United Insurance Agencies is a country wide agency with customers from California to Alabama and everywhere in between! But no matter where we go to write a policy, we always return home to Muncie, IN. Muncie is considered Eastern Central Indiana and around here you see a LOT of farms. Some farms are corporate owned, but we still have a quite a few farms that have been worked for generations by the families that live there.
Every now and then, a farm may get passed down to a different family member or a farm may get purchased by someone who wants to take over that legacy. When those changes happen, a person may find out that owning a farm is more than just planting and harvesting, but it is a business. A business you live on and is intertwined with your personal property. Where does the “personal” end and the “business” part begin?
At United, we have Brittany, an agent that’s worked with farms for years and said these are the insurance exposures that she reminds people of for first time farm and hobby farm owners. As always, these answers are not to be taken in lieu of insurance advice but to give you a little extra knowledge and a place to start your insurance journey.
Brittany says there are five main things to keep in mind for first time or hobby farmers (that means people that may have a few animals and grow a little produce, but not large scale operations). Those are your animal exposures, farm ground exposures, other structures exposures, farm stand exposures, and classification of vehicles. According to Brittany, when she talks to new clients about farms she answers these questions the most.
If you’re a farmer, you’re responsible for your animal. That not only means taking care of it, but also if your animal does something that will need paid for. Brittany told me about a policy that paid out because a horse got bored and chewed through a neighbor’s fence! A fence repair, if an animal gets out and causes damage, any kind of damage an animal can cause is an exposure that a farm policy will provide coverage for that a general home policy will not. This is also important to think about if you live in a neighborhood and have chickens, goats, or other “small livestock” type animals!
Farm Ground Exposures
If you buy a farm, but decide not to farm it yourself, you can do something called cash renting acreage. The idea is another farmer will rent your land for them to farm. Although this can be a great way to make a little money on your land that you wouldn’t be able to use, it is also a liability to you. If you cash rent, you will want to make sure you have a farm liability policy or endorsement if your insurance carrier has an endorsement.
A traditional HO-3 or HO-5 (home owners policies) have other structures coverage. If you have a shed, an unattached garage, even a brick mailbox, these are covered at 10% (or more) of your Coverage A value. This is normally enough THOUGH YOU MAY WANT TO VERIFY THAT WITH YOUR AGENT as a home is significantly larger than the additional structures on a property. When you think about a farm, however, there are often more structures that are also larger. You may have multiple sheds, a large barn, lean-tos for storage and other structures that will need far more than 10% of the home’s value. Make sure that you talk to your agent about your additional structures needs.
Farm Stand Exposures
Most hobby farmers don’t make enough produce or meat to sell to grocery stores as most will grow essentially for themselves. A way that most farmers get rid of the extra production is through farmer’s markets or farm stands. There is a liability for injury or sickness from your wares that you would be responsible for. Again, a normal home policy wouldn’t cover that, but a farm policy will.
Farm Classification on Vehicles
This one may surprise you. Many hobby farmers have a vehicle (often a truck) that stays on the property more than it sees the road. It may be used to move the farm stand or take produce to market, but it is not an every day road vehicle. Ask your agent if you can have that vehicle as a farm use vehicle. The agent will have some questions about mileage and use, but it can save a little money.
Hopefully our Farm Insurance 101 blog has helped you out today. If you’re a farmer, is there anything we missed? If you’re looking into farming, do you have any questions? Leave us a comment and let us know!