"Farm insurance is a bear cat," said Dan Backlund, an insurance agent located in Mitchell, SD. He offered suggestions for farmers and ranchers to consider when evaluating if the insurance policy will protect and cover the bases in every scenario.
"The farm business has changed so much, and I'm so humbled by how farmers keep track of everything," he said. "My goal and constant challenge is to keep up-to-date with every going on in agriculture. The one thing about farm policies is they are all different. There is no standardized policy to follow, unlike most commercial or homeowner policies. The biggest thing I want to stress today is this - ask questions and review the fine print. Don't take anything for granted. If not sure, get it in writing. Double check things. I have no problem verifying what I tell my customers."
Because farmers and ranchers have many diverse exposures, it's important to think of coverage on a multi-faceted policy.
"You have auto and truck exposure like a commercial fleet operation; you have cattle exposures like a commercial feedlot or auction barn; you handle grain like a grain elevator or storage facility; you work with chemicals, like a dealer or supplier; you handle large equipment like a general contractor; and you do welding and repair work like a production plant or repair shop," he said. "Your responsibilities are great, so that's why farm coverage is so important."
Today's operators want more than general liability, and they are pushing boundaries of what a farm policy is supposed to cover.
"Farm policies fall somewhere between a personal line and commercial policy," he said. Several problem areas include: custom harvesting, repair shops, contractor work, grain storage for others and renting out farm equipment.
Livestock are another separate part of the business to consider.
"South Dakota is still considered an open range state; the company may pay for liability claims depending on condition of fences and other prior claims," he explained. "If you have horses on your place and give riding lessons, some may be fine with it while other companies won't cover that in their policies. Most livestock producers need special coverage if feeding cattle for others. Most farm policies don't cover cattle in your care. Look closely at your contract and what it covers as it relates to livestock. When I see a small premium, I see a company that won't pay much for this exposure, which can pose a problem if something happens."
With livestock, coverage varies.
"Special coverage is needed for confinement animals, and extra endorsements for special coverages for drowning or suffocation need to be added," he said. "If you have a dairy, watch for exclusions on specialized equipment, milk spoilage and loss of revenue. Also, hay generally limits the value at $10,000 per stack with 100-foot limitation between stacks. Watch for inside and outside building limits. Limit can generally be increased."
Property issues can also arise, and Backlund discussed things to consider in farm policies in order to have appropriate coverage.
"Make sure to add collapse from weight of ice and snow to your building coverage, especially because damage to the roof and siding are typically excluded in policies," he recommended. "Most equipment is covered, but rented, leased or borrowed equipment has proven to be a big problem. Most farm policies provide minimal limits that aren't adequate for today's values. Limits need to be raised; they generally aren't automatic."
Another point to think about is employer liability.
"The state doesn't require farmers to carry workers compensation," he added. "Employer liability provides liability if an employee brings suits against you because of an on-the-job injury, but this is generally limited to $5,000-$10,000. Workers compensation might be the best option."
Other farm coverage issues range from pollution, to hunting, to lodges or restaurants.
"Always look for a company that is willing to verify their coverage and add extra exposures to fit your operation," he said. "Farmers need excess limits over liability. Farmers are the new millionaires, and it's important to protect yourself."
From equipment, to spraying, to livestock and hunting, Backlund hopes ranchers will take a minute to review their current policies and ask themselves, "Are my bases covered?"