What to Know About Hobby Farm Insurance

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Getting the right insurance for your property and business can be complicated, especially in agriculture. For farmers and ranchers running established ag operations, agribusiness and farm insurance are relatively clear options. But what about hobby farms? The path for small agricultural operations that are done for fun and not as a primary commercial business is a little different. Often, hobby farm insurance is a good approach. Here’s what to know about insuring agricultural activities you do just for fun or for supplemental income:

What Qualifies as a Hobby Farm?

Generally, when it comes to insurance, farms are classified by annual revenue, acreage, and size, including the number of employees. To be considered a hobby farm and not cross into a larger commercial farm category, a hobby farm generally needs to meet the following criteria:

• The annual farming income must not exceed $10,000.
• There are no full-time employees working on the farm.
• It operates on fewer than 50 acres.

What is Hobby Farm Insurance?

When you turn your property into more than just a residence and start to add farming activities, you can create insurance gaps. Hobby farm insurance is designed to fill these crucial gaps and protect you. Hobby farm insurance combines property and liability insurance into specialized coverage.

It is designed for small-scale agricultural operations and farming activities that are not a primary commercial business. More specifically, hobby farm insurance applies to farming-related structures, livestock, and activities that are done for lifestyle reasons, for fun, or for supplemental income.

What Does Hobby Farm Insurance Typically Include?

The exact coverages and limits you will need will depend on your hobby farm, activities, and specific situation. An experienced insurance agent will be a valuable resource for walking you through what you need. In general, a good hobby farm insurance policy will include coverage for:

• Farm structures and outbuildings, with protection against theft, storms, or fire for sheds, greenhouses, barns, coops, silos, etc.
• Equipment and tools, which can include mowers, specialized machinery, and tractors, even if high-value items may need to be scheduled separately on your policy.
• Livestock and poultry, which can include coverage for animals against illness, theft, or specific accidents.
• Liability, for protection should visitors get injured on your property, and can include product liability.

Why Do You Need Hobby Farm Insurance?

Here are some of the biggest reasons why you need hobby farm insurance:

1. A standard homeowner’s policy will not cover it.
2. There are likely gaps in liability protection.
3. Insurance carriers define agricultural exposure differently.
4. Local farmers’ markets may require proof of insurance.
5. You’ll want to protect against loss of income.
6. Hobby farm insurance needs to be customized to your situation.

1. A Standard Homeowner’s Policy Will Not Cover It

Commercial farming activities are things a standard homeowner’s policy does not cover. This extends to hobby farms. Even if you’re just setting up a roadside stand to sell some extra produce from your garden or want to set up a chicken coop on your land, a standard homeowner’s policy often excludes farming or business activities. In addition to the actual activities, livestock and outbuildings are also often excluded.

Sometimes, an endorsement is available and can be added to your policy for coverage on limited, personal-use farming, but it depends on the carrier, your policy, and what you’re doing. If you sell anything from your farming activities, it moves your farming activities from personal use and into a commercial category. Scale, income, and risk exposure are key factors in what is available and what type of coverage is necessary.

Without obtaining additional coverage you need via another policy or specific endorsements, you can be left with expensive gaps in coverage. And, should any excluded activities or items cause damage to your home or other property, you could risk your insurance claim being denied if it would cause the damage to fall under exclusions on your homeowners’ policy instead of covered losses. Hobby farm insurance fills these gaps to provide the protection you need.

2. There Are Likely Gaps in Liability Protection

Another reason why you need hobby farm insurance is that there are likely gaps in your liability coverage that need to be addressed. Since hobby farms are not covered under a standard homeowner’s policy, liability associated with those activities is also often not covered. If you have an umbrella insurance policy, it can help bridge the gap and provide additional liability coverage, but there may still be gaps in your insurance coverage.

This is particularly true if you’ll be inviting the public onto your property. Opening up a property to the public is a common reason why ag operations need additional liability coverage. In the case of a hobby farm, homeowner’s policies usually do not cover incidents related to outbuildings, livestock, or equipment related to the hobby farm or its activities, in addition to not covering the structures or animals. Here, too, even if you’re just selling extra produce or eggs at a roadside stand on your property, having the public come onto your property and doing so for commercial activities creates liabilities that you need to add coverage for.

It’s important to talk to your insurance agent about what you are adding and what you’ll be doing to ensure you have the right coverage and enough of it. Even if you have the right coverage, if your limits are too low to cover an incident related to your hobby farm, you can still end up having to pay out of pocket to make up the difference. This is also a consideration for farmers renting land. Even if you’re renting out land, you still need to be aware of what is happening on your land and consider what coverage you and your renter need for it.

3. Insurance Carriers Define Agricultural Exposure Differently

Insurance carriers have standards for “incidental agricultural exposure.” These often come into play for evaluating hobby farm activities in the context of what is and is not covered on your homeowner’s policy. Different insurance carriers will define agricultural exposure differently.

Depending on what you’re doing, the coverage you have, and the carrier, even small activities could fall under agricultural exposure. It’s important for you to understand what your current policy will and won’t cover, and whether you need specific endorsements or something like hobby farm insurance to get the coverage you need.

4. Local Farmers’ Markets May Require Proof of Insurance

Another reason why you could need hobby farm insurance is that local farmers’ markets may require proof of sufficient insurance before you are able to have a stand and set up as a merchant. If your plans for your hobby farm include having a stand at a farmers’ market, it’s a good idea to have hobby farm insurance that includes product and premises liability.

You may potentially also need inland marine insurance. Even if these specific coverages are not required by the farmers’ market you are interested in, they will provide coverage for the risks you will be exposed to by selling products and transporting them to and from a farmers’ market.

5. You’ll Want to Protect Against Loss of Income

Even when your hobby farm is not your primary source of income, you will want to have some sort of protection against loss of income for it. This is particularly important when your hobby farm is providing supplemental income.

It may not make sense in every situation, but loss of business income coverage can be valuable to have. Should you experience a loss that affects your ability to generate the income from your hobby farm that you normally would, loss of business income coverage can step in to bridge the gap until you’re back and running again.

6. Hobby Farm Insurance Needs to Be Customized to Your Situation

For the most part, insurance policies depend on a number of factors and need to be customized to your specific situation. This is especially true with ag operations and farm insurance, even small-scale hobby farms.

Your insurance needs will vary depending on your specific situation, and different factors will affect the types of coverage you need, what’s available, and what makes sense for you. Working through it with an experienced insurance agent can help make it easier, less stressful, and ensure you get the insurance coverage you need for your specific hobby farm. Customized consultations, personalized advice, and more are all benefits of working with an independent insurance agent.

Get the Insurance You Need For Your Hobby Farm

This is just a brief overview of what to consider about hobby farm insurance. The right insurance for you will depend on your situation. Talking to an independent insurance agent, especially one with ag experience, can help make sure you have the insurance you need for every aspect of your hobby farm.

If you need to review your farm insurance policy, have questions about your current insurance, or need to acquire insurance for a new hobby farm or activity, contact Ruhl Insurance, a Division of Horst Insurance, at 717-665-2283 or 800-537-6880. We can help you navigate and obtain the coverage you need.

Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.