FARM AND RANCH
THE HEART OF AMERICA
BNJA will want to determine whether the rural dwelling on the property is a home or a ranch. It’s an important distinction, as there can be substantial differences in coverage.
Insuring horses, fencing, barns and ancillary buildings, fire protection, selling produce, and other farm products all need to be considered for the options on the policy. They need to be handled separately but as a blanket coverage.
Whether farming is your occupation or just a hobby, you will probably agree that there’s nothing more peaceful than working your own land. Whether you are thinking about selling produce from your garden at the local farmers market or making your farm your full-time job, it is important to make sure that you understand the ins and outs of farm insurance coverage.
Your Standard Homeowners Policy Covers Some Farming Activities
Many treat their large garden or small farm as a hobby and have no intention of making money. If you fall into this category, it’s possible that your standard homeowners insurance policy will cover some of these farming activities. But, keep in mind that homeowners insurance policies generally exclude things like farm equipment and farm outbuildings.
If You’re Farming for a Profit, You May Need a Different Type of Policy
Hobby farming for a profit requires different coverage than your basic homeowners policy. If you begin selling farmed goods at a local farmers market, for example, you’ll want to consider a hobby farm policy.
There are a few guidelines that must be followed for a farm to be considered a hobby farm. Some of these guidelines include:
- Coverage is limited to a single farm location
- There must be no employees
- Less than 500 acres
- Total annual farm receipts are limited to a maximum of $10,000
- Minimum coverage of $125,000 on the main dwelling (mobile homes are not eligible)
If Farming is Your Full-Time Occupation, You Will Need a Farm Owner’s Policy
If you want to take your hobby even further and start farming as a full-time occupation, you’ll need farm owner’s insurance coverage. A basic farm owner’s policy generally includes property coverage, liability coverage, and more.
To better protect your livelihood, this basic coverage should be modified with endorsements based on your farm’s unique needs. BNJA will be able to help you determine what types of endorsements will best fit your farm’s needs.
In reality, farm insurance policies have so many different aspects that there is no standard policy. Each farming operation is unique and a policy should be custom built for the needs of the farmer.
You Need Special Coverage for Livestock
Livestock insurance is similar to crop insurance and is partially funded by the United States Department of Agriculture. Depending on the types of animals you have on your farm, you will likely require special coverage for livestock. A few options to consider include individual coverage, as well as blanket coverage.
- Individual Coverage (Scheduled): Scheduling animals individually may be the right option if you have higher-valued animals that you want to cover up to a specific dollar amount.
- Blanket Coverage (Unscheduled): With a blanket policy, all of your farm property (livestock, equipment, structures, etc.) is insured in one lump sum amount. When using blanket insurance, make sure to insure to adequate values, as being under-insured could result in a lower claim payment than you need or expect.
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