Farm and ranch insurance policies, often referred to as “farm insurance,” are quite different from the average insurance policy that homeowners carry. Farm insurance is more complex, covering many more areas of risk. For farmers, a home is not merely a place to live but is also part of a business operation. For farm insurance Maryland residents seek professional guidance.
Farm coverage typically includes three separate types of loss protection. First, it’s a standard homeowners policy for the farmer’s home. Secondarily, it includes characteristics of commercial business insurance because it protects the farming operation as the economic enterprise that it is. A third component of farm coverage deals with legal liability that can result from injuries to workers on the property and in farm-owned vehicles.
For farmers who participate in any horse-related activities such as selling horses, conducting riding/show or racing events, teaching equine skills, boarding, and more, equine insurance can offer needed coverage. Indeed, it’s possible for equine-related legal problems to arise from the ownership of personal horses that have no connection with the farming/ranching business.
Equine insurance is a necessity for farmers who take part in or offer horse-related activities, no matter how closely connected the activities are to the farming business. This kind of insurance is the only financial protection that stands between a farmer and a litigant who might bring about a lawsuit for damages, the payment of legal fees, or to settle court costs. Homeowners policies routinely exclude all types of equine liability protection. Without an equine policy in place, farm owners face the prospect of paying damages and legal fees out of their own pockets, directly to litigants and courts.
A central component of any farm business’s insurance protection is a farm workers compensation policy. Farmers have multiple responsibilities as business owners, including concerns about crop health, potential weather problems, commodity market conditions, financing of the operation, and staying in compliance with federal and state regulations. In order to maintain economic viability, farmers have employees turn to specialized insurance protection.
Whether the farm employs one or one-hundred workers (or more) there’s always the potential for legal problems that can arise from worker-related situations like accidents to employees and accidents caused by employees. In both situations the farm owner can be held liable for damages, medical bills, court costs, and legal fees.
It is commonplace for farm workers to sustain injuries on the job. Many states, however, do not mandate that farm owners carry workers compensation insurance. Even in those jurisdictions, it is possible for a farmer to face liability that arises from employee-related accidents and injuries. To address the complex legal requirements of farm insurance Maryland farm owners should be aware of local regulations and laws.
Farm insurance is not the only kind of coverage that includes workers compensation protection. The idea of workers compensation coverage is relatively new, having originated in Europe in the late 1800s. Nowadays, workers in most industries, including farming, have the option to waive the right to sue for damages. Instead, where workers compensation policies are in place, the insurance company pays medical costs and other damages directly to the worker. In some instances, that payment includes lost wages.
For farm owners who want the peace of mind that comes with complete business coverage, a farm workers compensation policy is a must. Depending how such a policy is written, it can include protection against liability for worker-related accidents both on and off the business property. When obtaining a farm insurance quote, the owner should be careful to make sure the policy addresses the farm’s specific job descriptions and work force composition.
As a matter of course, workers compensation policies for farm employees are designed to reimburse workers who become injured as a result of their job activities, wherever those activities take place. It’s an accepted fact that the farming business is a dangerous one for everyone involved. Historically, there have been a very high number of claims against farm owners by their workers. This is especially true when compared to non-farm businesses.
There is no such thing as a one-size-fits-all insurance policy for farms, but most coverage includes common areas of protection for owners. Many policies encompass multiple types of farm insurance coverage, but typically offer protection for claims resulting from the use of horses, illness or injury to horses, and all variants of what are commonly called “equine liability.”
Every farm contains structures like residential houses, processing facilities, silos, barns, and equipment-storage units. Besides the obvious structural coverage, farm policies routinely protect against losses resulting from fire. Rates for fire insurance depend on many factors, including how far the farm is from roads and hydrants.
When obtaining a farm insurance quote, an owner will want to adapt policy considerations to the unique aspects of the farming business. Every farm owner should discuss the details of insurance coverage with a licensed Agent.
Is equine liability coverage needed? How far is it to the nearest fire hydrant or public roadway? Does the farm employ workers, and if so, how many? Does state law require farm workers compensation coverage? Do local weather conditions imply considerable risk of crop failure? What other aspects of the farm require specialized coverage? Those are just a few of the areas that should be covered in a discussion between a farm owner and an insurance professional.
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No insurance policy, and that includes those written for farming enterprises, cover every conceivable loss contingency. When it comes to the typical farming business, there are specific areas that are not covered unless they are specifically added into a policy. These items include things like fire coverage, equipment, fencing and machinery. Equipment for farming operations can be among the owner's most costly assets. However, insurance policies that cover equipment come with several special requirements.
If and when equipment is insured, it must be regularly maintained by a competent technician and be kept in working order at all times. Most policies that deal with farming equipment do not cover technical malfunctions. Modern farm machinery is highly advanced and malfunctions are too routine for insurance coverage.
