LOVELOCK - Insurance is a tool that helps farmers reduce their exposure to risk. The purpose of insurance is to reduce the impact that an adverse event will have on your bottom line.
Therefore, in order to offer the best possible coverage, it is important for you, the producer and business owner, to talk with your insurance agent and review how you might be exposed to a high-risk situation.
Three basic kinds of coverage are generally necessary for farm operations: premises liability, crop insurance and products liability.
Premises liability policy protects the property owner from injuries that are incurred by a visitor on the property. Property owners are expected to take all necessary steps to reduce the likelihood that an accident may occur.
A policy may not cover a policy holder if the injury is shown to be the result of the policyholder/property owner's negligence, so it is important that a property owner show that efforts have been made to reduce the risk of injury.
In addition, most farm liability policies cover only liability that occurs in the ordinary course of a farm business. Therefore, supplemental coverage may need to be purchased for coverage pertaining to agritourism, custom farm work, direct market stands off the farm premise, contamination of others milk by your own, pick-your-own customers and product liability claims.
Crop insurance is available to protect the producer from the loss of revenue due to the loss of a crop as a result of an adverse event. USDA's Risk Management Agency is encouraging producers to move toward the purchase of revenue insurance, which protects the producer's income, as opposed to only insuring against the loss of a crop.
Products liability insurance provides protection for producers who sell product that has had some processing, such as the processing of fruits into jams or jellies, or the making of preserved foods, such as pickles.
Check with your insurance agent about a comprehensive policy that may cover the home, buildings and farm-specific activities on the property. These policies should/may include coverage on: unprocessed (raw) farm product, pick-your-own operations and roadside stands at the property.
In addition, If you have 10 or more year-round, full-time employees or any employees under the H2A program (H2A program allows a foreign national entry into the U.S. for temporary or seasonal agricultural work) you are required to have workers' compensation insurance. Even if not required to carry workers' compensation coverage, you may want to consider it in order to protect you in the event of an employee injury.
You may also wish to discuss an umbrella liability policy with your agent. This type of policy protects you against a severe loss, and typically offers coverage beyond the usual limits offered in automobile and general liability policies.
Finally, "Do you have enough liability insurance coverage for your farm?" Over the past few years, market values for land and other farm assets have increased substantially, which has contributed to the growth of farm assets. While many farmers' asset values have increased, fewer farmers have taken the time to review their liability coverage to ensure that they are adequately protected.
To reduce exposure to loss, farmers should regularly examine their balance sheets and coverage limits and ask themselves, "Is my liability coverage limit anywhere near the total value of my farm? If an accident were to occur, would my current insurance policy protect me from exorbitant losses?"
If the answer to either of these questions is "no" or "I don't know," it is probably time to talk with your insurance agent.
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