Farmers and agricultural contractors face many risks in their work. Whether by accident, natural disaster or by force of circumstance, your business can be seriously impacted when you’re not prepared with the right insurance coverage. Business interruption insurance can help you get back to work when something unexpected happens.
Types of cover you should consider:
- General liability
- Workers’ compensation
- Automobile insurance (if you use your vehicle for business purposes)
- Business property insurance, including coverage for buildings, equipment, livestock and other assets.
Farmers and contractors can apply for this insurance on a new or existing policy. In general, the coverage is divided into two different types. The first type of coverage applies to a covered peril or danger caused by “acts of God” such as flooding, tornadoes, hurricanes, lightning strikes, earthquakes and tsunamis. The other type of coverage applies to a covered peril or danger caused by actions of a person such as murder, arson, vandalism and theft.
Many businesses are often asked to consider obtaining an umbrella liability policy. This type of policy can help protect your farm, other business assets and other insurance policies that you may have by providing additional liability protection. As with any other insurance, you must work with your agent to understand the coverage provided under the policies you already carry and any exclusions.
When you purchase this insurance, you will generally be protected against some of the following items:
- Damage to your farm due to weather and natural disasters includes damage from floods, tornadoes and earthquakes and tsunamis and other natural disasters such as hurricanes and wildfires. Covered perils also include losses resulting from the death of a member of your family, including members on your farm or ranch, as well as damage caused by hostile actions such as threats, assaults or burglaries.
- The theft of your farm property: Covered perils include the loss of livestock, crops, farm equipment and personal items such as clothing, window coverings and appliances.
- Business interruption: This coverage can help you get back to work. The policy will pay for additional expenses associated with your operation when you are forced to close down due to a covered peril (acts of God). For example, if your farm is flooded and business interruption insurance under the weather peril would typically provide coverage for the items damaged by water, it would also cover your loss of income resulting from the flood.
If you have a business interruption insurance claim, your adjuster will verify the details of your claim and document the damage by taking photos and measurements. Once the amount of damage has been determined, a check will be issued. The money can be used to cover any expenses associated with your claim. This includes the cost of repairs, extra expenses when your business was idle, or any other losses that occurred as a result of your claim.
Why is Farming Insurance Important?
Many things can qualify as an “act of God”. These include natural disasters such as earthquakes and tsunamis, weather-related events like drought or flooding, or something that has happened to your farm by force of circumstance. If you don’t know which type of “act of God” would affect your farm, you can apply for coverage.
Many farmers and contractors will also consider coverage for an agricultural or business liability policy which provides additional protection for injuries or property damage that occurs on your farm. In addition, if you have employees, you may also be able to add additional coverage for workers’ compensation.
In addition to adding coverage from the above, there are other options that you may want to consider. For example, suppose your farm premises have been damaged by a covered peril such as a fire or vandalism. In that case, you may want to consider adding coverage for property damage as well as some of the contents of your buildings and structures. If you do this, be sure to check with your adjuster and ensure that the additional coverage will be covered under the policies you carry.
If you live close to a flood plain, river, or any large body of water, you may also want to consider adding flood insurance. Flood insurance is often handled by the same company providing your home owner’s or business owner’s insurance and will automatically be included in your policy. Flood damage is often excluded from a standard homeowners’ policy, so it may be a good idea to check your policy and speak with your insurance agent about how you might improve the available protection for flood damage.
Suppose you are an agricultural contractor and use equipment to perform your work (such as tractors, combines, and other machinery). In that case, you may also want to consider cargo insurance that can protect your business if any of this equipment is damaged or stolen. The coverage can also provide financial protection if a customer does not pay for services listed on the invoice.
To provide a thorough and complete level of protection, a business owner could purchase insurance covering all possible risks which may cause severe disruption. This would include:
- Business property and liability insurance – including coverage for buildings and equipment and other assets and protection against liability.
- Equipment breakdown insurance can help pay costs to repair damage to machinery while your business is idle.
- Pollution-related coverage can help protect you from costly cleanup costs or fines due to pollution on your farm.
- International project protection can help cover the cost of on-site services such as debris removal, emergency medical treatment, and evacuation if you travel outside the country on a project.
Read more about what kind of business insurance you need here.
Other useful links about business insurance:
Public Liability Insurance
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