Whether you are already an agricultural business or are planning to establish one, insurance should be a component of your risk management strategy. Insurance, production and marketing diversity, and corporate structure are all examples of risk management. Insurance transfers part of your company’s risk to the insurance carrier.
Insurance can be used in several ways in the agricultural industry. It can be used to protect you from loss of your assets, personal injury and liability, and financial losses to your business. Some specific types of insurance to consider include:
• Property insurance
Property insurance is a crucial component of your risk management strategy for your farm. It protects your assets, including buildings, personal property, livestock, and other property that might be considered part of your business.
• Liability insurance
If you hire employees, you may want to consider some form of liability coverage. Liability insurance protects you and your business from being sued. For example, a worker might slip and fall on the way to the farm, a storm may destroy a neighbor’s property, or your employees may commit misconduct that results in injury to a customer or another employee. Liability insurance can help protect you from frivolous lawsuits and protect your assets. Some business structures (such as partnerships) may not be able to get certain types of liability coverage.
• Health insurance
If you employ workers, you may want to consider some form of health insurance coverage. This is especially true if you have employees that are not related to you, live on your farm, or are considered sole proprietors.
• Farm business structure
Using a corporation or business trust can help shield your assets from lawsuits, but it may not insulate you from other losses. A corporation or business trust may also help you get preferred rates on liability or worker’s compensation insurance. You may also want to consider other business structures and options, including sole proprietorships, partnerships, or a limited liability company (LLC).
• Multi-Peril Crop Insurance
Crop losses, including poorer yields, induced by natural disasters such as the following are covered by multi-peril crop insurance:
- Fire
- Drought
- Weather damage
- Flooding
- Weather damage
More than 90 percent of farmers who purchase crop insurance opt out of MPCI, which is federally sponsored and controlled. If crop damage happens early enough in the growing season, they may be entitled to a replant on behalf of the insurance company.
• Crop-Hail Policy
A crop-hail policy is sold by private insurers and regulated by state insurance departments. This policy specifically covers hail damage, which can completely destroy your crops. It will protect you if your entire crop has to be replanted. This type of coverage is more difficult to obtain than MPCI, but many people see it as a supplement to the MPCI policy.
Do You Need Crop Insurance?
Crop insurance is likely to be required if you are a farmer searching for insurance. A crop insurance specialist can advise you on the appropriate coverage for your farm or ranch.
Crop Insurance Services by AMS is a market leader in the agricultural insurance industry and proudly provides risk management solutions for America’s farmers, ranchers, and producers. Contact us to get crop insurance in California.
