Farm Insurance

Back in January, Jeff Berwick came in and talked with farmers in our Building a Sustainable Business course about farm insurance.  Jeff owns the Berwick Insurance Agency in Peacham, VT. 

Many of the farmers wondered if insurance companies in Vermont offer policies for their types of farms.  In general the answer is yes.  Insurance companies, like most all companies, want to sell products that their customers need or want.  Those companies that insure farms here offer policies to fit large farms, and small farms.  They offer policies to dairy farms and farms that sell products at Farmer’s Markets or roadside stands.  Some offer policies to farms who sell raw milk and to farms that process products and to farms that have visitors on their farms.  Farm insurance policies vary with coverage, risk and price.  (Then there is the specialized crop insurance that I will not cover in this article.  To learn more, http://www.rma.usda.gov/aboutrma/fields/nc_rso/   or  contact Pam Smith <pssmith@uvm.edu>.)

Do you need insurance on your farm?  That is up to you.  In general, insurance is there to protect you from the financial consequences of a disaster.  With an insurance policy, we are transferring risk to the insurance company, we pay them to take this risk for a year.  If we suffer an insured loss, they pay us.

A farm insurance policy may include these types of coverage:

  • Personal liability that travels with you wherever you go
  • Commercial auto insurance in case an employee is driving a farm vehicle to make a delivery and is in an accident
  • Property insurance in case of fire or accident
  • Loss of use, in case your barn burns and you have no income for a period of time
  • Income and extra expense, to get you back into business after a disaster
  • Liability insurance in case something you do injures somebody

Farm insurance costs vary depending upon

  • Building values and location
  • Farm equipment, how much, types and sizes
  • Size of operation
  • Processing equipment- what and how are you processing
  • Liability limits and deductibles
  • Your credit score

We had several questions about Worker’s Compensation insurance.  Farming is one of the most dangerous occupations (I just goggled it:  Fisherman is most dangerous, then logging, then aircraft pilot, then farming…).   Vermont law says that unless you are self-insured, any employer hiring one or more employees on a part or full-time basis is required to carry Worker’s Compensation.  Vermont farmers are required to carry Worker’s Compensation if their aggregate annual payroll is greater than $10,000 in a calendar year.  Coverage costs are based on the type of farming.  How about interns and volunteers and apprentices?  If these people are under your control, you should have a policy.  Worker’s Compensation is a no-fault policy; an injured employee accepts the benefits in exchange for not suing the employer.  I know a couple of farms who bought Worker’s Compensation insurance the day after an employee was injured on the farm.  If you need coverage, talk to your current insurance agent.  This is the Vermont Department of Labor, Worker’s Compensation website, www.labor.vermont.gov/Business/WorkersCompensation/tabid/114/Default.aspx

Like car, health and life insurance if you have questions, talk to your agent to find out if you are covered.  Policies vary with the amount of risk.  Homeowner policies do not cover a farm business.  If you are selling more products, usually your cost will be higher.  Do you store products for a number of months?  Are you selling different products this year than last year? 

As far as I know there are 3 companies that offer farm policies in Vermont now.  There may be others, not all companies will cover all products or buildings.

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About Dennis Kauppila

I work with farmers on finances. I started with UVM Extension in 1983, and have worked with hundreds of farmers on issues ranging from starting a farm, how to get a loan, leasing a farm, understanding farm finances, to retiring from farming. I teach 1 or 2 courses for farmers each winter. I am working with several farmers now on business plans, and I continue to work with many farmers on balance sheets and budgeting.
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