Insurance for Farm Owners
owning a horse farm is a dream come true. caring for horses is rewarding and fulfilling - but it does have its costs too. horses seem to always damage something, no matter what you do, and the work is never-ending, not to mention finding the right people to work with you, sourcing the best hay, and figuring out what to do with all that manure. the last thing that you want to do is worry about loss - so it's important to devise a risk management plan and follow it.
risk management includes safety measures like enforcing no smoking rules, legal protections such as contracts and release forms, and insuring any remaining risk to an extent that you feel comfortable with. we are happy to guide you in this process of determining what risk management measures make sense for your farm and putting together an insurance package to compliment that. our job is to educate you so that you can make informed choices about how to manage your risk.
when do you need a farm policy?
if you keep only a small number of your own horses at home, typically four horses or fewer, you may be able to keep your homeowners policy. some personal lines carriers may require an endorsement to add the coverage that you need. it's important to discuss your farm exposures with your homeowners carrier to make sure that you are still eligible to be insured with them!
if you have any boarded horses, allow trainers at your farm, breed or sell horses (even if you own them), or earn money for any other type of farm or equine exposure, you will most likely need a farm policy. all farms are different, so it's important to let us know all of the activities that take place at your farm! that way, we can be sure to find a carrier that can cover all of your exposures.
farm packages include property coverage, which covers damage to your stuff from covered causes of loss. You can cover items such as:
your home, if it's on the farm premises
your barns and storage buildings
your arena buildings (some carriers even cover arena footing!)
your tractor and other tools and equipment
covered causes of loss vary, depending on what type of coverage you select. you can generally choose from basic, broad, or special causes of loss. basic and broad coverages list causes of loss that are covered, such as fire or theft. special means that everything is covered except what is excluded, such as wear and tear or settling.
coverage can also be for different valuations, such as actual cash value or replacement cost. actual cash value means that the carrier will pay you the current value of your item at the time of the loss, which includes depreciation. replacement cost means that the carrier will reimburse you for the cost to buy a new one.
property coverage usually has a deductible, which you must meet prior to a claim being paid, and a coinsurance penalty if you do not fully insure your items. generally, a lower coinsurance is better, because you are less likely to incur a coverage penalty for underinsuring your item. one exception to that is your primary home: so long as it is fully insured, most carriers offer extended replacement cost on your home, which means that they will provide an additional coverage buffer above and beyond your limit, in case the replacement cost of your home is higher than you anticipated at the time that you originally set the limit.
often you must provide replacement cost estimates for your home and other buildings when you purchase the policy as evidence that you are fully insuring them. it's also a good idea to update these regularly, especially if you have done any remodeling or updates, as building costs change all the time!
some mobile items, such as tractors and tack, are generally scheduled to your policy. usually this means that they are covered no matter where they are, even if they are off premises.
farm packages also include liability coverage. most offer both personal and commercial/farm liability. personal liability is your liability for your personal activities, such as when you have a guest over who slips and falls. commercial and farm liability are for your horse business, such as boarding, training, breeding, or selling horses.
your commercial and farm liability coverage is usually for general liability. this covers bodily injury and property damage that you are liable for, subject to the exclusions listed on the policy. some policies exclude damages caused by dogs, injuries to riders, or pollution, for example. coverage applies when the injured party can show that you were negligent, causing their damages.
you also usually have coverage for medical payments, which does not require the injured person to prove that you are liable in order for their claim to be paid. the coverage is usually for a smaller amount, such as $5,000 or $10,000, and can be used to pay medical bills for the injured person. if they want to claim anything beyond that, they would have to show that you were liable, and then your liability coverage would step in.
your employees are generally included in your policy, but your independent contractors are not! many farms use independent contractors, so you either need to require them to have their own insurance or else assume that if the contractor causes any kind of injury or damage to a third party, you might be held responsible. some carriers may allow you to insure activities of independent contractors at your farm on your policy, but you must request this. most carriers will require you to require any independent trainers, and sometimes vets, farriers, and bodyworkers, who come to your farm to provide you with a certificate of insurance naming you as additional insured on their policies.
if you train or board horses, you should also consider adding care, custody, and control coverage. this covers the injury, illness, or death of horses in your care. there is usually a per horse limit and an aggregate limit for the year.
professional liability would also be worth considering, especially if you train or sell horses. professional liability covers your negligence in how you do your job. this would apply to claims such as your failure to notice or disclose a horse's health issue to a buyer; or, your training or handling causing a horse to develop a behavioral problem, which required lots of additional training for the owner to correct. the claimant still has to show that you're liable in order for this coverage to apply.
most carriers also offer umbrella and excess liability policies, which are an additional limit of coverage on top of your underlying farm liability policy. if you use up all of the available limit on your underlying policy, then the umbrella or excess policy will pick up the additional coverage.
most carriers will require you to provide them with copies of your contracts and releases when binding your policy. you may also be familiar with your state's equine liability law. while these types of laws do provide some protection to farm owners, there are exceptions and you will still be held liable in some situations. it's a good idea to discuss your circumstances with an attorney familiar with equine law to make sure that you are protected!
if you have a farm package, you are usually also eligible to add farm auto coverage. most carriers will cover your farm vehicles, such as pickup trucks and horse trailers, as well as your personal use vehicles. the available limits are higher than with personal lines, and if you have a farm umbrella or excess policy, your farm auto policy can also be included as an underlying policy.
if you have a horse trailer, you've probably been asked to bring along friends' horses to shows or trailheads. you may even charge for this service! however, most personal auto insurance carriers do not want this exposure. you are not eligible for coverage on a personal auto policy if you charge for trailering non-owned horses! some may still insure you if you only do this on occasion and you do not charge. it is very important for you to check with your personal auto carrier about their rules.
if they are unable to insure you and you want to continue trailering horses for others, then please contact us. we may be able to include some coverage with your farm policy.
the information contained herein is general information only. policies vary by state, carrier, type, and insured, so this information might not be true for everyone.
please contact us to discuss your specific situation!