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What is farm & ranch insurance?

The terms “farm insurance & ranch insurance” are often used alone or in combined forms to make the distinction between insurance policies for farms/ranches and traditional “homeowners” policies. The most essential difference between homes and farms (or ranches) is that insurers view a home as a residence, not a place of work.

Farms and ranches can include a residential structure, but the goal of a ranch or farm is to produce income. That’s why insurance policies for farms and ranches must cover much more than a residence. Typically, they cover things like livestock, specialty structures, crops and other items that are closely related to the ability of the farm to produce income for its owners.

Many farm insurance and ranch insurance policies are quite complex, providing coverage for the residence, the farming operation itself, and employees who consider the farm their place of employment.

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Do you need equine insurance?

Any farm owner whose assets include horses should have equine insurance. A common type of equine policy available covers farm owners who board and sell horses, conduct riding classes, hold group riding shows, hosts races, or simply keep one or more personally-owned horses.

Do all farmers need equine insurance? The short answer is that an equine policy is a must for farmers who conduct any horse-related business enterprises or who keep a personal inventory of horses. An insurance agent would say if there are any horses on a farm, an equine policy should be in effect. There is no other way for a farmer to protect the value of what can be very expensive assets and to cover any business liability that may arise from horse-related activities.

It’s a fact that a number of farm policies contain specific legal language that excludes the coverage of equine activity. Farmers who own even a single horse need some level of protection against legal costs that can arise from law suits.

Do you need farm workers compensation insurance?

Farm owners who want to have the right amount of financial protection in place should have farm workers compensation policies specifically tailored to their needs. Running a profitable business means keeping an eye on the weather, the general state of crops, state and federal laws, commodity price fluctuations and potential issues related to workers compensation claims.

It doesn’t take much to become the financial target in a workers compensation claim. Farm insurance policies that include adequate coverage for a wide range of damages are a must for today’s conscientious farm owner.

Third parties often sue farmers for damages that result from the actions of farm employees. Additionally, a farm workers compensation policy can protect against claims made by injured workers. There are states that don’t require farm owners to carry workers compensation policies. However, even in those jurisdictions farmers can still be made to pay damages to injured workers.

In order to stay on top of local laws and regulations, farmers should consult with a professional insurance agent to find out what kind of workers compensation policy is best, based on local laws, the number of employees who work for the farm, and other factors.

What types of policies offer farm workers compensation?

The types of insurance coverage that offer adequate farm workers compensation include those designed specifically for the work environment. That means the policy must take into account the number of workers, the kind of jobs they perform, where they perform their work, and other unique factors.

Farm owners should consider every aspect of farm workers compensation policies. It’s often quite helpful to get a farm insurance quote from a licensed agent to plan for the important and necessary added coverage.

While every policy is tailor-made for each insured farm owner, the standard workers compensation components include two items: a section written to protect the farmer’s financial interest, called the “farm employers’ liability,” and a second section that deals with medical expenses incurred by injured workers.

For an injury to be covered, it needs to occur on what the law calls an insured location. Insurance policies for farms contain numerous “moving parts” and can be very complex, especially for large operations that include large numbers of workers, livestock, and expensive, high-tech equipment. Farming is big business. A farm insurance quote is essential for farmers who want proper legal and financial protection.

What does a farm policy cover?

Farm policies cover a vast array of situations, most of which are not a part of standard homeowners policies. What does a farm insurance policy cover? The list is very long, but usually includes protection against illness or injury to animals, medical claims made by workers, claims arising from damages caused by animals or workers, and multiple other financial losses that occur from the typical operation of a farming business.

It’s important to note that farm structures, like an average home, are susceptible to fire damage and extreme weather events like tornadoes. Farm policies are sometimes written to cover such occurrences. Buildings used for processing, barns, residential structures, silos and other specialty structures are often included in comprehensive farm policies.

One key feature of farm insurance policies is their uniqueness. Unlike many standard homeowners policies, farm insurance must uniquely take into account each component of the farming business, its assets and whether there are any on-site employees.

Farms whose primary assets consist of livestock will need very different insurance policies than those who engage in agricultural business as their main source of revenue. Likewise, farms situated in rural areas with no major roadway access might not be able to get fire insurance, while farms near busy highways and cities may. For farmers who need information about proper coverage, getting a farm insurance quote is the best way to begin.

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Frequently Asked Questions

1. What do farm policies not cover?

It is imperative for farmers to understand that there are certain types of assets that are not covered by a “typical” farm policy. Usually, unless one of the following items is specifically “written in” to a policy, it is not covered: equipment, machinery, fencing, fire coverage.

When it comes to equipment, even policies that do cover it require that it be kept in good working order and maintained by a technician regularly. Malfunctions of a technical nature are also usually not covered for most items of equipment. One reason for this situation is the highly-advanced nature of most modern farm equipment.

In cases of fire, farmers need to be careful to specifically list any buildings that they desire to be covered by an insurance policy. In some cases, as when a farm is located in an area where there are no paved roads or water mains, insurers might deny fire coverage altogether.

But it is worth noting that, in general, farm policies are able to cover for fire damage. Fencing is another matter. Because there are so many farms that have no fencing, or have it in minimal form, insurance policies typically include it only as an add-on, at the request of the insured.

