Agriculture is like any other major economic sector: possibly lucrative but never predictable. A farmer spends money and effort to boost productivity and profit. Primary farm insurance covers equipment, livestock, property, and crop output within certain limits. But what happens when disaster strikes?
Some incidents and situations aren’t covered by primary farm and ranch insurance. For example, a truck delivering your livestock has a freeway accident that damages another vehicle. Or a chemical spill on your property causes injury to a neighbor. Or a defective product from your farm results in liability claims that go beyond your main policy’s limits.
Umbrella farm insurance can help policyholders through those extraordinary events. It covers the fallout from major catastrophes that could end your farm. What does umbrella insurance cover, and is it really worth adding on top of basic farm and ranch insurance?
What Is an Umbrella Farm Policy?
Umbrella farm insurance adds another tier of coverage to your policy. This layer covers your farm’s liability over and above your primary policy’s limits.
Most commonly, umbrella farm and ranch insurance is used to cover liability to outside parties. This can include vehicle accidents, product liability, livestock-related events, injuries from defective equipment, or damage to farm visitors.
Primary insurance covers your liability for those circumstances up to a limit — then your farm pays for liability expenses. Umbrella farm insurance helps by giving you an extra layer of financial protection for serious occurrences or accidents.
Granted, there’s an additional premium for umbrella farm insurance. Some farmers may not think they’re as vulnerable to those potential disasters as others. They may believe umbrella insurance isn’t worth the additional expense.
But again, agriculture is unpredictable. Natural weather events can wipe out entire crops and even entire seasons. Animal-borne illnesses can destroy large parts of livestock. Farms that transport goods by truck across state lines face a constant threat of accidents that may be their fault.
Just one of those misfortunes could wipe a farm completely out. But umbrella farm insurance can help a farmer get back on their feet sooner.
What Does Umbrella Farm Insurance Cover?
Umbrella farm insurance duplicates many of the protections of personal umbrella insurance. To be very general, it’s more focused on damages incurred on parties outside your own. Some typical coverages umbrella policies address include:
- Bodily injury
- Property damage
- Personal injury (libel, slander, false imprisonment)
- Accidents to farmworkers
- Lawsuits and defense fees
Umbrella farm insurance kicks in after claims against your primary insurance reach their limit. For example, if an escaped cow from your farm causes a four-car pile-up, your primary insurance may cover up to $500,000 in damages. When claims exceed that $500,000 limit, umbrella coverage takes over.
Usually, umbrella farm insurance just covers accidents or unintentional events — not bad decisions. If you drive your tractor down Main Street on purpose and cause massive property damage, you are probably not covered. Umbrella farm insurance also doesn’t cover damages from your breach of contract with others.
Advantages of Umbrella Farm Insurance
The primary pros to umbrella for your farm and ranch include:
Higher Coverage Limits
The biggest advantage of umbrella farm insurance is its allowance for liability limits beyond primary coverage. This can help when you’re liable for damages in six or seven figures.
Extended Coverage
Umbrella insurance covers almost every aspect of your farm or ranch that can be held liable for damage. Physical injuries, personal damages, tragic accidents, and legal fees are just some of the areas covered.
Easier Cost Management
For many farmers, umbrella insurance premiums are worth the expense. It’s far easier to deal with monthly or annual policy premiums than the economic fallout from disasters.
Higher Security and Assurance
Every kind of insurance helps reinforce the policyholder’s peace of mind. Especially with the wide range of outcomes a farm can endure, umbrella insurance adds another layer of reassurance to your operations.
Disadvantages of Umbrella Farm Insurance
While the additional protection umbrella farm insurance provides can be life-saving, there are some cons to think about as well.
More Premiums
An additional insurance policy on top of your basic insurance will, of course, require more money in premium payments.
Complicated Claims Process
Claims filing and negotiations involving umbrella farm insurance can be tricky. The bigger the event or disaster, the more interested parties will be involved. Resolutions can take a long time.
Gaps in Coverage
There may be some areas of coverage that an umbrella policy does not cover. They can include pollution, cybersecurity, questionable employment practices, or car insurance. In many cases, these gaps can be resolved by policy amendments, but it’s important to be aware of any potential gaps in coverage. .
Coverage Requirements and Deductibles
Generally, you can’t have umbrella insurance without an underlying primary policy. You should also be clear on whether your umbrella insurance takes effect automatically. You may have to pay an additional deductible out of pocket first before umbrella coverage begins to pay. .
What Kinds of Businesses Benefit from Umbrella Farm Insurance?
All farmers, large and small, should take a closer look at umbrella farm insurance. It’s a huge shield against the kinds of losses that can destroy a business. Some of the businesses that should definitely look into umbrella farm and ranch insurance include:
Big Commercial Farms
The larger a company is, the more liability exposure it has. Large commercial farms face a greater range of costlier liabilities. An umbrella policy can defray those costs.
Direct-to-Customer Farms
Farmers who sell their wares at farmer’s markets or roadside stands deal with customers in person. The nature of the transaction exposes farmers to additional liability that umbrella insurance can address.
Learn More About Umbrella Farm Insurance from Garrett Insurance
Umbrella farm insurance is one of the many coverages that Garrett Insurance provides. Our insurance agents will go over each factor of your farm or ranch to find the right coverage for all your potential liabilities. We can customize a plan for your farm that works with your budget and workflow. Garrett Insurance is ready to handle your questions about umbrella policies. Get in touch with one of our agents to get a free quote and learn about your options.