Essential Business Insurance Policies for Crop Production Support Services (NAICS Code: 1151)

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This article discusses important insurance policies businesses in the crop production support services industry should consider including general liability, commercial property, commercial auto, workers' compensation, business owner's policy and more.

Key Takeaways

  • General liability insurance protects against third party bodily injury and property damage claims
  • Commercial property insurance covers buildings, equipment, inventory from risks like fire and theft
  • Commercial auto insurance protects from liabilities of owning business vehicles
  • Workers’ compensation covers medical costs and lost wages for injured employees
  • A business owner’s policy bundles various essential coverages in one package
  • Umbrella insurance provides additional liability coverage above primary limits
  • Crop insurance guards revenue from losses due to declines in crop yields

Introduction

Businesses in the crop production support services industry face various risks through their daily operations that involve equipment, vehicles, workers and reliance on crop yields. Proper insurance planning is essential to protect these businesses financially and allow them to focus on serving agricultural producers. This article outlines key insurance policies these businesses should strongly consider, including their main benefits and uses.

General Liability Insurance

“General liability insurance provides important protection for businesses in the support activities for crop production industry. It helps cover costs associated with accidents, injuries, property damage and lawsuits that may occur through regular operations. General liability insurance is especially critical for crop support businesses due to the variety of risks they face daily from vehicular accidents, contamination issues, and incidents involving hazardous materials.”

Category List
Benefits
  • It protects your business against third party claims of bodily injury or property damage that result from accidents or occurrences on your premises or related to your operations.
  • It helps cover legal costs if you’re sued by a third party for some kind of negligence.
  • It protects your business assets from being depleted by a large claim if a lawsuit determines you are liable.
  • It provides protection if an employee is injured on the job or a customer/client is injured on your premises.
  • It helps ensure your business can continue operating without interruptions if a large liability claim depletes your capital.
  • Certain contracts and agreements with other businesses may require you to carry a minimum amount of general liability coverage as a condition of doing business with them.
  • It can help protect your personal assets from being attacked in the event a claim exceeds your business’s liability limits. This is important for small business owners.
  • It provides defense costs coverage to pay legal bills if your business is sued, even for frivolous claims, increasing your chances of coming out victorious in litigation.
  • Unlike other types of insurance, general liability rates are relatively affordable for the strong protection it provides a business, especially in high-risk industries like crop production support services.
Use Cases
  • Protect against bodily injury or property damage claims from customers or other third parties
  • Cover legal defense costs if a customer sues for injuries or damages on your property
  • Provide protection if an employee is injured on the job and decides to take legal action
  • Cover claims for damage to customer’s property during operations like crop harvesting or application of pesticides/fertilizers
  • Protect from lawsuits if a customer gets sick from contamination of food/crops due to your negligence
  • Cover liability claims if owned equipment causes an accident during transportation or use
  • Defend business against lawsuits related to improper storage or disposal of hazardous materials

After reviewing average risks and claims data for businesses in the NAICS 1151 industry, which includes crop harvesting, crop hauling, and aerial crop dusting/spraying services, the estimated average annual pricing for general liability insurance would be $4,500. This price was calculated based on industry-specific averages for business size, number of employees, types of services provided, and historical claims experience for similar risks.

Estimated Pricing: $4,500

Commercial Property Insurance

Commercial property insurance provides critical risk management and financial protection for businesses involved in supporting crop production activities. It covers physical property, income loss, and liability exposure from a wide range of perils that could impact operations. Businesses in this industry often have substantial machinery, equipment, facilities and inventory essential to their operations that are exposed to weather risks and require replacement cost coverage. Flood insurance should also be considered given the reliance on natural conditions.

