Small Farm Corporations: Insured?

Small farm corporations can carry insurance, and it is recommended that they do so to protect their business. The type of insurance will depend on the specific needs of the farm, such as whether they welcome visitors or sell products for human consumption. For example, farms that invite visitors may want to increase their liability coverage in case someone gets hurt on the property. Farms that sell products for human consumption may want to purchase product liability insurance in case someone gets sick from their products. There are also insurance options available for small farms that are not the primary source of income for their owners. This type of insurance, called hobby farm insurance, can cover property damage and liability but does not usually include additional auto insurance coverage.

Liability insurance

• Liability insurance is often called "slip and fall" insurance, covering injuries to customers during operational hours.
• Many property owners require tenants operating farmers' markets to carry liability insurance.
• Farmers' markets may also require their vendors to have their own liability policies.
• Liability insurance can protect against costly lawsuits that exceed policy limits.
• Small farm corporations can benefit from liability protection for bodily injury and property damage claims resulting from their operations.
• Liability coverage can be customized to include additional residences, off-property recreational vehicle operation, and office or studio use.
• It is recommended to consult with a local insurance agent to design a liability policy that meets the specific needs of the small farm.

Product liability insurance

Most farm owner's insurance policies include a limited amount of product liability insurance. However, additional insurance may be required if the farm engages in certain production and marketing activities, such as direct marketing of farm products in their natural state, selling to restaurants or grocery stores, or making and/or selling value-added products. For example, if a farm sells apples that they grew and someone becomes ill from consuming those apples, the farm's general insurance policy would typically provide product liability coverage. On the other hand, if the farm uses those apples to make apple cider or other processed products, commercial liability coverage would be necessary.

The premium for product liability insurance is based on several factors, including the products sold, the number of years in production, any past incidents, and the volume of sales. It is important for farms to have adequate protection, so estimating on the higher end of planned sales is recommended. Farms should also be transparent about all products they sell or plan to sell to avoid issues with insurance claims.

Product recall insurance is another type of specialised coverage related to product liability. It covers some of the costs associated with recalling contaminated products from the market. Farms that add value to their products or sell through a broker should consider this type of insurance.

In summary, product liability insurance protects small farm corporations from the financial risks associated with selling products that may cause foodborne illnesses. It covers medical treatment for customers, legal costs, and judgments against the farm, up to the policy limit. By purchasing this insurance, farms can safeguard their assets and effectively manage risk.

Workers' compensation insurance

When determining the cost of workers' compensation insurance, the premium is generally based on your payroll and industry. It's advisable to consult with insurance providers to understand the specific requirements and costs for your small farm corporation.

It's worth noting that workers' compensation insurance requirements differ based on the structure of your farm business. If your farm is held as a corporation or LLC, family members working on the farm are not exempt from this insurance requirement. On the other hand, if the farm is not incorporated, family members are typically exempt.

Additionally, it's important to be aware of the challenges that farmworkers may face when accessing workers' compensation benefits. These include a lack of coverage in certain states, reluctance to file claims due to potential employer retaliation, and difficulties in finding healthcare providers who can navigate workers' compensation rules effectively.

Crop insurance

The USDA makes crop insurance information readily available, allowing customers to quickly calculate premiums, locate agents, and download files on demand.

Commercial auto insurance

Other types of commercial auto insurance include non-trucking liability insurance, dump truck insurance, and owner operator insurance. When considering commercial auto insurance, it is important to compare quotes from multiple carriers to find the best coverage and price for your specific needs.

Frequently asked questions