Key Takeaways
- Crop insurance protects against risk of crop failure and loss of income from natural disasters
- General liability insurance covers risks of injury lawsuits and property damage claims
- Property insurance reimburses costs of damage to buildings, equipment, and crop losses
- Auto insurance provides coverage for vehicles used in farming operations
- Workers’ compensation insurance covers medical costs and lost wages for employee injuries on the job
Introduction
Tobacco farming businesses classified under NAICS code 111910 face a variety of insurance risks due to the nature of their agricultural operations. Proper risk management through business insurance policies can help protect the financial stability of these businesses in the event of losses. The most essential types of coverage tobacco farmers should consider include crop, general liability, property, auto, and workers’ compensation insurance.
Crop Insurance
Crop insurance provides valuable risk management for tobacco farmers by protecting them from unexpected losses due to natural disasters and other uncontrollable events that could significantly impact their crops and business operations.
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Based on research, the average cost of crop insurance for tobacco farming is around $30-40 per acre. With most tobacco farms averaging around 50 acres, the estimated total annual cost would be around $1,500-2,000. This pricing is derived from national average rates published by the USDA Risk Management Agency and insurance providers like Great American Insurance Group who specialize in tobacco crop insurance.
Estimated Pricing: $1,500-2,000
General Liability Insurance
General liability insurance is an important risk management tool for tobacco farming businesses. It can help protect the business from costly lawsuits arising from common risks in this industry such as injuries from equipment, pollution incidents, and potential product claims related to tobacco.
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Based on industry research, the average annual pricing for general liability insurance for tobacco farming businesses with NAICS code 111910 is around $5,000. This pricing is derived based on factors such as the hazardous nature of farming tobacco, average insurance claims in the industry, premium calculation formulas used by insurers.
Estimated Pricing: $5,000
Property Insurance
This reference provides an overview of key benefits, use cases and pricing considerations for property insurance for tobacco farming businesses. It explains how property insurance can help protect the financial stability of such businesses by reimbursing costs from events like fires, storms or theft that damage property like buildings, equipment and crops. Top benefits highlighted include protection from various types of property damage or losses while use cases focus on how insurance can help cover issues commonly faced like weather-related crop damage, equipment repairs and liability risks. Average estimated annual pricing is also given based on the higher fire risks involved.
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Based on national averages, property insurance for tobacco farming businesses tends to be higher priced due to the flammable nature of tobacco crops and barns. The estimated average annual property insurance pricing for tobacco farming businesses is $12 per $100 of insured value due to higher fire risks. This price was calculated by taking the national average base rate of $8 per $100 and adding a 50% surcharge.
Estimated Pricing: $12 per $100 of insured value
Auto Insurance
“Auto insurance provides crucial protection for tobacco farming businesses by covering vehicles, equipment, liability, and financial losses. The top benefits, use cases, and estimated pricing of auto insurance highlighted below show why it is an essential part of managing risks for these operations.”
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Based on typical rates for agricultural businesses, the estimated average annual pricing for auto insurance for tobacco farming businesses with NAICS code 111910 would be around $2,500 per vehicle. This pricing takes into account factors like the hazardous nature of tobacco farming equipment/vehicles operating mainly on private roads/fields as well as higher potential for liability claims from agricultural operations.
Estimated Pricing: $2,500
Workers’ Compensation Insurance
“Workers’ compensation insurance is an important protection for businesses in the tobacco farming industry. As the agriculture work involves risks of injuries from operating machinery, chemicals and weather conditions, workers’ comp coverage ensures employees receive medical and lost wages benefits if hurt on the job. It also protects the business from liability lawsuits, complies with state laws requiring the insurance, and provides estimated annual premium of $16,500 for a typical tobacco farm with 10 employees and $300,000 total payroll.”
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Based on industry data, the average workers’ compensation insurance rate for tobacco farming is $5.50 per $100 of payroll. Given that the average tobacco farm has 10 employees with an average salary of $30,000, the estimated annual premium would be $5.50 x $300,000 (total payroll) = $16,500.
Estimated Pricing: $16,500
Conclusion
By understanding the top benefits, use cases and pricing of these core business insurance options, tobacco farmers can make informed decisions to adequately insure their businesses against unpredictable risks inherent to the industry.