Farm Insurance and More: Everything Farmers Need to Know About Coverage

Posted by Matt Simon on Nov 1, 2018

Make Sure Your Farm Has What it Needs to Survive a Bad Crop Yield or Natural Disaster

Farmers are feeding our nation, and with a number of crucial assets in their possession, they need the right farm insurance to ensure that they have the protection they need to continue maintaining their farm for years to come.

Why is farm insurance so important? Farming is wholly dependent on the weather, and if something goes wrong where there’s not enough rain or the temperature randomly drops, an entire year’s worth of crops can be ruined. This is just one of the major risks that farmers face, and without the right insurance, a disaster could lead to a farm losing everything. Family-owned farms are the backbone of America. The best farm insurance policies help them stay that way.

If you’re looking for farm insurance, you’re probably wondering what exactly needs to be protected. On the personal side, you probably have insurance policies for your home, car, and your life. You may have even heard about a few of the policies that businesses need to have, like general liability and worker’s comp. But what about farms?

Your farm is both your business and your personal livelihood, and there are several policies that have been created to keep the important assets on your farm protected all year long. We’ll go through a few of the top farm insurance policies that most should have in mind when they go to talk to their agent.

Crop Insurance: How Does it Work?

One of the key insurance policies that farmers need is crop insurance. This policy comes in several different forms to cover all the different needs that your crops have. Typically, crop insurance is purchased to cover the loss or damage of crops due to natural disasters or a drop in the price of agricultural products. The most popular policy type is multiple peril crop insurance or MPCI. The vast majority of farmers have this type of insurance in their portfolio because of the amount of coverage it provides for crops that are hit by natural disasters.

MPCI is also a federally supported and regulated insurance policy, and the amount that you pay toward losses is dependent on the value of the specific crop. MPCI coverage includes more than 120 crop types, but it might vary depending on the area that you’re in. Meaning that in some areas, certain crops are not covered under MPCI.

Another type of crop insurance is crop-hail insurance. This policy is protection specific to hail damage and is essential if your farm is located in an area where hailstorms are prevalent. Crop-hail insurance is most often a supplement to MPCI if it’s needed and is used to cover high-yield crops for the season.

Crop revenue insurance is another supplement that farmers might add on to their MPCI policy. If your crop for the year has a low yield or the price on that crop drops, this insurance will protect your yearly earnings from taking a dramatic dive no matter what the cause is.

Do Your Tractor and Other Essential Farm Equipment Need an Insurance Policy?

Your farm equipment is one of the most important parts of your farm, and your ability to get work done, which is why every piece of machinery absolutely needs protection. In fact, farm tractor insurance and farm equipment insurance function a lot like an auto insurance policy, and you’ll want to make sure that you have a strong policy in place before you take it out into the field.

Any farm equipment can also be pretty dangerous. Just like when you get into a car, you want to make sure you’re protected so that in the event something happens to you, your tractor, combine, skid steer loader, chopper or self-propelled hay equipment, or even someone on one of these machines, that you don’t end up with the responsibility of all the bills and ruin everything you’ve built financially.

Depending on the size of your farm, you’ll want to adjust your farm tractor or equipment insurance to make sure that it fits what you need. The bigger your farm operation is, the more insurance coverage you’ll want to make sure you have in place so that you’re not putting anything to chance. For example, your equipment insurance might be part of your larger farm insurance plan, or if your farm is small enough, it might only be necessary to add on to your homeowner's insurance policy.

You’ll also want to think about liability with your tractor and equipment insurance. Farm machinery, especially tractors, tend to come with a high accident rate, and if you hurt someone on your machine, or someone hurts themselves on your machine, you could be facing all of the responsibility. You can add a tractor liability or farm equipment liability insurance policy to your farm insurance plan or even your business liability plan to ensure you have the right coverage.

Are Your Livestock Protected?

From cows and sheep to pigs and chickens, all your livestock on your farm needs to be covered so that your farm doesn’t face financial losses in the event of disease, death, accidents, or livestock getting out of their pens. This is the root of what livestock insurance is for, and it can be added to your larger farm insurance policy.

Livestock insurance usually is able to cover livestock and poultry as a whole, and you can get specific coverage for other groups of animals like cattle, pigs, hogs, chickens, and even emus. You’ll want to make sure you have a policy that matches the amount of livestock you have on your farm. For example, if you have an entire herd of cattle, an individual coverage plan for each cow or steer isn’t going to cut it.

You can get livestock insurance in a variety of different forms, but most farmers start with an animal mortality plan to cover their farms in the event they have unexpected deaths that can impact their revenue. This coverage can come in three types: individual, blanket, and herd. If you have high-value animals, individual coverage is likely the right choice for your farm. Blanket coverage covers all your property at a predetermined value, and herd coverage insures a specific number of animals, such as 300 cattle.

You can also break your livestock insurance into specific policies depending on the type of animals you have. If you only have pigs on your farm, pig insurance might be an option you look into adding onto your overall farm insurance policy. If you have animals on your farm, you know the stress of worrying that they’ll get out. You know how important they are to your farm’s livelihood and your success. Don’t let them go without the proper protection they need.

Is Your Farmhouse Protected in the Event of a Disaster?

If you and your family live directly on your farm, insuring your home is key to making sure your farm is fully protected. Farm home insurance is different than farm liability insurance because it protects the buildings and structure instead of the farm as a whole.

Your farm home insurance policy should be part of your overall farm insurance policy if you live on the property since it will protect the contents of your home and other structures that are part of your home. This policy will also protect additional structures that are on your property like outbuildings and the equipment you use to maintain those buildings.

If a natural disaster strikes your farm, it’s not just your crops or your livestock that will be affected. You don’t want to leave your home out of the equation, especially if you live in an area that is prone to serious weather events like hailstorms or tornadoes. This coverage can also protect you in the event that a house guest is injured on your property and you are facing a lawsuit to cover the costs.

When it comes to farm insurance, you shouldn’t leave anything up in the air. You won’t be able to tell if the coming year will bring a profitable crop or if a hailstorm will destroy half your fields. With a strong farm insurance policy, you’ll be ready for whatever comes your way and be able to run your farm for many generations to come. And an independent insurance agent can help you build one. At Hill & Hamilton, we put people before policies, and we’ll help you determine what type of insurance you need for your farm and help you find options that fit your budget. Interested in learning more about how we can help? Start a conversation with us here.

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