Due to rising farm values and increasing values of farm assets, farm owners should give their liability insurance coverage options a second look, one extension specialist advises.
"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," Whitney Wiegel, University of Missouri specialist says.
Wiegel explains that liability insurance protects farm owners from claims arising from unintentional injuries or damage to other people or property.
"Many commercial farms have an umbrella insurance policy that provides liability coverage up to a certain threshold," he says. But for a farmer that has $1 million in liability coverage, he or she is protected for 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.
Along with farm values and farm asset values, if your farm business has evolved to include nontraditional activities such as agritourism or direct sales to consumers, additional coverage may be necessary, he adds.
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.
Source: University of Missouri
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