Running a farm isn’t always about the money. Some people just love farming activities and don’t necessarily do it as their primary occupation, but it doesn’t mean they aren’t passionate about what they do. In fact, many maintain small acreages and pursue agriculture for their own personal enjoyment. These are known as hobby farms. With that said, even a hobby farm needs insurance.
At BrokerLink, we understand the importance of insuring a hobby farm. That’s why we offer several types of commercial farm insurance to protect your property, even if you are simply a hobby farmer. With that said, we have prepared a guide to hobby farm insurance insurance to help you understand how to insure your property.
Learning what qualifies as a hobby farm
If you have a small property with a low amount of acreage where you keep a horse, some chickens and a garden, you likely have a hobby farm. These farms are not primarily for profit. Many run hobby farms to utilize the resources they offer.
Hobby farms and commercial farms have unique needs. For a property to fall into this category, hobby farmers need to meet three specific pieces of criteria, which include the following:
- Size: How many acres is your property?
- Income: Does your farm bring in revenue?
- Livestock: How many animals are kept on your property?
Before getting approved for a hobby farm insurance package, your insurance company or broker will ask you each of these questions. Your answers will determine if you are hobby farming or running a commercial farm. We will explain each criterion in detail below:
Farm size
Hobby farms cannot exceed 10 acres. These acres of land must be considered workable. What does this mean? Land that includes unworkable areas, such as geographic features (e.g. bush or ponds), will not be taken into account when measuring the size of your property. A smaller property prevents you from having to deal with business claim scenarios.
Farm income
A hobby farm is not intended to generate a significant amount of revenue. However, that doesn’t completely prohibit owners from selling produce or other goods. A hobby farm is allowed to make up $8,000 annually before being considered a commercial farm, so you don’t have to worry about small business health equity. Renting land is not part of the gross income calculation from hobby farming.
Farm animals
If you are keeping livestock on your small farm, you can’t have more than six animals to be considered a hobby farm. The only exception to this rule is saddle animals. Horses will not count towards the limit of six animals on your hobby farm. Having these types of animals will not provide coverage even if you have home business insurance or business property insurance.
Understanding what separates a hobby farm from a commercial farm is essential. Misclassifying your farm puts you at risk for penalties, including cancelling your policy. Always be honest with your insurance company to avoid these issues. Next, we will find out what hobby farm insurance covers.
What a hobby farm insurance policy covers
Without hobby farm insurance, your personal insurance coverage will not apply. Personal insurance coverage will protect your home and belongings. However, if you have acreage or large portions of land, outbuildings or equipment the majority of homeowners would not have, you need separate coverage. Here is the coverage available for a hobby farm:
Limited farm coverage
Hobby farm insurance is covered by a policy called limited farm coverage. It offers additional liability coverage across your property. To be clear, it’s not a type of business insurance. Running a hobby farm is not primarily for profit, but you can make a little money from it. A hobby farm insurance package will cover aspects including, but not limited to, the following:
- Your home and belongings
- Outbuildings
- Farm machinery and equipment
- Livestock
- Produce (e.g. vegetables, grain, etc.)
- Loss of income
- Fire department charges
- Farm liability (e.g. if someone gets hurt on your hobby farm, you will not have to pay for extensive damages)
A hobby farm is not the same as a regular farm. Yes, this type of farm insurance covers similar things, but the exact coverage comes down to your specific insurance company. You can ask your insurance company about additional coverage if your policy is missing something. Next, we will discuss the costs of hobby farm insurance.
Hobby farm insurance costs
How much does hobby farm insurance cost? Not every hobby farm owner will pay the same amount for insurance. This is because risks will vary depending on the farming activities you perform. It’s best to shop around with an insurance broker to find the insurance company that will offer you the best price. Several factors affect how much hobby farm insurance will cost, including:
- The amount of coverage required and optional coverages you opt into
- Hobby farm size
- The number of animals and crops present
- Where the hobby farm is located
- Policyholder’s claims history
- Any safety precautions put in place by the owner
- Equipment present and its uses
- Types of property in use, including pens and sheds
These aspects and many more can affect the costs of a hobby farm insurance package. You can lower your insurance rates by installing safety features and having a farm and property inspection. This will show your insurance company that you are committed to making your hobby farm safe.
Contact BrokerLink today!
Finding good hobby farm insurance is as important as choosing the right insurance policy for your business. That’s because you should want to protect everything from your animals to your equipment. Even when you’re not working for a significant amount of property, maintaining your hobby farm is important.
Do you need hobby farm insurance? Maybe you just want to learn more about farm insurance. Either way, BrokerLink is here to help with various types of business liabilities. Educating yourself is a significant part of finding an insurance policy. Contact us today to find the policy that’s right for you.
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