Do you NEED a Farm Insurance Policy?

Farm & Ranch Insurance vs. Homeowners Insurance: Which Do You Need?
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Learn several of the differences between Farm and Ranch Insurance and Homeowner’s Insurance

While similar, there are some major differences between Farm and Ranch insurance vs. Homeowner’s insurance. It’s not as if one type of policy covers your personal property and liability while the other does not, but the limitations of coverage can and do vary significantly. Let’s discuss a few major differentiators between the two.

OTHER STRUCTURES “COVERAGE B”

Your farm is not just your home, it’s also your business. This is great and all, until you find out that any buildings and property which can be used for your farm operation are excluded from coverage in your Homeowner’s policy. While that nice new barn you just built would be EXCLUDED on a Homeowner’s policy, a Farm & Ranch policy would provide you adequate coverage to repair or replace it, should a fire (or other covered peril) cause partial damage or even a total loss.

Furthermore, the Coverage B “other appurtenant structures or buildings” coverage, is insured to 10% of the cost to replace your dwelling unless increased with an endorsement. Would this be enough coverage to even replace your barns? Most likely not, in this instance, you need a Farm and Ranch insurance policy.

Something that must be mentioned though are fences. In your typical Homeowner’s policy, fences are covered, whereas in a Farm and Ranch insurance policy, the advisor you work with needs to be certain that you are scheduling them if you wish to properly cover them.

BUSINESS PURSUITS

Whereas your Homeowner’s insurance policy excludes business pursuits and professional services from coverage, the Farm and Ranch insurance policy you need will afford you commercial general liability coverage in addition to the personal liability coverage you would get from your Homeowners’ policy.

Don’t be fooled into thinking that just because you run your business from home, your Homeowner’s insurance will respond to a commercial liability exposure. You’d be upset if you find out you have to cover the full amount of the bodily injury or property damage judgement “out of pocket,” wouldn’t you?

Does your farm really only consist of a large garden, or a couple animals you raise for your own meat? If you treat your “farm” as merely a hobby, it is possible you may not need Farm and Ranch Insurance, and a Homeowners Insurance policy may suit you just fine. That said, if you want your farming equipment and outbuildings covered, looks like you’re right back looking into a Farm and Ranch insurance policy. Not sure which one you need, well, listen to the Beatles— “all you gotta do is call, and I’ll be there.”

BUSINESS PERSONAL PROPERTY / FARM PERSONAL PROPERTY

Let’s talk about farm property for a second. We’ve already established that your farm is a business, right? Your Homeowner’s policy will allow up to $2,500 of coverage to business personal property on the premises. A riding mower used to maintain your lawn will be covered under personal property with either a Homeowner’s or Farm and Ranch policy. However, when you think about a tree falling on your new John Deere 5125R, with the $104,000 price tag attached to it (excluding the costs of options and attachments), will you be satisfied hearing it isn’t covered because it’s technically business property?

There are two ways to list farm personal property on your Farm and Ranch insurance to ensure coverage—Scheduled or Unscheduled. Combines, irrigation equipment, and several other specific items must be specifically scheduled on your Farm and Ranch policy, and given their own separate coverage limits,while other items can be grouped together and given one unscheduled “blanket” value. As long as the equipment covered by a blanket insured to a minimum 80% of true replacement cost, it will be replaced in a total loss. Homeowner’s insurance will not afford you this type of protection in the event of a loss.

Is that all?

While not an all-encompassing list thus far (we’ll get to more in a later episode), this will give you better idea whether to look for a Farm and Ranch insurance policy, or Homeowner’s insurance. All too often I find myself meeting with people who need Farm and Ranch insurance to be fully protected, but were sold Homeowner’s policies instead. I don’t believe that’s due to carelessness, but most insurance agents don’t focus on Farm and Ranch insurance enough to know the subtle differences.

Are you ready to schedule your no-cost, no obligation, consultation to determine whether what you HAVE is what you NEED? Contact your Trusted Choice Farm and Ranch insurance advisors at Richey-Barrett Insurance today and ask for Mike, “the Farm Guy.”

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