How Does Farm Insurance Coverage Work?

Of all the insurance types on the market, farm coverage is perhaps one of the less well-known examples. Despite its relative obscurity, farm insurance coverage can be a lifesaver for those in the agricultural sector. The right policy can offer tremendous advantages and significant peace of mind.

From protecting machinery to covering livestock, a farm policy can help guard the essentials you need for your livelihood. At Lake Region Insurance Agency, we know how crucial this coverage is for our farming neighbors. Reach out to a team member today for a free insurance review and quote.

What Is Farm Insurance Coverage?

Also known as agricultural or ranch coverage, farm insurance is protection designed for those in agribusiness. It can protect you in the event of many different losses, including loss of:

  • Business 
  • Buildings
  • Livestock
  • Machinery
  • Equipment
  • Tools

Farming is an unpredictable industry at the best of times. It is reassuring to know that your business and livelihood have protection. From unexpected events to freak weather conditions, strange things can happen that damage your ability to earn a living.

What Is Covered By Farm Insurance?

Farm and ranch insurance is a unique type of policy. It can protect you commercially and personally. Its foundation is similar to homeowners insurance, and then the farm owner can add more coverage for commercial property. 

There are four main components to consider in your farm insurance coverage. It’s crucial that you discuss each of these with your independent insurance broker so that you have the protection you need. Not every policy automatically includes all of the following:

1. Farm Machinery and Equipment

Machinery and equipment are integral to any farming operation, and losing them can have significant consequences. 

Damage or loss can also result in a hefty bill if you need to replace anything. A tractor alone can cost more than $200,000 but is essential for any farmer. By taking out an insurance policy, you protect your finances and ensure that the farm can still operate in the face of property casualty.

This category is broad and covers most essential farming property, including:

  • Tractors 
  • Planters 
  • Field Equipment 
  • Hay Rakers
  • Combines 

In addition, portable structures and fences may also have coverage, depending on your policy.

2. Livestock

Livestock is often the heart of commercial agribusiness, so insurance saves you tremendous difficulty if something happens to your animals. 

Your insurance plan will outline the types of peril that have coverage: basic, broad, or special. If livestock is killed or injured due to a covered hazard, you will be able to recoup your cost for the animal. Examples of peril may include:

  • Lightning
  • Windstorm
  • Hit by Vehicle
  • Theft
  • Sinkhole
  • Attack by Wild Animal

Some policies will also protect against freak weather conditions such as floods or earthquakes. Speak with your insurance agent for a full understanding of your plan’s coverage.

If you own horses, you also may be able to purchase coverage specifically for equines. Due to their range of functions, from showing to breeding, horses are significant investments and require specialized coverage. You will generally be able to claim for incidents including:

  • Mortality due to perils or theft
  • Death due to illness
  • Major medical expenses, including surgical costs
  • Compensation for loss of use – This coverage may apply if a horse’s illness or injury forces them to miss breeding or showing season.

Ensuring that your livestock has coverage can protect you from a financial nightmare. When comparing agribusiness insurance carriers, be sure you are clear on the protection you need.

3. Farm Products 

In addition to the machinery and livestock you own, your farm also requires specific products to function. Silage, seeds, fertilizers, pesticides, and animal feed need coverage in your farm insurance policy, as well. 

It is critical to note that this kind of insurance only covers your seeds while they are in storage. Once they go into the ground, a farm or ranch insurance policy no longer applies. 

Crops do not have protection under this type of plan. Talk to your insurance agent about a policy that provides that level of coverage.

4. Farm Liability Coverage

Farms are inherently dangerous places. With heavy machinery and unpredictable animals, accidents are likely to happen. 

Liability coverage can apply to a wide range of situations. For example, if a visitor to your farm gets hurt, it may help cover their medical bills. Or if your cows escape and run through a neighbor’s fence, the policy can cover the damage.

Legal fees from injuries or loss of personal property can add up quickly. So liability coverage is vital to protect your farm and livelihood. 

Are Any Items Not Covered?

Farm and ranch insurance products can carry many caveats. It is essential that you understand what your policy will and will not cover. Most farm plans exclude the following:

  • Fencing – You may be able to purchase a policy extension to cover this.
  • Specific Perils – Be sure you understand all covered and excluded events.
  • Fire – Your insurance agent should discuss any situations in which coverage would not apply to fire damage or loss. For example, there may be specific guidelines surrounding road accessibility for fire trucks.
  • Crops – To protect planted seeds and the crops that you grow, you need a separate policy.

Do I Need Farm Insurance?

Farming can be a volatile industry with thin profit margins. A great deal of your profit potential resides in your physical structures, equipment, and livestock. Taking the time to purchase insurance now could save heartbreak down the line. 

How Can We Help?

Farm insurance is a unique niche, and many insurance companies are touting their services. How do you pick the best option?

Here at Lake Region, your protection is our priority.  As independent brokers, we can access a range of agribusiness insurance providers. This means that we work to find perfect coverage options for you without being obligated to a particular  carrier. 

If you are a farmer or rancher, call or stop in one of our Greater Minnesota offices to get started. We serve our community in New London, Willmar, and Cokato, MN. 

 

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