April 05, 2022
“Agriculture is civilization.” – E. Emmons Today’s blog comes to us via David J. Bonne, President of Hudson Valley Agents. David had a dream of providing locally sourced insurance coverage (yep, we can do that by insuring businesses with Hudson Valley insurance companies.) for the Valley’s farmers, farmer’s markets, restaurants, breweries, distilleries, and wineries, and he has turned that dream into a reality.
The Farm When it comes to insuring your assets, such as your farm, it’s really easy to make a mistake and either over-insure your properties out of sheer paranoia or under-insure them to try to save money. Also, there is a broad spectrum of insurances to choose from, and picking the right coverage's for the right amounts can be critical to keeping your farm afloat. The first thing you should know is that one size does not fit all when insuring farms. Thinking about your liability exposure first, the more acres you have, the greater the vulnerability is, just on the math alone. Nosy wandering trespassers, subcontracted laborers, employees, visitors, and customers can all get hurt easily on farm property no matter how hard you try to prevent it. Sometimes even the most minor, most frivolous claims can turn into tens of thousands of dollars in defense costs. Depending on the size, type, and structure of your farming operations, some non-attached parcels may not be covered correctly, if at all. These are the things that must be discussed with your agent before accepting your policy terms. Next, there is the issue of properly insuring farm property which can fall into several categories and is rarely lumped into one. •Non-attached buildings, for instance. On a standard homeowners policy and maybe even on a country squire/small hobby farm policy, non-attached buildings are usually sub-limits of the home-dwelling amount. However, on a standard farm, those other buildings typically cost way more to repair or replace than those sub-limits afford. In many cases, the barn alone can cost much more than the farmhouse, and in most cases, there are quite a few outbuilding structures such as run-in sheds, barns, utility sheds, garages, etc. In all those situations, the farm owner needs to be aware of the settlement option on those buildings. Are they insured for full replacement value, actual depreciated cash value, or possibly an agreed-upon value, and the correct amounts? With a standard farm policy, you can usually pick and choose which buildings to insure and set an agreed-upon value. This can be a helpful tool in controlling your costs. •Farm equipment is another aspect of farm property. On a home or hobby farm policy, the contents coverage as a sub-limit of the home may or may not suffice here, but on a standard or larger commercial farm, it most certainly will not. Properly insuring farm equipment can be tricky and requires the advice of a really good agent. In many cases, the farm equipment can dwarf the building coverage's. A really good tractor can cost upwards of $250,000, not to mention irrigators, dusters, plows, balers, wagons, combines, and the list goes on. Once again, having the correct settlement option and valuations on your equipment is vital. Also, are you co-insuring your equipment? Many policies offer the option and in some cases only offer this option to co-insure. This means you may still be on the hook for a good portion of your loss in the event of a claim. Then there is choosing the right deductible as well. Is your equipment scheduled or blanketed with one lump sum of coverage, and is that the correct way to do it in your specialized case? Now, on to your crops and/or livestock. Crops and livestock are not automatically covered under ANY policy. They have to be endorsed and specified in the policy. Once they are, how do you know exactly what they are covered for? Tornado, flooding, pestilence, pests, or wildfire? Before buying crop insurance, it is vital that the farmer submits an accurate representation of the planted acreage they have per unit. If they are farm workers, they may not be reimbursed for all losses they could realistically experience. Livestock also has many different options and requirements. There is mortality insurance, transit coverage, auction coverage, cattle cages, pasture, etc. An equine racehorse farm would have very different needs than a cattle farm or a crop farm. Make sure you have the correct insurance policy in hand. Crop and livestock coverage can be partially funded by the USDA as well. Workers Compensation is also vital to having a legally operating farm when you employ people. Contrary to what some believe, there are NO EXCEPTIONS for farm-workers, they must be insured by a worker’s compensation policy in NY. As a farmer, you have many obligations, not just to your family and employees, but to your ven
dors, distributors, and even your insurance company. Like any insurance policy, there are strict requirements on the part of the policyholder to safeguard their property and minimize the chance of a loss as much as possible. If you are not familiar with your obligations to your insurance carrier, then it is time for a review of your policies. If you have not discussed your insurance with anyone in quite some time, then you are overdue for a review of your current policies. Farm insurance is not something to let stagnate or keep buried in a drawer somewhere.