Writing Farm Insurance Requires A Different Approach (Excerpted)

High property values, protection classes, older properties, and multiple liability exposures—just to name a few obstacles—can make writing farm insurance a challenge. Over 90% of the 2 million-plus farms in the United States are owned by individuals/families, sole proprietorships, or family-held corporations.

Appurtenant structures and personal property concerns

The HO-3 provides for Coverage B – Other Structures and states that “we cover other structures on the ‘residence premises’ set apart from the dwelling by clear space.” Then it tells us what structures are not included as other structures:

Interpreting potential challenges under Property Not Covered

This section includes:

Structures that are rented or held for rental to any person who is not a tenant of the dwelling (other than private garages)

Structures that are used principally for farming purposes (other than private garages)

Any structures shown in the Declarations as Other Property Not Covered under Coverage B

When it comes to Coverage C – Personal Property, there are some challenges. Coverage C in the farm owner’s program applies to Household Personal Property and is partially defined as “Household personal property owned or used by you or members of your family who reside with you.”

Farm liability coverage

This form addresses an interesting combination of both personal and business exposures that the farmer may face. Because of various limitations in this contract, it is often our recommendation that the farmer consider a CGL in addition to the Farm Liability Coverage Form. Essentially, the only “business” coverage provided for in the FL 00 20 is the business of “farming” and “custom farming.” Of course, these are both defined terms in the policy. At this time, we’ll forgo a review of what “custom farming” entails. The definition of “farming” is a bit lengthy and intricate.

What can agents do?

There are multiple other areas to consider when writing a farm operation: pollution; property valuations (ACV, RC, functional); leased, rented, or borrowed equipment; autos vs. mobile equipment; the contracts that the farmers sign and use; power generation; and more. The list is almost endless.

Utilize a coverage checklist and have a firm and complete understanding of what the farmer is doing. Absent such, something may be missed. When that occurs, no one is happy.