Properly insuring your farming operations
The three basic components of farm liability insurance
Insuring a farm operation provides an unusual mix of property and liability exposures. It is important to understand the coverages a farm owner’s policy provides, especially within the liability section of the policy.
1. Personal and farm liability
Most farmers live on the premises where they conduct their farming operations. Due to this reality, a farm policy is structured and designed to provide the farmer with personal liability protection, as well as liability for his/her farming pursuits.
Personal liability can provide protection, for example, if the family dog were to bite a farm visitor. Farm liability, in contrast, protects the farmer from claims brought by a third party for property damage or bodily injury arising from the farm operations. For example, farm liability would provide coverage for a farmer who pulls out of a field with a piece of equipment and strikes an automobile traveling on the road.
2. Business pursuits
Potential coverage gaps and exclusions can exist within a farm owner’s policy – especially if the farmer is engaged in business pursuits that are outside of the policy’s definition of “farming.” Altering farm products to sell directly to the end consumer via a roadside stand is a good example of a business enterprise that most insurance companies do not consider to be a farming operation.
Most farm owner’s policies can provide liability protection for these incidental business pursuits through the purchase of policy endorsements which extend coverage to these “commercial” areas of the operations.
3. Slip and fall
The medical payments section of a farm owner’s policy is not a true liability coverage because an injured party is not required to prove the property owner acted in a negligent way which resulted in the bodily injury. A medical payment is a “good faith” payment that is automatically offered to any party who happens to injure him/herself on the farm property.
It’s imperative to understand how a farm owner’s policy covers the liability exposures of a farm operation. This knowledge is best gained through consultation with a licensed insurance professional in your state.
Reuben Dourte is an account executive at Ruhl Insurance in Manheim, PA where he specializes in farm and agribusiness insurance risks. He received his Accredited Advisor in Insurance designation in 2015.