You probably know by now that insurance is a real and important expense for your small-scale farm—whether or not you run your farm as a business. As a dangerous and often unpredictable activity, farming poses all kinds of risks to you and to people and property around you. Beyond basic farm insurance, here are a few add-ons that you should consider.
1. Umbrella
Personal-property umbrella insurance and liability umbrella insurance go above and beyond your standard property insurance. Umbrella policies tend to not cost that much more than property insurance, and these might even comprise some of the insurance options mentioned here.
2. Commercial Liability
Making money of any amount means your farm is a commercial operation, and you might consider commercial liability insurance as a result. This could cover agritourism or the sale of hay, animals, produce and the like.
3. Whole-Farm Revenue Protection
This safety net comes from the USDA Risk Management Agency rather than your regular insurance agent. Whole-Farm Revenue Protection is small-scale, organic and specialty-crop producers’ answer to crop insurance, and it’s only been around for a few years. It will provide revenue for all covered enterprises due to an unavoidable natural loss—for example, a hurricane, flood, drought or wildfire. The WFRP program doesn’t cover timber, forest, forest products or animals for sport, show or pets, according to USDA. The amount reimbursed is based on your farm’s historic average revenue, as shown on your tax returns.
4. Business Interruption
If your small-scale farm is also your business, this insurance covers you when something takes place that prevents you from carrying on. Penn State Extension offers the example that “this may be due to the loss of a barn and marketable animals in that barn. The business will not have income until new animals can be raised to the same size as the lost animals.” While your property insurance might cover the cost of the barn and the animals, the business-interruption insurance can take care of the income you are missing out on.
5. Workers’ Compensation
Workers’ compensation insurance is not something only required of large employers, and it’s also not something that’s covered by umbrella policies. If you pay someone to work on your farm or in your farm business—even part-time or seasonally—you need a workers’ compensation policy. Premiums vary in price based on the number of years you’ve been in business, the number of employees and your estimated payroll.
6. Employee Dishonesty
We’d like to think all of our friends, family members and employees are trustworthy in every situation, but we know that’s not always the case. In the event that your farmers-market till is getting skimmed or your inventory is unexplainably dwindling—and an employee is found to be at fault—the employee-dishonesty insurance can reimburse your loss.
Whatever is happening on your farm, insurance is an unfortunate necessity. For some hobby farms, a homeowner’s insurance policy will cover farming activities, but this is not always the case. The size, scope and location of your farm will dictate exactly what you need, and a trusted insurance advisor is invaluable.
This article originally appeared in the January/February 2017 issue of Hobby Farms.