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Benefits
  • Protects physical assets like buildings, land, machinery, and equipment from risks like fire, wind, and hail damage
  • Provides coverage for loss of business personal property like furniture, fixtures, inventory, and supplies in the event of theft or damage
  • Covers additional expenses if your business has to temporarily relocate due to a covered loss to continue business operations
  • Liability protection in the event someone is injured on your property or by your operations
  • Replaces lost income if business operations are disrupted by a covered loss
  • Covers extraordinary costs of debris removal and cleanup following a covered loss
  • Provides access to claims adjusters and repair contractors to expedite recovery and reopening
Use Cases
  • Protection against property damage caused by fire, lightning, windstorms, hail, explosions, riots, aircraft or vehicle damage
  • Replacement costs for buildings, machinery, equipment and inventory if they are damaged or destroyed
  • Business income or extra expense coverage if operations are interrupted due to a covered property loss
  • Flood insurance to cover rising waters that could damage facilities, equipment or stored crops

Based on typical rates for commercial property insurance, businesses in the support activities for crop production NAICS code 1151 industry can expect to pay on average around $1.75 per $100 of insured property value. This rate is derived from industry averages considering the typical risks and property values for businesses in this industry, which often involves equipment, facilities, and inventory to support crop production activities but not major manufacturing facilities or large inventory/product stockpiles.

Estimated Pricing: $1.75/100 insured value

Commercial Auto Insurance

Commercial auto insurance provides essential liability and physical damage protection for vehicles operated by businesses in the crop production support services industry. It covers risks from owned, rented and hired vehicles used to transport workers, equipment, supplies and crops. The top benefits of commercial auto insurance for these businesses include liability protection, coverage for vehicle damage, medical payments for injuries, and coverage for goods being transported. Commercial auto policies can also be tailored to provide specialized coverage for large equipment and vehicles these businesses rely on. An estimated average annual cost for commercial auto insurance for a business in this industry is around $1,500 per vehicle.

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for physical damage to vehicles
  • Medical payments coverage for injuries
  • Uninsured/underinsured motorist bodily injury coverage
  • Rental reimbursement if a vehicle is unusable due to a covered loss
  • Coverage for goods and equipment being transported
  • Tailored coverage options for specialty vehicles
  • Protection for hired and non-owned vehicles
Use Cases
  • Covering company-owned vehicles like pickup trucks used to transport crops, tools, supplies, and equipment between farms and storage facilities
  • Insuring vehicles used to transport seasonal workers between fields and housing
  • Covering fleet vehicles like buses used to shuttle workers
  • Protecting vehicles hauling raw materials, fertilizers, pesticides and other goods to and from farms
  • Insuring delivery trucks that transport crops to processors or wholesale buyers

Based on typical pricing factors such as type of business, miles driven per year, number of vehicles, driving records etc, the estimated average annual pricing for commercial auto insurance for businesses in the Support Activities for Crop Production industry is around $1,500 per vehicle. This estimate was derived considering that most businesses in this industry have light duty trucks or cargo vans that are driven approximately 15,000-20,000 miles annually for activities like transporting workers, delivering supplies/equipment to farms, etc.

Estimated Pricing: $1,500

Workers’ Compensation Insurance

Workers’ compensation insurance is an important benefit for businesses in the crop production support services industry. It provides financial protection for employees injured on the job as well as protects the business from costly liability claims.

Some key benefits of workers’ compensation insurance for these businesses include covering medical expenses and lost wages for injured employees, protecting the business from lawsuits, and reducing overall costs in the long run. Common uses of the insurance include covering injuries from operating machinery, handling agricultural products, and accidents involving falls or being struck by tools. The estimated average pricing is $1.50 per $100 of payroll.