In any case, and as insurance companies well know, fences don’t usually sustain much damage in the course of their useful lives. However, it is common to have policy extensions for coverage of electric gates, which can be highly technical and expensive pieces of equipment.

2. Does my homeowners policy cover equine risk?

Most homeowner’s policies do not cover equine risk. Generally speaking, a standard homeowner’s policy contains exclusions regarding any risk that arises from the presence of horses.

One significant area of concern involves where a particular occurrence takes place. If your horse injures someone while the animal is not on your property, most policies don’t cover for that loss. Keep in mind that it is common for horse owners to take animals to shows, contests and public events of all kinds, meaning an “off-premises” exclusion would translate into no coverage for any injuries or damages the animal causes.

A key consideration, and another area of exclusion, has to do with what insurance companies define as “business activity.” Some policies routinely exclude animals that are used for business, which loosely means any activity that can earn money. Horse shows, races, riding lessons and similar pursuits fall into this category.

It’s also common for homeowners policies to include a general, wide ranging exclusion regarding both cattle and horses. In these cases, a policy might include specific wording that denies any claims related to damages that arise from or are caused by cattle or horses.

3. What is equine mortality insurance?

The term “equine mortality” is somewhat self-explanatory because this type of insurance is often describes as a “life policy for horses.” That’s exactly what it is because it covers against various kinds of losses, including those from theft, disease, accidents, injuries, sickness, death during transportation (usually resulting from vehicle accidents), and destruction by humane means.

Many carriers include coverage for at least three typical areas: guaranteed extension, colic surgery, and agreed value. So-called “full mortality” policies for horses will usually include that trio of coverage items, along with whatever add-ons the owner opts for.

It’s also commonplace for equine mortality policies to require extensive paperwork that includes things like a detailed application, an official document regarding the animal’s age, and a signed or certified statement regarding the horse’s monetary value. In the case of animals used for racing, or former race horses used for breeding, the amounts of coverage might be exceptionally high. For more common horses, value might be stated based on a group of animals or an entire herd.

The areas of optional coverage typically include protection against “loss of use,” surgical and medical costs, and any injuries that might occur while animals are being transported by air, truck or ship.

4. What is a workers compensation exemption?

If a workers compensation exemption is in place, an employee is unable to receive insurance benefits. Why might employers opt out of workers compensation insurance programs? The reasons include cost, excessive paperwork and documentation, and the presence of other insurance coverage for injured workers.

State laws vary on which employers must carry this kind of coverage, but in many states there are entire categories of workers who are not covered by workers compensation insurance. Those typically include people who work for the government, independent contractors, any type of volunteer, railroad workers, farm employees, the self-employed, owners of shops, undocumented workers, and anyone employed in the maritime industry.

In states where employers are allowed to “opt out” of workers compensation insurance, they can still be sued by workers who injure themselves on the job. Even if workers have their own medical insurance, those policies might deny a claim made for an injury that occurred on the job or during a job-related duty. Employers then become the likely targets of a medical claim by those workers who were denied compensation by their own medical insurance carriers.

Opting out of workers compensation via an exemption might save money for an employer in the short run, but it can have a significant negative effect on the long-term financial health of an enterprise.

5. Do I need workers compensation if I don't have any employees?

In most cases, farm owners with no employees do not have to purchase workers’ comp policies, but it makes good sense in most cases to have such policies on yourself and family members who work in the farm business.

There are several reasons that having a workers’ comp policy on yourself makes good financial sense in the long-run, even though there are initial costs.

Traditional medical insurance often falls short when injuries are sustained “on the job.” Health insurance carriers tend to deny claims that arise from work-related activity. Additionally, even though you will have to pay a deductible, workers’ comp policies do cover job-related injuries and the coverage amounts for medical expenses are usually unlimited.

When farmers do contract work for others, in whatever capacity, third parties often demand proof of insurance certificates. If you have workers’ comp on yourself, such demands are not a problem. If you decided not to carry a workers’ comp policy on yourself, you’ll either not get the contract or will have to quickly arrange for a workers’ comp policy before beginning a particular job (such as horse training or taking care of someone else’s livestock).

6. Can you insure livestock?

Livestock insurance is an essential part of the financial security blanket for farmers who own even a small number of livestock animals. Insuring against accidents, sickness and more is a smart way to protect one’s economic security.

Insurance agents can create a policy that takes into account any number of unique factors regarding livestock, including value, age, productivity, and replacement cost. Sometimes it is necessary to cover individual animals while other situations call for the coverage of large groups of animals.

There are so-called “blanket” policies that include coverage for livestock, farming equipment and structures. Most farmers opt to insure their livestock herds, particularly when individual animal values are hard to set or make no sense to calculate.

Farm owners need to spend time calculating the financial risk that a loss of livestock might mean. In cases of very large losses of animals, the most common cause is disease. Other losses include animals being hit by vehicles, falling into ravines, or being victimized by predators. It is important for farm owners to make a detailed list of all livestock and discuss the particulars of a policy with an insurance professional. Any farmer who owns livestock should consider getting insurance.

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