7 Insurance Considerations for Christmas Tree Farms
December 5, 2019The Christmas holiday brings about a lot of excitement and anticipation. Heading out to the local Christmas tree farm to select this year’s Tannenbaum is a tradition for many families, but it does create risks for Christmas tree farm operators. Due to the amount of public traffic that they receive, Christmas tree farms present some inherent risk exposures for operators, and those risks can evolve and change over time. Operators of these types of businesses should keep safety considerations at the forefront of their business and ensure their Christmas tree farm is properly insured. Here are a few important insurance considerations for Christmas tree farms that owners and operators should keep in mind:
- Adequate Liability Coverage and Limits
- Adequate Property Insurance Coverage and Limits
- Insurance For Tools and Equipment
- Commercial Auto Coverage
- Coverage For Growing Stock
- Farm Workers’ Compensation Insurance
- Cyber Liability Insurance Coverage
1. Adequate Liability Coverage and Limits
How much liability insurance is enough? That is, literally, the million-dollar question when it comes to insuring your business. Multiple factors come into play when deciding how much liability coverage to buy, including:
- Asset and equity volume
- Size and scope of the business
- Location of the business
- Nature of the business
Get Enough Liability Coverage to Equal Your Asset and Equity Volume
As a general rule, it is important to purchase enough liability coverage to equal your asset and equity volume in the business. If you have a large fleet of equipment, large and expensive structures, or a high-value estate where your business operates, these things are visible to the public eye and become inherent factors in the size of potential liability lawsuits. However, just purchasing enough liability coverage to equate to your asset volume may not always be enough.
Consider the Size and Scope of Your Business
You also need to consider the size and scope of your business. First, how much traffic will you receive each year? The more folks who enter your premises, the more opportunities arise for something to go wrong.
The risk of an accident increases, and the probability of encountering a bad actor who is seeking to bring frivolous or malicious litigation against your business is also increased with a greater volume of public foot traffic. These are also important considerations for determining if agritainment is right for your farm.
Take the Location of Your Business Into Account
Additionally, you need to consider the social climate of your geographic location. Certain locations are more prone to lawsuits and liability claims due to the simple fact that they hold a higher concentration of personal injury lawyers.
This is often the case when businesses operate just outside of larger metropolitan areas where there are higher populations of people and more aggressive advertising campaigns conducted by these law offices.
Posting visible signage, keeping the premises free of hazards, and doing what you can to keep your property safe for visitors can help farmers avoid frivolous liability claims. However, there will always be a risk, and liability coverage will always be necessary when you invite the public onto your property.
Think About the Nature of Your Business
You also need to take into consideration the nature of your business. In the case of Christmas tree farms, no two are alike. Depending on the nature of your business and the details of your operation, you may need to explore different types of liability coverage, including, but not limited to:
- General Liability
- Product Liability
- Agribusiness Liability
If you allow the public to go out, select, and then cut their own tree, there is significantly more liability exposure present than if you are selling pre-cut trees out of a centralized storefront on your property. Slip and fall exposures are more prevalent with these types of operations, and anytime the public is given a sharp object, such as a bow saw, you have the potential for more severe types of bodily injury.
Additionally, how you get the public to the stand of trees can create a heightened liability exposure for your business. Will they walk, or will you take them by tractor and wagon on a hayride? Some Christmas tree farms use horse-drawn wagons to provide a quaint and unique holiday experience for their customers. Although this can be a benefit to the business, it can also be a reason why you need additional liability coverage for your ag operation.
Your insurance company will need to know the scope of your operations so that it can properly underwrite your policy. When your insurance company is educated about all aspects of your business, they are far less likely to issue a non-renewal after a liability claim than they are in situations where a liability loss occurs as a result of a business operation of which they were not previously made aware.
The best practice is to be open and honest with your independent agent about the details of your operation so they can properly represent your account to their underwriter and appropriately advise you in regard to the specific coverage you need and how much of it you need.
2. Adequate Property Insurance Coverage and Limits
Be sure to consider the property exposures that are present within your business. Equipment, vehicles, buildings, tools, inventory for sale, etc. are all insurable via the Property portion of your insurance policy.
Buildings that are essential to your ability to conduct business operations are especially important to insure, as are vital pieces of expensive equipment. There may be some items you choose to self-insure, or you may choose to insure buildings and business personal property items at less than 100% of their replacement cost.
Your independent insurance agent can provide important insights as to what you should consider insuring so that you receive a customized policy that is tailored to your exact needs. Having a detailed conversation with your agent will keep your business insured properly so that it can continue operations even in the event of an unforeseen loss while simultaneously avoiding the purchase of unneeded or unwanted coverages.
3. Insurance For Tools and Equipment
Although some equipment and tools may fall under your property insurance coverage, there may be cases where specific endorsements or other types of coverage are necessary. In addition to property insurance for building, outbuildings, and more, make sure you talk to your insurance agent about your operation’s tools and equipment. From portable power tools and hand tools to heavy, high-value equipment, make sure the tools and equipment your Christmas tree farm needs to operate are properly insured and fully covered.
4. Commercial Auto Coverage
Typically, personal auto insurance policies exclude coverage for business use. Any vehicles you have on the property that are engaged in business use and commercial operations will likely need to be covered under a commercial auto policy or other coverage that goes beyond the standard personal auto policy.
Having a conversation with your insurance agent about the vehicles on your property and how they are used within your operation will help make sure you have the coverage you need. This type of customized and personalized advice tailored specifically to your situation is one of the biggest benefits of working with an independent insurance agent.
5. Coverage for Growing Stock
Any kind of tree farm or nursery has a unique property exposure in that a large portion of their business assets are still rooted in the ground and growing. Typically, a standard commercial insurance policy will not provide adequate coverage for growing stock.
Once the trees are cut and placed in the “For Sale” line, coverage can often be obtained through the Business Personal Property part of a policy. However, when the trees are still in the ground, other insurance vehicles are likely to become a necessary part of a comprehensive insurance portfolio.
Crop insurance options may exist in order to provide coverage for your stock. But, creating a cost basis if you do not have prior coverage is a process that needs to be worked through with an experienced crop insurance agent. Losing growing stock to various forms of natural disasters can become crippling to tree farmers in subsequent years, so this is an important coverage consideration to make. Depending on your operations and the nature of your claim, you may be eligible for the USDA Tree Assistance Program (TAP) should your trees become damaged or be lost under eligible losses.
6. Farm Workers’ Compensation Insurance
Workers’ compensation coverage is required by law in Pennsylvania and most states. Should an employee become injured or lose wages due to an injury on the job, workers’ compensation insurance can help cover those expenses.
For ag operations, the complexity of farm operations, the use of independent contractors, and more can provide additional challenges. Farm workers’ compensation coverage is an important insurance consideration for Christmas tree farms, whether employees are full-time or part-time.
7. Cyber Liability Insurance Coverage
If your Christmas tree farm has a website, collects customer information online, processes credit cards, uses email, engages on social media, etc. cybersecurity is an important consideration, and cyber liability insurance is an important coverage.
Without consideration for cyber liability, general liability policies often fall short should a data breach occur. In the event of a hack, cyberattack, or data breach, cyber liability insurance can protect your business.
Get the Right Insurance For Your Agribusiness Operations
Christmas tree farms can have significant property exposures, and valuable equipment is often utilized in these businesses as well. All of these concerns should be weighed, and the appropriate coverages put in place to ensure that potential losses are properly insured.
These are just a few of the important insurance considerations for Christmas tree farms that owners and operators should keep at the front of their minds. Although these cover the basics, every operation will have unique needs and may have different risks that need to be addressed. A conversation with your insurance agent will get you well on your way to acquiring the best and most applicable coverage for your operations.
At Ruhl Insurance, a Division of Horst Insurance, we have been writing Commercial and Agribusiness Insurance since our founding in 1943. One of our experienced agents will be happy to help you through every aspect of the insurance buying process. Give us a call at 1-800-537-6880 or 717-665-2283 and start the conversation today!
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Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.