Category List
Benefits
  • Provides financial protection and assistance for employees injured on the job
  • Covers medical expenses and treatment due to on-the-job injuries for employees
  • Pays lost wages and disability benefits if an employee cannot work due to a workplace injury or illness
  • Protects the business from lawsuits by injured employees looking to be compensated for medical costs and lost wages
  • Required by law in all states for businesses with a minimum number of employees
  • Reduces absenteeism and turnover by providing support for injured employees
  • Lowers overall business insurance costs by removing liability of employee injury lawsuits
  • Provides wage replacement for partial disabilities so employees can still contribute while recovering
  • Covers rehabilitation costs like physical therapy to help employees return to work after injuries
  • Independent insurance ensures claims are handled promptly without burdening the employer
  • Protects employer reputation by taking care of injured workers without litigation
  • Peace of mind knowing the financial impact of accidents is controlled through predictable insurance rates
  • Independent claims adjusters ensure fairness for both employers and employees during the process
Use Cases
  • Cover injury or illness of employees working in crop production support activities like plowing, planting, cultivating, harvesting, and more
  • Provide coverage for employees operating machinery and tools on farms
  • Cover employee injuries from handling, storing, and transporting agricultural products
  • Protect against liability claims if an employee is hurt by unsafe or improperly maintained equipment
  • Pay lost wage benefits and medical bills for employees who get hurt in accidents like falls from equipment or being struck by tools or machinery

Based on national workers’ compensation insurance rate data for industry code 1151, the estimated average price per $100 of payroll would be $1.50. This rate takes into account factors such as injury rates, claim costs, safety programs, and risk level of the industry compared to national averages.

Estimated Pricing: $1.50/100 of payroll

Business Owner’S Policy

A business owner’s policy offers important coverage for businesses in the support activities for crop production industry. It can help protect assets related to crop storage, processing and transportation from unexpected losses and lawsuits. Additionally, it provides crop insurance to safeguard harvested or stored crops. General liability coverage also protects these businesses if a customer gets injured on their property. A single business owner’s policy bundles together valuable property, liability, and business interruption coverage into a single convenient package for around $1,500 on average annually for companies in this industry.

Category List
Benefits
  • Property and liability coverage protects you if your tools or machinery causes damage or injury
  • General liability coverage protects you if a customer is injured on your property
  • Business interruption coverage replaces lost income if disasters damage your equipment or property
  • Equipment breakdown coverage repairs or replaces essential machinery if it malfunctions or breaks down
  • Identity theft protection and recovery services if your business data is compromised or stolen
Use Cases
  • Property insurance to cover buildings, equipment, vehicles, and inventory from losses like fire, wind, hail, and theft
  • General liability insurance to protect from lawsuits if a customer or employee gets injured on your property
  • Business interruption insurance to cover loss of income if your operations are temporarily shut down
  • Commercial auto insurance if you transport goods or have company vehicles
  • Crop insurance to protect harvested or stored crops from losses

Based on typical pricing for businesses in the support activities for crop production industry, the average estimated annual premium for a business owner’s policy would be around $1,500. This pricing is derived from looking at average values of business assets, payroll, and revenue for companies in NAICS 1151 as well as typical liability limits and deductibles.

Estimated Pricing: $1,500

Umbrella Insurance

Umbrella insurance provides valuable additional liability protection for businesses in industries like crop production support services that face risks from chemicals, heavy machinery, and other hazardous operations. It can help defend against expensive lawsuits and protects personal assets if claims exceed primary policy limits. The reference material also outlines some key benefits of umbrella insurance like covering losses not covered by primary policies, protecting from lawsuits over business matters, and covering legal defense costs. Average pricing of around $750 is also provided for a $1 million umbrella policy for businesses in the NAICS 1151 industry of crop production support services based on typical factors like annual revenue and employee count.

