When it comes to ensuring commercial properties, it is easy to think of an office building, retailer, or restaurant. However, commercial farms and ranches also need necessary insurance coverage to ensure their businesses are well protected in the event of a fire, flood, or other natural disaster. Knowing the ins and outs of agricultural commercial coverage can help farm and ranch owners understand their coverage options and avoid being taken advantage of by insurers.

Why Farms and Ranches Need Commercial Insurance Coverage

With over two million commercial farms in the U.S., the farming and agriculture industry makes up a large portion of the nation’s revenue. Despite this, farm and ranch businesses are incredibly susceptible to natural disaster damage.

According to a Forbes article, the U.S. Department of Agriculture estimates that 90% of the nation’s crop losses are due to extreme weather. For example, after Hurricane Harvey in 2017, Texas A&M AgriLife Extension Service economists reported more than $200 million in crop and livestock losses. Record-breaking cold in January 2019 resulted in flooding in the Midwest, causing $3 billion in crop damage, and this year’s Winter Storm Uri caused at least $600 million in crop and livestock damage.

According to the U.S. Environmental Protection Agency (EPA), each year natural disasters – including hurricanes, floods, fires, earthquakes, and tornadoes – challenge agricultural production. Because agriculture relies on the weather, climate, and water availability to thrive, commercial farms and ranches are easily impacted by natural events and disasters.

The repercussions of natural disaster events often include contamination of water sources, loss of harvest or livestock, and the destruction of irrigation systems and other agricultural infrastructure. Unfortunately, these impacts typically have a long-lasting effect on overall crop production, as crops require time and patience to fully mature before they can be sold. This can cost farm and ranch owners hundreds of thousands of dollars in the long aftermath of a natural disaster.

With this in mind, farm and ranch owners should have insurance coverage in place to protect them from costly financial losses. These businesses also have many unique characteristics that require special coverage. Farm and ranch insurance policies that are designed to cover agriculture businesses often combine elements from homeowners, commercial property, and general liability policies to ensure most coverage needs are met.

Farm and Ranch Insurance Coverage

While some farms and ranches can be insured under a homeowners policy, businesses within the agriculture industry will also need to obtain coverage under a separate farm policy. This is because most homeowners policies exclude coverage for any structures in which business is conducted.

Farm policies are intended for farm and ranch owners that live and work within the same location. They typically cover the farm owner’s residence, barns, machinery, and other property used to run the business. It’s important to note, however, that these policies vary widely depending on various aspects of the business. Some insurers will utilize standard policies published by the American Association of Insurance Services (AAIS), while others will use proprietary forms or a combination of standard forms with proprietary endorsements.

Some of the coverage options included in standard AAIS farm policies include:

Barns, Outbuildings, and Other Structures

This covers buildings and structures that are used for farming purposes, including barns, stables, sheds, silos, portable structures, and fences.

Farm Personal Property

This covers machinery, equipment, tools, livestock, animal feed, seeds, fertilizer, and any other items needed for farming. While all of these items can be covered through a single blanket limit, individual items can be scheduled on the policy at separate limits.

Farm Liability

This covers third-party claims against a farm owner for any bodily injury or property damage caused by the business and/or for other types of damages such as those caused by misleading advertising.

Commercial Property Damage Attorneys

Damage to farms and ranches following a natural disaster can be devastating and incredibly costly to business owners. While farm and ranch insurance coverage can help to ease some stress, insurance companies often use tactics to deny, delay, and underpay valid claims. At Raizner Law, our team of commercial property damage attorneys is well versed in handling these instances and helping business owners get back on their feet after a disaster. Contact our office today to see how we can help your business.

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