Insurance Considerations for Agricultural Operations
Every producer knows agriculture is a business with risks. Having the right insurance coverage can be the difference between sustaining your operation and literally losing the farm.
This gives an overview of insurance considerations for agricultural operations. Insurance policies available to agricultural producers are highly variable case-by-case and from company-to-company. The insurance premiums you pay for coverage also vary and may be based on payroll, footage, acreage, gross sales, or activities conducted.
Agricultural operators need to be honest and specific about all of the activities they intend to do when discussing policy options with insurance agents to ensure adequate coverage. Producers should talk with multiple companies if they aren’t finding the coverage they need.
Types of Insurance Coverage
Each insurance company may have their own names for various types of policies, so be sure to have a clear understanding of each type of policy offered by each company. If an insurance agent says a policy covers a particular item or activity, verify that it’s reflected in the policy paperwork.
Basic Homeowners’ Insurance will not usually cover farm buildings, farm equipment, fences, or farm activities. Be aware that having livestock or even certain breeds of dogs on a property may prevent you from obtaining homeowners insurance or invalidate current insurance policies.
Farm and Ranch Personal Property Insurance can typically be designed to cover buildings, equipment, and some farming activities on a property. Operations with livestock may be able to obtain Animal Collision Insurance which may cover some cost of the animal and the damage caused to someone else if they hit the animal.
If a farm is operating as an incorporated business, then a Commercial General Liability Insurance package policy may provide the most complete coverage for the farm business. Additional coverage may be needed for special events or having members of the public on your farm. If a farm wants coverage for a few select events on a property (i.e. a weekly farmers’ market or a few festivals), then lower-cost Event Liability Insurance may be an option. General Liability policies don’t usually cover product liability. Farms selling their own agricultural food products or value-added food products should consider Product Liability Insurance.
Agritourism operations require careful consideration of liability coverage options. Without insurance coverage, your land, business, or personal assets may be at risk from visitors’ potential ignorance, negligence, or recklessness. Florida Statutes specifically offer some liability protections for agritourism operations, however, this should not be considered a replacement for insurance that may offer additional liability protection.
Some types of agritourism activities may require additional liability coverage beyond a General Liability policy, either through a rider (endorsement) added to an existing policy or through a separate policy. Insurance premiums may be based on the perceived degree of risk associated with an activity, whether activity fees are collected or the experience of the operator. Premiums may be higher if alcoholic beverages are served, if food services are offered as part of your operation, or if shooting activities occur on the property. You may want to request vendors coming to your property (i.e. for weddings, etc.) add your business as an “additional insured” on their policy.
Other types of insurance policies offered by some companies: Fruit and Vegetable Dealer Policy, Farmers Market Insurance (which would cover working events off your property, not usually covered under other types of property-based policies), Beekeepers Insurance, and Inland Marine Insurance (for coverage of products being transported by vehicle).
Workers Compensation Insurance may be required by Florida law if an agricultural operation has six regular employees and/or twelve seasonal workers who work more than thirty days during a season but no more than a total of forty-five days in a calendar year (http://www.myfloridacfo.com).
Various types of Crop and Livestock Insurance are available through:
- Independent Crop Insurance Agents – insure crops/livestock commonly produced in a County, either individually, or through newer programs like the USDA Risk Management Agency’s Whole Farm Revenue Program for farms with diversified enterprises.
- USDA Farm Service Agency – insure crops/livestock that can’t be insured through independent Agents, including Non-insured Crop Disaster Assistance Program (NAP), Emergency Livestock Assistance Program (ELAP), Livestock Forage Disaster Program (LFP), and Livestock Indemnity Program (LIP)
Most crop/livestock insurance programs are on a cycle and have deadlines for filing applications. It may be necessary to apply for some types of crop insurance for each crop planting.
Having insurance coverage for your agricultural operation increases your cost of doing business. When evaluating insurance options for an enterprise, here are some questions for consideration:
- Is the difference between the cost of insurance and income gained enough to allow for reasonable profit to make the venture worthwhile?
- Can you realistically pass the costs of insurance on to the customer, or will the cost decrease customer purchases or participation in an activity?
Keeping documentation of your safety strategies may help your insurance company understand your operation better. Documentation may include: safety policies, safety inspections, animal vaccinations and veterinarian records, emergency plan, employee safety training, local permits, log sheets for cleaning, and photos (i.e. Florida Agritourism Warning Signs, Florida Equine Activity Warning Signs, appropriate fencing and locks, hand washing stations, traffic safety strategies and signs, fire extinguishers, etc.)
Is it covered?
Use this checklist when evaluating current or potential options for insurance to ensure your property, activities, services, and products are covered.
___Damage caused by your livestock (off property):
___Products (stored on your farm):
___Products (during transportation):
___Products (if they cause illness/death to someone):
___Your Services (off property):
___People who may become injured on your property
___Contractors/Vendors offering services on your property:
___Agritourism activities ON your property:
___Agritourism activities OFF your property:
___Court Costs for defense
1Russell, Brittany. Agri-Tourism Workbook: Guide to Discovering New Ways to Build a Successful Agriculture Business through Direct Farm Marketing. Portland, Oregon, USA: Agri-Business Council of Oregon, 2003. http://www.farmsreach.com/welcome/wp-content/uploads/2014/12/AgriTourismWorkbook.pdf.