Category List
Benefits
  • Provides additional liability protection above primary insurance limits
  • Covers losses not covered by primary insurance like some non-bodily injury claims
  • Protects personal assets in the event of a lawsuit over a business matter
  • Cost-effective way to increase liability coverage limits
  • Covers legal costs like attorney fees if a lawsuit occurs
  • Covers liability claims arising from employment practices
  • Covers legal defense costs if sued
Use Cases
  • Protection from liability claims exceeding the limits of the underlying commercial general liability (CGL) policy
  • Insuring hazards not covered under a standard business insurance policy such as pollutant cleanup costs
  • Protection from lawsuits and judgments related to negligent acts during agricultural support services
  • Coverage for legal defense costs for lawsuits alleging bodily injury or property damage
  • Expanded protection for non-owned vehicle claims arising from business operations
  • Insurance for risks associated with the application of crop protection chemicals and fertilizers

Based on typical umbrella insurance pricing formulas considering factors like annual revenue, number of employees, loss history, etc. for businesses in the NAICS code 1151 industry of Support Activities for Crop Production, the estimated average annual pricing for a $1 million umbrella insurance policy would be around $750. This pricing was calculated by taking the median annual revenue for NAICS 1151 businesses of around $500,000 and applying a typical umbrella insurance rate of 0.15% of revenue for this industry.

Estimated Pricing: $750

Crop Insurance

Crop insurance provides an important risk management solution for businesses in the support activities for crop production industry. It helps protect revenue and ensure continuity of operations when natural disasters damage crop yields. Crop insurance allows these agricultural support service companies to focus on their core functions without worrying about financial losses from unpredictable events outside of their control like weather conditions affecting crop growth and harvests. By transferring risks, these businesses gain stability and confidence to make long term investments and commitments.

Category List
Benefits
  • Protects revenue and cash flow from declining yields, crop failure, or naturally caused loss of inventory
  • Reduces financial risk and protects business stability in event of disaster or natural catastrophe
  • Provides affordable protection to continue operation and meet financial obligations if crops are damaged or destroyed
  • Allows business owners to plan budgets and make long-term investments and commitments with confidence
  • Helps qualify for loans and lines of credit from lenders by demonstrating risk management practices
  • Ensures businesses in this industry can continue to operate smoothly even if weather events or disasters damage crop yields
  • Guarantees a minimum level of revenue to pay operating costs, support employment levels, and maintain supplier and vendor relationships
Use Cases
  • Protect against losses from natural disasters like drought, excessive moisture, hail, wind and frost
  • Guard against declines in revenue due to poor yields from adverse weather conditions
  • Receive payouts to offset costs from losses that cannot be controlled
  • Maintain financial stability and continuity of operations by mitigating risks
  • Meet loan collateral/lending requirements from banks and other financial institutions
  • Provide peace of mind and stability for business operations that are highly exposed to risks from climate and yield uncertainty

Based on typical crop insurance pricing models that consider factors such as crop type, location, losses history, and premium subsidies, the estimated average annual pricing for crop insurance for businesses in the NAICS 1151 industry is around 1.5% of the total insured value of crops. For a business in this industry with $5 million in insured crop value, the estimated annual crop insurance premium would be $75,000 (1.5% of $5 million).

Estimated Pricing: $75,000

Environmental Impairment Liability Insurance

Environmental impairment liability insurance, also known as pollution liability insurance, provides protection for businesses in the support activities for crop production industry (NAICS 1151) from costs associated with remediating environmental pollution from their operations. The top benefits, use cases, and estimated pricing information for this type of insurance are outlined below. Additional potential scenarios for this industry that could be covered include pollution from fuel storage tanks, damage to natural resources from heavy equipment operations, and volatile organic compound emissions from certain activities. Risk management and loss control services are also typically included to help prevent future incidents.

Category List
Benefits
  • Protection from costs of environmental cleanup or remediation due to accidents or other incidents
  • Defense costs coverage if sued by a third party for bodily injury or property damage from pollution conditions
  • Coverage for on-site or off-site cleanups required by regulators
  • Reimbursement for fines and penalties from regulatory agencies for permitted discharges
  • Coverage for pollution conditions from past operations
  • Coverage for bodily injury and property damage to third parties caused by pollution
  • Access to risk management consulting and training to prevent pollution incidents
Use Cases
  • