Nature is a powerful and strange force sometimes. As a crop farmer, you're often at the mercy of Mother Nature - and she's good at throwing curveballs. In 2013, an invasive breed of East Asian stink bugs began ruining fruit crops with their very distinctive and strong "cilantro-like" flavor. Wine grapes were particularly hard hit, as the blemishes and bad flavor these bugs were leaving behind were sometimes undetected until the grapes were crushed and the juice is tasted.
Scientists at the U.S. Department of Agriculture predicted that, left unmitigated, these bugs could cause 100 percent loss for fruit farmers in 40 states and parts of Canada. At present, there isn't a great way to stop the invasion of these bugs without significant chemical usage which can take out some of the beneficial insects that farmers like to have around.
Since agriculture was developed thousands of years ago, crops have been subject to the ebb and flow of nature. Crop producers and farmers still face the risks of natural disasters and weather events, but they also must handle the financial risks of price volatility. While farm insurance may cover some of these risks, crop insurance is the only way to fully protect your crop revenue and crop yields.
What Is Crop Insurance?
Crop insurance protects farmers and ranchers who grow crops from financial losses due to natural disasters or weather events that cause crop loss and low crop yield. This coverage also offers coverage for loss of revenue due to price volatility in the commodity markets. This coverage is packaged a few different ways:
• Multi-Peril Crop Insurance (MPCI):This program developed by the Federal Crop Insurance Corporation offers coverage for inescapable crop loss and covers nearly all available crops. The MPCI consists of various policies and coverage options that insure farmers and agriculture producers against a decrease in crop yield or a loss of crops due to natural disasters, weather events and disease. It also protections you from revenue loss as a result of price changes in the commodity markets. You can choose products customized to your individual operations and needs or general policies that use county yields and prices.
• Crop-Hail Insurance: While many crop-hail policies cover much more than hail, insurance professionals have kept the traditional name. Usually these policies also cover loss due to fire, during transit to storage, while in storage and more. You can also add options for loss due to windstorms, freezing conditions and other weather-related events.
• Specialized Peril: Many crop insurance companies also offer coverage for specifically defined perils excluded from a MPCI or crop-hail policy. These would include, but are not limited to, the following specialized policies:
• Grain fire policy: Covers most crops against natural, man-made or lightening fire loss
• Rainfall policy: Covers loss of crops, such as tomatoes and raisins for rainfall issues
• Citrus freeze policy: Protects citrus growers against loss due to early freezes
• Citrus business interruption policy: Covers citrus packers if their business is interrupted as a result of a freeze
• Hay fire policy: Covers fire damage while hay is in stacks
• Other specialized policies: Ask your insurance agent for coverages available in your state or region
Do I Need Farm Insurance?
Crop insurance will cover your loss of crops and crop price fluctuations, but it does not cover the rest of your farm. You also need to protect your home and its contents, other buildings on your land, equipment, irrigation systems, combines, livestock and may other things you use to carry out your farming operations. That's why it is a good idea to use crop insurance as an addition to a general farm policy.
In addition to property damage insurance, your farm policy should also contain general liability coverage. This protects you if someone other than an employee suffers personal injury, sickness or death on your farm or as a result of your farm operations. Also, a liability policy covers you if you, one of your employees or even an animal you own damages someone else's property. Other protections typically provided by a general liability policy are medical expenses for someone injured on your property and product liability.
Do I Need Business Owners Coverage for My Farm?
If your farm is also your business, it's a good idea to get protection from business loss. Here are some of the relevant coverages you may want to consider:
• Business Interruption: Protects you in the event of a covered business interruption; provides operating expenses and replaces lost income
• Workers Compensation: Covers your workers or employees if they are injured, get sick or die as the result of a job-related situation; state laws vary, so ask us about the requirements in your state
• Commercial Auto: Protects your over-the-road vehicles used for business purposes, such as trucks, vans, specialized trucks, etc.; normally necessary for the vehicles that need to be licensed
• Voluntary Property Damage Coverage/Care, Custody & Control: Covers property of others that you damage while the property is in your care, custody, or control, or because of work you performed. Coverage applies regardless of negligence.
• Pollution Liability: Manages the costs associated with pollution clean-up, as well as to cover liability claims for pollution-related injuries, illnesses or deaths. Policies cover any type of small-scale pollution that causes contamination of soil, groundwater or property. They also provide coverage for air-borne contaminates like smoke and emissions. Many policies will even cover pollution that occurred in the past before the harmful effects of waste-products was known. For larger, more extensive pollution incidents, an environmental impact liability insurance policy may be needed.