What and Why of Farm Insurance

Posted by Insurance Advice on November 20th, 2007 at 05:09am

Agriculture and farming is big business in any country because it helps in building a strong rural economy and helps the country to sustain the food requirement of their population. Hence farmers and their farms play an important role in the overall development of a country. But farming can’t be shielded against natural disasters like flash floods, insects etc. This is why farm insurance is recommended.

Although farm insurance can’t protect your farm from flash floods or other natural disasters but what it can really do is provide cover so that you will not undergo a total loss. There are different types of farm insurance and the premiums depend on the nature of farming. There is always a thin line between a drought filled year and a crop yielding year. This is what makes farm insurance critical.

Farm insurance will provide cover in three circumstances:
• If your crops are damaged then you can get crop insurance.
• If your hired hand or farmers are hurt or disabled then you can purchase Property and Casualty (P&C) insurance, which will not cover your livestock though.
• The third type of coverage deals only with your livestock and is called livestock insurance.

The Cost of Farm Insurance
There are certain subsidies offered nationally to farmers who want to purchase crop/farm insurance. Some of the US States have their own state-funded premium subsidy too. The rates or the premium of farm insurance is dependent on certain factors like your need, the specific farm insurance plan, risk tolerance, total production, and location of the farm. For example: If your farm in situated within a forest area, where forest fires are prevalent then the premiums will be higher.

How will Farm Insurance Benefit?

Buying farm insurance is not a necessity but it will definitely help you in your troubled times. For every farmer, the farm and the crops are their source of livelihood and hence insuring the farm will protect your livelihood.

Some of the reasons for considering farm insurance are:
1. The Government provides certain subsidies to farmers, which will help them to counter the expense of high premiums.
2. If you have multiple crops in your farm then you can get increased coverage for all your crops.
3. Farm insurance will provide protection for harvest values and input costs.
4. One of the interesting facts is that you can use your farm insurance policy as collateral against any operating loans.

These are some of the tangible benefits of farm insurance but the real benefit lies in the fact that you will never have to worry about losing your crops or livelihood ever.

Under Farm Insurance