Farm Insurance: 6 Areas To Consider

Published online: Jan 09, 2023 Feature Lane Lindstrom, Editor Sugar Producer Magazine
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For an investment as small as 1.48 percent, not making that investment can be quite costly, even catastrophic.

That 1.48 percent is one estimate (from Rabo AgriFinance) of the overall cost percentage-wise of a grower’s overall expenses on the farm. That estimate is fairly comprehensive, including property and casualty, crop, auto, home—really all things insurance-related to the farm.  

We asked insurance client advisor Joe Palmer of Buckner Insurance to give us some suggestions of what to consider when exploring insurance options for the farm. Since a farm is such a big operation with so many components, Palmer separated his ideas into two parts: farm coverage and crop insurance. Within those two parts, here are three ideas/considerations.

Farm Coverage

This category would include homes, autos/vehicles, outbuildings, cellars, pivots, shops, all equipment; really anything on a farm besides the actual crops themselves.

1) Good Information In; Good Information Out

The quality of the information an insurance agent receives greatly assists the quality of the policy he/she can put out. This seems like simple common sense, which it is, but surprisingly, some areas are overlooked or forgotten. You always have choices when it comes to your insurance so there’s little danger to providing all the best information you have and then pick and choose from there on what you’d like coverage-wise.

2) Developing A Relationship

This goes right along with No. 1 on this list. Having a great relationship with your agent helps him to be familiar with your operation. The more knowledge your agent has about your operation, the better the chances are of you getting the coverage you want without paying for something you don’t want or need.

Your agent should understand your short- and long-term goals when it comes to your farming operation and even be a part of your business plan as insurance is an important part of that plan.

3) Don’t Just Do Blanket Coverage

Schedule or individually list equipment/items you want covered. This could be quite a daunting task, considering how many items/components there are on a farm. But you don’t want to discover something you overlooked after a loss is incurred.

Review the list every year with your agent, making sure the list is up to date. Did you sell some of your equipment or get rid of it? What new equipment did you buy?

Additionally, make sure values are up to date, especially these days with values of some items (most items?) having skyrocketed. With today’s fluctuating costs/values, you don’t want to under or over insure.

Of course, everything depreciates. But a knowledgeable agent can help you determine not only values but other key indicators as well, such as market trends.  To help you try to figure out values you can also talk to dealers and equipment reps, your neighbors and do online research,  Yes, all this can take time, but you will (or already have) a good feel for some valuations. It’s just a matter of making sure you’re putting a value on everything you want to insure.

On homes/outbuildings/shops, etc., there are cost estimators through insurance companies that help with this. Take advantage of their knowledge and experience.

Crop Coverage

This coverage, obviously, is for everything you’re planting in the ground. Most growers choose multi-peril crop insurance (MPCI) or hail policies. MPCI helps cover what are referred to as acts of God, which includes a lack of water, excess water, heat, hail, wind and frost.

1) Dates Are Very Important

This is especially true when it comes to the sales closing or the start dates of your coverage. Growers need to choose their coverages/options prior to closing. Each crop has plant dates that you need to stay within to have the proper coverage. These dates are set by the Risk Management Agency at the USDA by crop and county.

2) Coverages

Again, good information in is good information out. You need to work hand-in-hand with your agent so he’s familiar with your risk threshold. Translated, risk threshold is what risks you’re willing to take with your crops. You need to consider the coverage you’re going to buy without putting yourself at risk of getting coverage you don’t really need or that won’t give you the best protection. You don’t want to over insure nor under insure. You need to find that “sweet spot” of crop coverage.

Painting a clear picture for your agent helps him so he can set up your policy to best serve you. The more information you provide about the specifics of your farming ground, the better that policy will be. For example, are certain fields susceptible to frost or hail every year? Do you experience flooding in some fields more often than not? What other field “quirks” might there be?

3) Sugarbeet Specifics

This portion somewhat dovetails into No. 1 (Dates Are Very Important) because growers planning on planting sugarbeets usually buy crop insurance to help cover replanting costs. This policy won’t cover 100 percent of the replanting costs but will help cover some of the cost.

The dates of planting are very specific and vary for different parts of sugarbeet growing areas in the United States. Figure 1 shows a sampling the dates for specific states and counties. This data was for 2022.

FIGURE 1

State                County                        Earliest Planting          Final Planting              End Of

                                                            Date                            Date                            Insurance

                                                                                                                                   Date

Michigan         Clinton            March 21                     May 20                        Dec. 5

Michigan         Montcalm        March 21                     May 20                        Dec. 5

Minnesota       Mcleod            April 11                       May 31                        Nov. 15

Minnesota       Douglas           April 11                       May 31                        Nov. 15

North Dakota  Richland          April 11                       May 31                        Nov. 15

North Dakota  Grand Forks    April 11                       May 31                        Nov. 15

Idaho               Minidoka         March 18                     May 10                        Nov. 15

Idaho               Power              March 18                     May 10                        Nov. 15

Colorado         Weld               March 21                     May 20                        Nov. 15

Montana          Big Horn         April 5                         May 20                        Nov. 15

Washington     Benton                        March 1                       April 20                       Nov. 15

As per the RMA, the sales closing date for all cropping areas is March 15, which is prior to the earliest planting dates for nearly every sugarbeet growing area except Washington state and Oregon (not shown). Likewise, the acreage reporting date—July 15—is a set date for all sugarbeet growing areas.

Perhaps one of the most important numbers to remember is 72. That’s the number of hours you have to report damage or loss to your crop. The “official” wording from the RMA states, “For a planted crop, when there is damage or loss of production, you must give us notice, by unit, within 72 hours of your initial discovery of damage or loss of production (but not later than 15 days after the end of the insurance period, even if you have not harvested the crop).”

Purchasing insurance for your operation is more involved than what we can cover in a short magazine article. But it’s not overly complicated. It will take some homework as well as finding a good agent who can help you navigate the process.