over a large cattle operation, liability protection is vastly important. Your homeowner’s policy will most likely not cover the liability exposure of your farm, and even with “incidental farming coverage” added to your policy, there are still massive gaps in your coverage. For instance, if you are selling farm products at the local farmers market and someone gets sick from your product, any damages that you are liable for would NOT be covered under the liability section of your homeowner’s insurance.  On top of that, even if you have the “incidental farming coverage” added to your policy, in most cases there is no coverage for liability arising from farm products. Liability losses can involve not only medical expenses, but also expenses for legal fees, and damages you may be required to pay as the result of a lawsuit. Without a farm insurance policy these substantial expenses will have to come straight out of your pocket.

Farm Property:

Another area that your homeowner’s insurance policy falls short is when it comes to farm equipment. Farm equipment ranges from your farm implements, to farm structures (barns, silos, etc.), to the animals themselves. In each of these cases, there will be no coverage for damage or loss afforded on your homeowner’s insurance policy, leaving you completely on the hook to keep your farm up and running. The coverage for your farm equipment is customizable to the type and size of farm that you are running, so it is important to sit down with your insurance advisor to make sure that your farm is covered properly.

Loss of Income:

From a large multi-million dollar farming operation, to a small family hobby farm, the income from your farm is important to your financial portfolio. With a farm insurance policy, you can have coverage for lost income arising from loss or damage to your farm property. Once again, based on size and farm income, the loss of income portion of your farm insurance policy can vary greatly, so it is important to discuss with your insurance advisor to ensure that you are covered properly.

If you are an experienced farmer, or thinking of starting a farm, give Lighthouse a call, and let us make sure that you are properly protected.