I’m not throwing eggs at any agents or carriers or even the industry here. It would be a terrible waste of perfectly good cage-free, antibiotic free, organic eggs. I’m also not going to point fingers. I am however pointing…as in pointing out some flaws I see in North Carolina Farmowners insurance. The purpose however of finding the flaws is knowing how to fix them. That’s what I do – find and fix.
I’ve been reviewing farmowners policies for twenty years now. Which means I have seen a lot of missing coverages, outdated information, and other problems with farmowners insurance. At times through those years I didn’t have great options to offer to fix those problems. Now I’m in a position with several carriers and a lot of choices when it comes to tailoring a policy to fix problems when I find them. However I decided it might help to first get people digging in their policies.
I’ve narrowed the big list of problems that regularly “crop” up to the 5 I think are most common. Although I’ve specified North Carolina insurance because it’s what I primarily handle, I’d “bet the farm” these same problems are not unique to NC.
- FARMOWNERS POLICIES CAN COVER HOMES BUT HOMEOWNERS POLICIES DON’T COVER FARMS
This problem is a growing one. Many folks are starting to dabble in growing food and raising livestock in their not-so-farm-sized backyards. Even if they are not in the business of selling the food or animals their homeowners policy could have some significant gaps in coverage.
What’s the big deal? Doesn’t a home policy cover a house, other structures, loss of use and liability? Sure. But it wasn’t designed to cover animal exposure (other than some family pets) and there is limited coverage for any business exposure (and yes selling your eggs to your neighbors might be a business by definition).
If you were raising a cow to milk for your family and the cow was struck by lightning would you expect your homeowners policy to pay you for the loss? What if you decided to start a bee colony at your house do you think your home policy would address the claim if you were sued for your neighbor’s child being stung? A home policy simply can’t do what a farmowners insurance policy can.
2. FARMOWNERS POLICIES THAT ARE FAR FROM FRESHLY PICKED
You took out the policy years ago and haven’t reviewed the coverages since then. I have seen this scenario more than should happen. Your agent comes out (hopefully!) and walks your property when you first take the policy out so they can see your buildings, check for conditions, and be aware how everything is being used. Then time goes by and maybe you add more structures, upgrade your barn, or abandon a building all together.
If you haven’t advised your agent of these changes then your farmowners policy may not be adequately written. Reviewing the policy annually is the best way to avoid the possibility of being caught unaware. Or perhaps uninsured.
3. BURNED OUT, BROKE DOWN, SHORT CIRCUITED AND NO COVERAGE
It’s pretty time consuming to milk a herd of cows when the milking equipment isn’t working. Fields don’t get themselves ready without the tractor. A lot of NC Farmowners policies are missing the Equipment Breakdown endorsement. This coverage has some limits but in general can pay out for when things just quit on you. Even your computer or well pump. Repairs or replacement of equipment is costly and the Equipment Breakdown endorsement could be well worth the premium to add it to your policy.
4. LOSS OF USE DOESN’T EQUAL LOSS OF INCOME
Although most NC Farmowners insurance will cover loss of use of the residence covered on the policy that is not the same as loss of income on the business. After a loss occurs there could be a considerable amount of time where no income is coming in because of a covered loss. Buildings used in the production end of your farm could take a while to be rebuilt and during those weeks it results in loss of farm earnings. Adding farm earnings and extra expense (like borrowing, renting, or outsourcing facilities and equipment) to the farmowners policy will give back that lost money.
5. NEW WAYS OF MAKING MONEY COULD COST THE FARMOWNER
The modern farmer is often creative in finding new ways to make money on the farm and with the things they raise or grow. Having the corn maze in the fall on your farm is not the same kind of risk as when you were just growing the crop in those fields. Changing or adding products from your crops could open you up to new liability and recall dangers.
If you are now making a perishable item that you store on the farm you could need spoilage coverage to protect your investment. Maybe it sounded like a good idea to post the cabin on the back of the property up on Air BnB and you didn’t think it mattered to your insurance company. Just like changes to property can affect your coverage, so can what you are doing to make money there. The yearly review should also be a time to discuss those creative ideas.
DIG UP THE PROBLEMS BEFORE THEY GROW TOO BIG
These 5 problems with North Carolina Farmowners insurance aren’t the only 5. You could be missing crop insurance, pollution liability, work comp for those seasonal employees, and much more. You won’t know the problem is there perhaps until it is too late. Why not review your policy and fix the problems. Call me today at 828-652-6212 and let’s see what we can dig up together to help your NC farm grow.