As businesses go, few run the sort of risks that farming does. Farm insurance is critical to making sure that the bad moments don't sink your entire operation. However, it can be tough to figure out just how much insurance you should carry for your farm. Let's look at how you can approach the issue and make sure your farm will have enough coverage.
Foremost, you should think about the consequences of the worst risks. Notably, this doesn't mean the most likely risks. Instead, you want to cover any risk that could wipe your farm out financially. Your farm might be in a region that regularly gets enough rain, for example, but the peak risk for crop failure may be what might happen in a drought year.
Remember, the issue isn't how probable an event might be. Instead, the question is about how devastated the farm would be as a business if a particular thing did happen.
Most folks are going self-insure at least some of their risk. This is the point of deductibles, after all. The insurance company doesn't want a farmer to claim damages for a blade of grass that dries out after the wind blows.
Consequently, the question is, "How much risk can you afford to self-insure?" The more you can cover out-of-pocket, the higher your deductible should be. In turn, this will lower your premium and reduce your farm insurance costs.
Be aware, though, that you don't want to leave yourself financially exposed. Just because you might be able to cover $50,000 of damages in cash doesn't mean that's where you set the deductible. Otherwise, you might end up in a tight financial situation and not be able to handle a second event if one hits soon after.
Farms come with all kinds of risks, and some of them can seem like pretty unlikely scenarios. Suppose pollen from your radish fields adversely affected the taste of the honey from a neighbor's bee farm. Worse, those folks seek compensation. You might be on the hook for the financial issues their farm experienced due to the radish taste in the honey.
A farm often has unusual labor arrangements. If you pay nonemployee labor to harvest crops, for example, an injury in the field might not be covered by workers' compensation insurance. Instead, that could result in an injury case. Similar scenarios can involve folks getting hurt while picking up products from your farm, and you need to be insured.
Visit a farm insurance website, such as http://www.wrg-ins.com/, to learn more.