In instances of fire loss, each building on the property must be listed individually in the policy. It is not unusual for insurance companies to deny fire coverage in situations where farms are too remote and have no ready access to local roadways, water mains and hydrants. With those few exceptions, however, most farm policies can include fire coverage if needed.
When it comes to fencing, the standard farm policy only includes coverage when specifically requested by the owner. So many modern farms have no fencing that insurers leave this kind of coverage out of standard policies by default. Many farmers do opt to insure technically sophisticated electric gates and other entryways that feature special equipment.
Generally speaking, a standard homeowners policy does not cover any type of equine risk. In fact, such policies often list equine-related issues as exclusions. Other commonly excluded areas of coverage for homeowners policies are damages resulting from the presence of cattle or horses on the property. This exclusion is written into homeowners policies as a matter by default in most cases, and is carefully worded to deny any claims that are even peripherally related to cattle and horses.
For farmers who do need equine insurance, they should note the policy's particular coverage terms. For example, a claim might be denied based on the location of the incident. Typically, equine coverage only protects against losses that arise from injuries that take place on the farm. This feature of coverage might seem insignificant but it is not. Farmers who own horses often travel to public events, contests and shows that are not located on the farm property.
Most equine coverage is careful to delineate the meaning of "business activity." It's common for insurers to exclude coverage for any animals that are used in any money-making activity. That includes routine participation in races and horse shows, the offering of riding lessons and other activities that stand to earn money for the farming business.
What insurance professionals call "equine mortality insurance" is informally referred to as an "insurance policy for horses." This area of insurance coverage protects against losses associated with injuries, death while being transported, sickness, theft, accidents and disease. Most insurance policies for horses cover, at minimum, three areas of concern: colic surgery, agreed value, and guaranteed extension. There are policies that go by the term "full mortality," and include additional types of coverage that an owner can choose to add to a standard policy.
Whenever a farm owner applies for equine coverage, the insurer will ask for a detailed application that includes particulars like the animal's age and dollar value based upon a certified statement. Coverage costs can be quite high for special types of animals, like those used in racing and for breeding. It's also common for farmers to state a horse's individual value based upon an estimate for the entire herd.
Add-ons to equine policies can include any number of situations, like medical costs, surgery expenses, loss-of-use, and various types of injuries.
Some employers can be exempt from the requirement to provide workers comp. coverage. Offering workers compensation (WC) can seem costly, involves lots of paperwork and documentation, and might be legally allowed under state law. But employers who choose to opt out of workers comp. via a legally-allowed exemption can face dire financial consequences in the long run.
There is no national standard about who has to carry workers comp. coverage for their employees. However, many states do not have workers comp. coverage for a number of work categories. In most states that allow for these exclusions, those categories include railroad workers, farm employees, shop owners, undocumented laborers, maritime workers, volunteers, independent contractors, government employees, and the self-employed.
Even in jurisdictions where owners can opt-out of workers comp., employees can still sue owners after an on-the-job injury. If a worker carries individual medical coverage, that coverage can deny claims when injuries occurred at work. At that point, the employer is at risk of being sued by the worker who has nowhere else to turn for insurance coverage.
Even for farmers who have no paid workers, it makes good sense to have workers comp. insurance. Legally, there is no requirement to carry such coverage if the farm does not employ paid workers. However, a workers comp. policy can be a good idea for the farmer and family members who work on the farm. There are up-front costs to obtaining workers comp., but the long-term advantages can be substantial.
Any work-related injury has the potential to be denied by typical medical coverage policies. Most health-insurance carriers are reluctant to cover on-the-job claims. With a workers comp. policy, even in cases where the farmer has to pay a deductible, there is coverage for work-related claims and there are usually no limits on the amount of coverage for medical expenses. Compared to standard health insurance, workers comp. can carry significant advantages.
It's also common for farmers to perform contract jobs for other farmers, like taking care of cattle or training horses. In those cases, the farmer doing the work will need to show insurance certificates as proof of coverage. A workers comp. policy solves this dilemma. Without workers comp., the farmer will either lose the contract or have to quickly obtain coverage before starting work.
Livestock can be insured. A farmer who needs coverage for possible losses arising from livestock accidents can easily obtain coverage. Cattle and horses can represent a large economic investment on the part of any farm owner. As is the case with any other asset, there should be sufficient insurance coverage in place. Insurance agents are adept at writing farm policies that specifically address the various uses of livestock, as well as the size of the herd and the type of animals involved.
It's possible to cover each animal in situations where the livestock is high-value. But there are other, more common ways to insure livestock, including the standard "blanket" policy that covers animals, farm equipment and farm structures under one insurance agreement. Most farm owners opt to insure their livestock by the herd. An example of specific wording in such a policy would be, "820 Hereford cattle."
Every farmer should carefully consider the risks of livestock ownership. In most cases, the primary threat to animals is disease rather than injury or theft. Entire herds are wiped out by bacterial and viral illnesses. When injuries do occur, it's common for cattle or horses to fall into ravines or ditches, be struck by vehicles, or fall victim to wild predators like coyotes.