How Much Does It Cost To Insure A Farm?

Oct 22, 2020 | Business Insurance

“What happens if my farmhouse catches fire? If my employees start getting injuries? When will my cattle die?” you asked. The once happy and clear vision slowly became blurry because of the fear of losing your well-beloved investment. It is understandable how these perils can cause worries to a farm owner. Fret no more! The solution is to get a Farm Policy to ensure that your investments will have protection. One of the most common concerns when getting a farm insured is the cost. Due to its unique structure, there is no definite sum as to how much it costs to insure a farm. In this article, we will let you know how much is farm insurance.


Learn more about farm and ranch insurance in this video.

What Is The Coverage And How Much Does Farm Insurance Cost?

Similar to other insurance models, there are specific insurance policies that can cover each aspect of your farm operations. In general, there are 3 main categories under the Farm Policy: Property, Asset, and Liability.

Property Insurance

Property Insurance can cover damages to a farmhouse and its permanently attached contents like cabinets, doors, and even some appliances. Because rebuilding a home often exceeds its actual value, most farm dwelling insurance is we will calculate this on the Replacement Cost Value of the property. It means that the depreciated price of the house will not be deducted from the cost to repair the property.

Rebuilding

Also, the insurer will cover the rebuilding of the house based on the reconstruction cost. For example, 8 years ago it cost you $150,000 to build your farmhouse. You had it insured for its actual value with your insurance agent. 8 years later, the house catches fire and burns to ashes. After consulting your engineers, you learned that the cost to rebuild the house, in 2020, is now at $250,000.

Insured By Actual Value

Since you had it insured for its actual value back then, you would only get $150,000 from your insurance company and will have to pay the extra out of your pocket. We can prevent the sample scenario. When choosing the coverage amount for your farmhouse, it is best to consider the reconstruction cost rather than the actual value. Depending on the size of your house, the cost to rebuild it may range from $100 to $150 per square foot. We will also take into consideration the material, age, claim history, and location.


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Average Farm Insurance Cost

The average cost of home insurance depending on your state is from $400 to $3000 per year and this is just a rough estimate. For example, if you live in Delaware, your home insurance may cost around $500. While if you live in Oklahoma, it will cost you around $2500. Aside from the home structure, you can price out your personal property from 50%-75% of your farm dwelling coverage amount. If you have high-value items and you think the amount would not suffice, you may ask your insurance agent for details about extra coverage.

Other Farm Properties

Other than your farmhouse, most property contents such as equipment and machinery are not part of farm policy automatically. Getting a Farm Equipment Policy will protect you from any losses caused by damaged equipment or machinery. Farm equipment is mostly high-value. A farm tractor-trailer may cost $200,000. It is vital to have this equipment insured for you not to suffer a loss. Per year, it costs $2000 to $4000 to insure a tractor-trailer. The price will decrease along the way depending on the equipment’s depreciated value.

Asset Insurance

This policy provides coverage for your farm animals such as cattle, dairy, swine, and lamb during natural calamities and accidents. 

3 Types of Livestock Policy Coverage

Individual

The best option for insuring valuable individual animals is a policy that covers them specifically. The policy includes an exhaustive catalog of all animals, organized either by tag or other means of identification. An individual cash sum is assigned to each animal.

Herd

The most basic and often used kind of livestock insurance is called “herd coverage,” and it entails insuring a group of animals for a lump sum.

Blanket

All agricultural property is insured for a certain amount under a blanket policy. Coverage for buildings, machinery, and animals is included in a standard Farm Insurance policy.


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Farm Liability

Even when we are cautious, accidents may happen. The Farm Liability policy covers injured guests. Liability insurance protects you against lawsuits made by harmed parties. Your insurance provider will pay medical expenditures, property damage, and legal fees as per your policy. Your child’s buddies visited and milked a cow. Due to the youngsters’ loud sounds, the mother cow got scared and stepped on a child’s foot by accident. You are legally accountable for what happened, so your insurance will cover related injuries and expenses.

Workers Comp Farm Liability

Worker’s Compensation is another common farm liability where the insurance covers accidents involving your staff. Worker’s Compensation may cover 100% of work-related medical expenditures. It covers lost wages owing to the accident. The Worker’s Compensation Insurance premium depends on the location, farm operations, employee’s employment position, claim history, and yearly payroll receipt; larger annual payroll equals higher premiums.

Contractual or part-time workers cost more than full-timers. A field worker’s insurance costs extra owing to the increased risk. State premiums vary. The premium is $1 for $100 of yearly salary. In Texas, Worker’s Compensation Insurance costs $0.75 every $100 payroll. Say you have 10 agricultural workers making $25,000 per year. $250k is your yearly payroll. Your yearly insurance premium would be $187.50 based on payroll. This amount may rise based on your workers’ jobs and past claims.


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How To Determine The Cost Of Farm Insurance?

Most insurance companies offer various farm policies depending on your needs. Most insurance premiums would be based on your farm’s business model, location, employee count, risk factors, and claim histories. The best way to know how much your farm liability insurance cost is to contact your trusted insurance agent. The agent will visit your farm to assess your property and operational processes. Doing this could help him come up with a plan that will cover all areas of your farming operations.

Once your agent is done with the assessment, he will be discussing the insurance premium and deductibles, if there are any. An insurance premium is an amount charged by the insurance company for the plan you have chosen. A deductible is an amount that you will pay out of your pocket before your insurance company starts paying. Take note that the insurance company will only pay up to the dollar limit of the policy. If the cost of the damage is more than the limit, you will have to pay extra.


More info in this great read: What are the Benefits of Insurance to Farmers?


Should I get a farm policy to determine how much farm insurance costs?

Are you willing to lose your hard work, time, and money on the farm in an emergency? If you answered NO, you should get a Farm Policy. Customizing your agricultural policy protects your labor and investment. In comparison to the past, modern farm regulations are more flexible and can be tailored to better protect farm owners like you.

It’s common to hesitate to spend a lot of money on insurance at once as a risk assessment. It’s your safety blanket. A farm policy will help you financially and prevent unanticipated claims. Knowing that your Farm Insurance covers losses may make lenders more likely to lend.

How Do I Lower My Farm Insurance Premium?

I know! No one is more than willing to break the bank and pay hundreds of dollars annually for an insurance plan. No worries, the tips below can guide you on how you can reduce the cost of your insurance plan.

  • Before buying insurance, check pricing with multiple companies. This will let you compare plans and choose one that’s affordable.
  • A bigger deductible reduces premiums. Do this if you are willing to cover further losses.
  • Get a policy covering accidents, sickness, injuries, theft, and natural disasters. Full protection will be cheaper.
  • Tell your insurance agent everything. Ask them how you might minimize your premium and farm insurance limits.
  • Request discounts. Most insurance providers offer multi-policy savings.
  • Avoid overclaiming. Claim histories raise insurance rates. 
  • Carefully value your possessions and valuables to avoid over- or underpaying insurance.

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How Much Does Farm Insurance Cost

All-in-all, we hope we have provided the best answer to “how much is farm insurance?” Having Farm Insurance should help ease your worries as a farm owner and not add up to the burden of your expenses. The number of available farm policies can be overwhelming especially if you are new. 

Get Your Farm Insured by Advantage Insurance Solutions Today!

It pays to consult the experts and stay updated so you are sure that you will be getting the protection you need. Remember, prevention is better than cure! Getting insurance now can help reduce unexpected expenses in the future.

Let our team get you covered. Call or text Advantage Insurance Solutions at (877) 658-2472 today!

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