Farm liability insurance: Do you have enough coverage?

BLUE SPRINGS, Mo. — Farm owners should periodically review the coverage limits on their liability insurance, says a University of Missouri Extension agriculture business specialist.

“Over the past few years, market values for land and other farm assets have increased substantially, which has contributed to the growth of farm balance sheets,” says Whitney Wiegel. “While many farmers’ asset values have increased, fewer farmers have taken the time to review their liability coverage to ensure that they are adequately protected.”

Farm liability insurance protects farm owners from claims arising from unintentional injuries or damage to other people or property. An increase in total farm assets suggests a need for increased liability coverage to maintain consistent risk protection, Wiegel says.

“Many commercial farms have an umbrella insurance policy that provides liability coverage up to a certain threshold,” he says.

For example, a farmer who has $1 million in liability coverage is protected from liability claims of not more than $1 million for the number of occurrences and coverage period specified in the insurance policy.

“While a $500,000 or $1 million policy may have been adequate for many farms 10 years ago, changes in farm profitability and asset values have altered many farmers’ insurance needs,” Wiegel says.

To reduce exposure to loss, Wiegel advises farmers to regularly examine their balance sheets and coverage limits and ask themselves, “Is my liability coverage limit anywhere near the total value of my farm? If an accident were to occur, would my current insurance policy protect me from exorbitant losses?”

“If the answer to either of these questions is ‘no’ or ‘I don’t know,’ it is probably time to talk with your insurance agent,” he says.

In addition, supplemental coverage may be necessary if your farm business has evolved to include nontraditional activities such as agritourism or direct sales to consumers.

For more information, contact your local MU Extension center.