By Christina DiSalvo
Owning a farm has grown in popularity in the recent years; everyone is looking for that private retreat back to nature or personal exclusive label. Here are a few things to think about before buying that orchard, vineyard or backyard dude ranch.
1. Purchasing a Homeowners policy is not enough
Why is a Homeowners policy not enough? For starters—and it’s a biggie—they exclude pollution and contamination. Whether you are growing grapes, avocados, oranges or raising chickens, horses or cattle, you will have a pollution exposure. A Farm policy has this coverage built in and you can increase the limits.
Water pollution is a huge concern, especially when weather patterns create droughts. A big concern for farmers/ranchers is animal waste leaching into the water table. This can affect surrounding property and carries a hefty price tag for clean-up. Spraying pesticides, herbicides or insecticides can also leach into the water table.
You also need to be mindful of air pollution exposures, such as dust from animals or dust caused from harvesting.
Farm policies are also designed to protect you in the event that you have to drive your farm equipment on a public road and have an accident. Or, they protect you in the event that your produce, wine or animal products (eggs, milk, etc.) make someone ill or cause injury.
Homeowners policies have Personal Liability, but they don’t have Commercial Liability, nor Farm Liability. Don’t think that you are too small-time to be covered by the right policy. A gentleman/gentlewoman farmer/rancher has the same risks and exposures as the big cattle rancher or large wineries.
2. Determine who will work on your new Farm, Orchard or Vineyard
Who will maintain your property? Will it be you and your family with a few hired hands? Or will you be hiring an outside service? If you will be working the property with your family, that’s great. However, don’t think you don’t need workers’ compensation coverage. During your big harvest, you may ask for volunteers or hire a couple of people for a few days. You will need workers’ compensation in the event those volunteers or part-time seasonal helpers get injured.
If you are hiring an outside firm to do all the work, make sure that they name you as an additional insured and provide you with a certificate of insurance. You will want to make sure that they not only have liability insurance but workers’ compensation coverage as well.
Make an inventory of all farm equipment and machinery you own, lease, or borrow. A farm policy should include machinery and equipment coverage, equipment breakdown (for your water pumps, irrigation system, generators, etc.) and always have coverage for borrowed or leased equipment. You might not own a scissor lift, but your best friend’s neighbor does. Even if the neighbor doesn’t have that piece of machinery insured, you will at least be covered if something happens while it is in your care, custody and control.
3. Orchard and Vineyard Tree Coverage versus Crop Insurance
Yes, you can insure your 10-year old trees or 50-year old trees. This coverage is endorsed on a Farm policy. Coverage is limited to fire, lightning, explosion vehicles not owned nor operated by you (the insured), vandalism and theft. The coverage typically starts at $300 a tree or vines up to a maximum $25,000 for damaged trees or vines. Depending on the carrier, this could be increased.
The coverage will also provide a minimal amount of harvested orchard and/or vineyard products once the produce has been removed from the tree or vines. Basically, there is coverage once the avocados or grapes are sitting in a box on the ground.
Now, if you want to cover the fruit, nuts or grapes while they are still on the trees or vines, you will need Crop insurance. This is heavily regulated and controlled by the federal government and is designed to protect against catastrophic perils, such as frost, hurricane, hail, even insects. Coverage is always purchased two years ahead of the current harvest year. Meaning, it’s 2015 and you want coverage on your 2016 crop. You would have had to purchase that coverage in 2014.
Crop insurance can only be purchased during set months of the year, depending upon the crop. So, if you are growing avocados and want coverage for 2017, your application should have been submitted before November 20th of 2015.
Disclaimer: The above content is a general overview which is provided for discussion purposes only and is not in any way meant as providing recommendations or legal counsel. It is not intended to apply to each circumstance. Because the facts and circumstances of every matter differ and the terms, conditions, exclusions and limitations contained in insurance policies vary, you should review your policy carefully and seek any legal counsel that may be necessary or appropriate. Momentous is not responsible for any losses or damage resulting from reliance on the information contained herein.
For more information, contact Christina DiSalvo by email at firstname.lastname@example.org.