4 Types of Farm Truck Insurance PoliciesFebruary 6, 2020
As farms become more commercialized, many farmers are adding larger trucks to their inventory and expanding the usage of these vehicles into commercial hauling and various other means of generating revenue. Most of these farms also have numerous light-duty trucks, such as pickups or flatbeds, and many smaller family farms solely utilize these types of vehicles. In other common cases, farms may employ the use of exempt vehicles, referred to as “unlicensed farm trucks”. And, there are a few different types of farm truck insurance policies available.
The insurance needs for each type of vehicle vary. By spending just a little time, farmers can expand their knowledge about the different types of farm trucks and select the best and most economical insurance solutions for each. If you use automobiles in your agricultural pursuits, here is a brief outline of the types of farm truck insurance policies available and will get you headed in the right direction to becoming properly insured:
4 Types of Farm Truck Insurance Policies
1. Commercial Auto Policy
Many farm insurance carriers will also offer to write a farmer’s auto insurance. It can be advantageous to couple policies together from both a coverage and cost standpoint. In some scenarios, a farm insurance carrier will only offer certain types of auto insurance or only insure the auto risks that have operations within a certain scope or scale. Some farm insurance companies do not offer any auto coverage, and vehicle insurance must be obtained from another carrier.
No matter what carrier is writing the farmer’s auto insurance policy, heavy and extra-heavy trucks will need to be put on a commercial auto policy. Trucks titled to a commercial farm entity, such as an LLC or INC, will need to be placed on a commercial policy regardless of the insurance carrier. Some companies may require large pickup trucks to be placed on a commercial policy even if there are titled to the farmer’s individual name.
If a farmer has a semi that is used for hauling their own farm products, they may be able to include this on the same commercial auto policy that insures their commercially-owned pickup trucks. However, if the semi is used in the off-season to haul the goods of others, most standard farm and commercial auto insurance carriers will not have an “appetite” for this kind of risk. In these situations, the farmer will need to purchase a separate commercial auto policy that is sometimes referred to as Trucking Insurance.
A trucking policy is still a commercial auto policy. However, the carriers who offer coverage for operations with vehicles used to haul goods for 3rd parties are usually specialized in this type of insurance. These types of operations create higher risks for insurers, larger claim volumes, and a greater severity of claims. For this reason, the premiums for a Trucking policy will typically exceed that of a standard commercial auto policy.
An experienced independent agent can help you decipher the type of policy with which your commercial vehicle should be insured and explain the nuanced ramifications and insurance implications of having multiple auto policies with various insurance carriers.
2. Personal Auto Policy
Some trucks that are used on the farm are insured on personal auto policies. These types of vehicles are usually limited to mid-to-small-sized pickup trucks. When a pickup truck is titled to the farmer’s individual name, it can often be placed on a personal auto policy. The availability of this option is based upon the insurance company’s underwriting guidelines.
But, when possible, placing a farm-use pickup truck on a personal auto policy is usually one of the most economical ways to insure the vehicle. However, be aware of liability limit maximums on personal auto policies. Most do not exceed $500,000 of liability protection. So, it becomes much more imperative that an umbrella liability policy is purchased to accompany the farm and auto policies and provide additional limits of liability coverage.
3. Farm Auto Policy
A few farm insurance carriers offer a type of commercial auto policy that is called a farm auto policy. Although these are less common than standard commercial auto policies, they can be an economically viable option for farmers in many cases. Commercial vehicles that are not eligible for a personal auto policy, but are used exclusively in the farming operations offer a reduced risk to insurance companies than their commercial use counterparts.
Some carriers opt to insure them on a farm auto policy, which will have slightly different underwriting criteria and rating structures than a regular commercial auto policy. The differences between the two types of policies are subtle. So, having your agent help you determine the appropriate path to take will be the best route to receive the best coverage and value combination from your auto policies.
4. Farmowners Policy
In the case of farms that have unlicensed farm trucks, the appropriate means of obtaining auto insurance will, surprisingly, be the farmowners insurance policy. The vehicles deemed to be unlicensed farm trucks are exempt from standard vehicle registration and inspections. Many farmers relegate older or limited use vehicles to this type of registration because it is a cost-effective way to keep a vehicle in use without all of the additional expenses typically associated with automobiles.
The Department of Transportation in the state of Pennsylvania categorizes several different types of unlicensed farm trucks – Type A, B, C, and D. It is very important to know the restrictions that come with each vehicle type because the extension of farm liability coverage to unlicensed farm vehicles requires that they are employed for use in accordance with the laws set by governing authorities. Time of day of use, miles from the home farm, and other restrictions apply to these types of vehicles. So, it’s not a good idea to delegate your “daily driver” as an unlicensed farm vehicle.
As you can see, there are multiple types of farm truck insurance policies available to farmers. Although insurance is a very analytical industry of numbers, standards, and statistics, these farm truck insurance options allow for experienced independent agents to creatively structure comprehensive insurance packages for farmers in a way that best meets their coverage needs and makes the most economical sense.
It’s important to discuss your vehicles and their usage openly with your agent when they are structuring your insurance portfolio. This kind of detailed, conversational approach to the insurance buying process will help to ensure that all coverage gaps are closed and you are receiving the greatest value from your policies.
If you would like to discuss the best avenues to take with your farm vehicle insurance, give one of our licensed and experienced agricultural insurance agents a call at 1-800-537-6880 or 717-665-2283.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.