Why do I need farm insurance?


Farming is a risky business. From the ups and downs of the market to the potential for disease and natural disasters, farmers have to have some risk management tools to protect their investments. Insurance is one of the most common risk management tools farmers and agriculture business owners take advantage of.

farming 101

1What does it protect?
Insurance protects the farmer or agricultural business owner from claims and lawsuits resulting from personal injury or property damages due to accidents related to your farm business. Insurance also helps cover unexpected losses of crops or livestock in extreme weather situations, disease and pest pressures, fires or other disasters.

2How does it work?
Insurance companies collect premiums contributed by individuals and invest these funds. The proceeds from these invested funds are then used to pay for losses experienced by anyone covered by one of their insurance policies. In this manner, large amounts of money can be available to any one person in the group that experiences a loss covered by the insurance policy.

Each policy owner has a unique risk potential, which is reflected in premium pricing. The higher the potential for loss, the higher the premium. Insurance companies must also factor in their cost of business and overhead expenses.

“Insurance is not a tool to make money, rather it is a tool to help compensate an individual or business for losses that might otherwise cause a financial disaster,” according to a Cornell University Study.

3Find an agent
It’s important to find an agent you are comfortable working with, who understands agriculture and business, and can help you reduce your potential for risk. Ask your neighbors who they recommend and don’t be afraid to shop around. Get quotes from three or four (or more) potential agents and ask lots of questions if you don’t understand how something works.

Sources: Cornell University College of Agriculture and Life Sciences.

Next week: Farm and Dairy will highlight different insurance options for farmers throughout December with liability insurance up next.

(Farm and Dairy is featuring a series of “101” columns throughout the year to help young and beginning farmers master farm living. From finances to management to machinery repair and animal care, farmers do it all.)

More Farming 101 columns:


Up-to-date agriculture news in your inbox!


  1. I didn’t realize that farm insurance protects unexpected losses of crops or livestock. My brother-in-law and I have been talking about starting a small corn farm. We have been looking into everything we might need. However, I don’t think I have come across this before. I’ll have to point this out to him the next time I see him.

  2. It was a relief to know that a farming insurance can protect your farm from the damages caused by natural disasters. Everyone knows that one of the worst enemies of a farmer is the weather and climate. This risk can wipe out your hard-earned crops entirely in an instant. This is why having a farming insurance is essential, because it will serve as a safety net in case a tragedy like this occurs.

  3. Thank you for suggesting that we get quotes from at least three, for, or more agents when shopping for crop insurance. With the harsh weather variations and unexpected rise in costs, we feel like there are more risks these days in farming. We are the second generation on this farm and we do not want to lose it. Between this and the weather conditions, we are going to make sure we get the best crop insurance we can. Hopefully, by the end of the week, we will have several appointments with some insurance companies.


We are glad you have chosen to leave a comment. Please keep in mind that comments are moderated according to our comment policy.

Receive emails as this discussion progresses.