[Market-farming] getting a new farm insured

Brigette Leach avalonfarmshomegrown at earthlink.net
Tue Sep 13 20:49:05 EDT 2005

Lynn Wigglesworth wrote:

>Lucy, I'm going through the same thing right now. I'm trying to expand my
>small farmstand business by selling to restaurants and grocery stores.
>They require $1million liability coverage, and my farmowners insurance
>won't cover it. My agent said that last time she got a quote for that kind
>of coverage, it was $5000/year. How do people do it? I grow good produce
>and I just want to sell it. Why is it SO hard?.
>Lynn Wigglesworth
>Cowbridge Farm
>----- Original Message -----
>From: "Lucy Goodman" <goodows at infinet.com>
>To: "Market Farming" <market-farming at lists.ibiblio.org>
>Sent: Tuesday, August 23, 2005 6:43 AM
>Subject: [Market-farming] getting a new farm insured
>>My husband and i have found a farm that we are buying (probably closing
>>in the next 7 days) and in order to close on the deal we had to get the
>>farm insured. this has been a bit of an ordeal because we are not "real"
>>farmers and it took a couple of days of phone calls to two different
>>insurance agents (both state farm) to get things clear and get the farm
>>What I found out is State Farm will not insure certified organic farms
>>nor will they insure us if we wholesale to groceries or restaurants.
>>At any rate they did write us a policy through Iowa farm and ranch.
>>But I am curious why a certified organic operation cannot be insured.
>>Lucy Goodman
>>Market-farming mailing list
>>Market-farming at lists.ibiblio.org
>>Get the list FAQ at: http://www.marketfarming.net/mflistfaq.htm
>Market-farming mailing list
>Market-farming at lists.ibiblio.org
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Here's my two cents on the insurance question and issue. Just because 
one agent tells you that it isn't available just means that either they 
don't sell for a company who offers such insurance or that the agent 
isn't familiar with the product. Keep checking until you find a better 
company or a better agent. If you have sales over $1000 you are a farm 
by USDA and IRS standards. You can substantiate your claim if you filed 
a Schedule F with your tax return. Makes no difference whether the farm 
operation is organic or conventional.

Secondly, despite the relatively high cost of the premium, I would never 
run a business without liability insurance.

Thirdly, Willie's claim about insurance companies taking in twice as 
much as is paid out is incorrect. I sit on the board of directors for a 
mulitline insurance company and see the numbers. As I can only speak for 
the company that I know, I will tell you that premiums are invested very 
astutely by our treasurer with advice from his staff and the investment 
committee.  At each board meeting we get a report from our claims 
department on the ten biggest claims, these claims are _always_ 
"millions" of dollars regardless whether the product was a liability, 
auto, or fire policy. Governmental agencies regulate insurance companies 
and their perforamcne is monitored by a multitude of rating agencies.

Claims are paid based on what the policy says, so my advice is to _read 
the policy_. Don't take what the agent tells you as what will be paid, 
he really doesn't care, unless he has very high standards regarding the 
way his business is conducted and how he services his policyholders. 
Don't assume that a homeowners or farmowners policy covers everything on 
your farm, in your house or its contents. Many policies need riders to 
cover certain things. Case in point, we have a 1867 painting of our 
farm, valued at over $20,000 hanging in our office. Without the rider, 
it isn't covered. Another example, my Mother in laws travel trailer was 
broken into last winter when it was stored in one of our pole barns. 
Besides running the tank out of propane and  drinking all the booze the 
theives stole the TV. Her policy doesn't cover a replacement.

I'm curious to know what state you are in Lucy.

Avalon Farms

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