The ag industry changes, insurance companies change and your farm changes. Craft a plan that keeps you on top of your risk management by setting aside time at least once a year to thoroughly review what has happened and what you plan for your farm going forward. Your farm policy might include your home, machinery, outbuildings, livestock, grain, tools as well as personal and farm liability.
This is your largest exposure for having a claim.
On the farm, autos may include personal as well as farm use vehicles and semi-trucks with trailers. Especially during busy times of the year, like harvest, having heavy vehicles on the road significantly increases the risk of being involved in an accident, and the general public is not always aware of the unique challenges that come with hauling grain. Because of this, some folks prefer having their farm vehicles owned and insured in a separate entity to help mitigate the farm's exposure. Be sure you're educated on the benefits and aware of the consequences surrounding the different options for covering your auto liability risk.
How much umbrella coverage is enough?
The value of land, grain, steel and farm equipment has increased at a rapid pace in the last few years. This increases the assets you have on the farm and in the event of a large accident, you could see lawsuits filed by folks who only see you as an asset target. The purpose of an umbrella policy is to have enough liability coverage over you and your operation, so you aren't forced to give up the actual assets that you need to stay in business. The umbrella policy covers a lawsuit whether it's connected to an auto, farm or work comp loss.
Every state has different laws when it comes to workers comp, but typically farmers have the option of purchasing this insurance or having "employers liability" added to the farm insurance policy...if you have a certain number of employees under the amount set by your state. There is significantly more coverage under workers comp than under employers liability. Your unique operation will determine which is right for you.
One difference is what happens in the case of a claim. If one of your employees is injured and you don't have workers comp, your employers liability coverage may set you and your employee as adversaries in the process, possibly requiring them to sue you in order to get benefits to take care of their injury.
Properly designed life insurance policies can be used for multiple purposes. One or two policies might be a solution for covering family needs, short/long term debt, buy/sell agreements, key-person coverage, succession planning and legacy concerns. There are multiple types of policies and knowing how they work and differ will go a long way towards accomplishing your goals.
Let's face it, farming isn't a spectator sport. At times, it can be dangerous. A long-term disability not only takes you out of work, but it also increases your expenses as you and your family or operation deal with your illness or injury. In fact, 90% of all disabilities are illness-related....not injury-related. Not everyone needs a disability insurance policy, but everyone needs a plan.
The idea that long term care insurance is only "nursing home" insurance is a myth. If you aren't able to perform two out of the six "activities of daily living" (transferring, eating, bathing, toileting, dressing and continence), regardless of your age, you are eligible for the benefits of this type of policy. Most policies also cover cognitive disorders and can be designed to pay benefits even if the insured is still residing in their own home. Relying on your family or business alone to care for you can cause high stress and negatively impact you more than just having extra bills to pay.
A good insurance review includes a discussion of the risks on your farm. Once those are identified, you can figure out if there are ways to mitigate those risks, or if you need to finance them through insurance, essentially paying a premium to hand the risk over to someone else. With the way farming is changing so rapidly, it's a good idea to conduct an insurance review about twice a year. Your insurance advisor should come to your farm and ask lots of questions. Here are some of the questions you should expect to hear: