10 Mistakes to Avoid When Buying Dairy Farm Insurance
March 19, 2026By nature, farming can be volatile and unpredictable. Even the best plans and well-run ag operations can run into accidents, unpredictable weather, and other unexpected challenges and obstacles. Doing what you can to set your ag operation up for success is within your control, and so is the insurance coverage you obtain for your operation. Every type of farm and ag operation will have different needs and specific challenges to address. A dairy farmer will have different considerations for their ag operation than a farmer who only grows crops on their property. Here are some common mistakes to avoid when buying dairy farm insurance:
- Mistake: Undervaluing livestock and assets.
- Mistake: Ignoring livestock mortality insurance.
- Mistake: Not obtaining some sort of revenue protection.
- Mistake: Failing to add business interruption insurance.
- Mistake: Overlooking needs for specialized coverage.
- Mistake: Not having replacement cost coverage on buildings and equipment.
- Mistake: Underestimating liability limits for current operations.
- Mistake: Not updating coverage to include new ventures.
- Mistake: Not keeping or providing detailed records.
- Mistake: Working with someone who does not have ag insurance experience.
1. Mistake: Undervaluing Livestock and Assets
One of the biggest mistakes to avoid when buying dairy farm insurance is undervaluing livestock and assets. Your cattle are essential to your dairy operation. Should anything happen to them, your milk production and operation can suffer. Insurance is one of the ways to protect your livestock.
But if you are underinsuring your cattle or equipment, you could end up with significant coverage gaps. You also don’t want to assume a flat rate for all of your animals. There may be differences in the coverage you need based on factors like age, breed, and more. For example, high-value breeding stock may require a specific type of insurance or more coverage to eliminate coverage gaps.
Market conditions also have an effect on the prices and value of cattle, which can also affect valuation for insurance. Given the current market conditions, cattle values, including dairy cattle, are very high. If your insurance policy is not designed to weather market conditions or hasn’t been updated in a while, you could be underinsuring your cattle in the current market.
2. Mistake: Ignoring Livestock Mortality Insurance in Situations Where it Would Make Sense
In addition to general insurance for your dairy cattle, you also want to look into the options available to you for Livestock Mortality Insurance should you have instances where this coverage would make sense.
Livestock Mortality coverage is like “life insurance” for your cattle. Mortality policies help provide compensation for the loss of an animal and can help with replacement cost, per the terms of the policy, and provided it is a covered loss.
There are various coverage options available. Cattle mortality policies can be applied to entire herds, and individual policies are available for high-value cattle. There is also a USDA FSA Livestock Indemnity Program (LIP), which can be an option for eligible contract growers and livestock owners.
Livestock Mortality may not be cost-effective or make sense for farmers, but it may make sense in certain situations. Livestock Mortality policies tend to be helpful and useful for insuring valuable breeding animals or show animals. For dairy farmers, it’s worth having a conversation with your insurance agent about Livestock Mortality if you have:
- Valuable heifers or cows for embryo flushing/transfer
- Valuable breeding bulls
- Valuable show animals
What makes the most sense for your dairy farm and herds will depend on your specific operation and needs. An insurance agent with ag experience will be able to help you determine the right options for your operation and help you obtain the coverage you need for your cattle.
3. Mistake: Not Obtaining Some Sort of Revenue Protection
On top of protection for your livestock, equipment, buildings, and other assets, it’s important to consider coverage that can help provide stability during market swings, specifically with feed costs and milk prices.
When it comes to “milk insurance,” dairy producers have a few options available for coverage. The FSA Dairy Margin Coverage Program (DMC) replaced the Margin Protection Program (MPP) several years ago and is the most commonly used.
Dairy Revenue Protection (DRP) and Livestock Gross-Margin Dairy (LGM-Dairy) are other options, but tend to be far less common now than DMC. Depending on your operation and your needs, these types of coverage can be tools to help you manage risks and provide more predictable income for your dairy operation.
4. Mistake: Failing to Add Business Interruption Insurance
Having some sort of revenue protection can reduce risks related to volatile market conditions and market swings, but what about when something happens to disrupt production on your dairy farm? Severe weather, equipment failure, and more can disrupt or shut down your operations.
Continuous operation and production are critical for dairy operations. Any downtime to production can have serious negative consequences. Business Interruption Insurance, like Loss of Business Income and Extra Expense Coverage, can help cover ongoing costs during downtime caused by covered perils.
5. Mistake: Overlooking Needs for Specialized Coverage
Standard farm insurance policies can cover a lot, but there can be coverage gaps when insuring specialized ag operations. Depending on your operation and needs, standard policies may not be enough to cover specific risks on their own.
There may be situations or assets that require endorsements or specialized coverage to obtain sufficient coverage on your policy. Working with an experienced ag insurance agent can ensure you are adequately insured for the specific risks of your dairy farm.
6. Mistake: Not Having Replacement Cost Coverage on Buildings and Equipment
Another one of the mistakes to avoid when buying dairy farm insurance is not having Replacement Cost Coverage on buildings and equipment. You may be tempted to go for Actual Cash Value (ACV), especially if it results in a lower premium. However, you have to evaluate whether you’re getting actual savings or less insurance in that situation, and whether you’re able to self-insure and handle the difference should you need to replace lost equipment or rebuild structures.
Actual Cash Value (ACV) depreciates as your equipment and structures age. So, if you incur a loss under a covered peril, ACV provides compensation for the loss at its market value at the time of loss. This can leave you undercompensated when you need to replace equipment or rebuild structures.
Instead, insure your valuable buildings and equipment with Replacement Cost Coverage. This insures your buildings to value. Provided the building limits on the policy meet requirements, Replacement Cost Coverage provides compensation that allows you to rebuild your lost structures as new.
7. Mistake: Underestimating Liability Limits For Current Operations
Another mistake to avoid when insuring your dairy farm is underestimating liability for your current operations. There are inherent risks in everything. Between the property, animals, equipment, and more, ag operations can carry a lot more.
This creates several liability exposures for ag operators, which only increase if you invite the public onto your property. These are often reasons why you need additional liability coverage for your ag operation. Underestimating the liability limits for your current operations can leave you with significant coverage gaps on your insurance policies.
It’s not enough to just have coverage for your dairy operation. You need to have the right coverage and enough of it to adequately protect your ag operation. An insurance agent with ag experience will be invaluable in making sure you have the coverage you need with the right limits to protect your dairy operation.
8. Mistake: Not Updating Coverage to Include New Ventures
It can be easy to try out new business ventures on your farm and not think about how that affects your insurance coverage. However, in addition to increased liability risks, you may also be creating coverage gaps that leave you exposed and uninsured should a loss occur related to operations that aren’t included on your current farm insurance policy.
Just as you may need to update your insurance policy to cover newly acquired assets, whether that be new structures, animals, equipment, etc., you also may need to update your policy to cover any new business ventures or operations on your farm. Even something as seemingly simple as a roadside stand selling products involves you in direct farm marketing and can expose you to new risks. If you are not covered for those or covered with sufficient limits under your current policy, you and your dairy operation are at risk should an incident occur.
Any time you add new assets or ventures to your ag operation, it’s important to have a conversation with your insurance agent to make sure you have the right coverage. This is a key way to protect your operation. Additionally, if your new ventures involve the public for any aspect of agri-tourism, the right insurance is a way to lower your risk and protect your agritainment investment.
9. Mistake: Not Keeping or Providing Detailed Records
Insurance is all about managing risk. Having strong containment practices and safety practices, along with detailed safety records, herd management records, and more, can provide evidence of risk control on your dairy operation. Not only can this improve your operation and help you in the event of a claim, but it also provides benefits when you are exploring options and purchasing dairy farm insurance.
Good containment practices and documented safety protocols around your farm reduce your liability exposures and provide proof of it for insurers. Detailed records can give your insurance agent more details to better tailor coverage to your specific needs and can also result in lower premiums because you have proof of lower risk. Not having these records or missing documentation paired with evidence of lacking standards can result in fewer insurers willing to offer coverage or higher premiums.
10. Mistake: Working With Someone Who Does Not Have Ag Insurance Experience
It’s easy to assume that insurance is insurance. But this can result in costly coverage gaps, overinflated premiums, and more. Ag operations are unique and have specific needs. A general insurance agent may be able to help you get insurance coverage, but an insurance agent with ag experience ensures nothing is missed or overlooked with your operation.
They understand what goes into running and insuring an ag operation, as well as the nuances on both the ag operator side and the insurance side that need to be considered. A farm insurance specialist knows how to correctly schedule the dairy farm equipment, navigate the nuances of livestock valuation, identify and adequately cover ag-specific risks, and more. They’ll also know the right questions to ask and can help guide you through a farm and ranch insurance review to make sure you have the information you need and get the coverage your operation needs.
Get the Right Insurance For Your Dairy Farm
These are just a few mistakes to avoid when buying dairy farm insurance. Because every ag operation will have unique needs, a conversation with an independent insurance agent who has ag experience will help you make sure you get the coverage you need for your dairy farm. If you’re exploring new coverage for your dairy farm or need to review your farm insurance policy, contact Ruhl Insurance, a Division of Horst Insurance, 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.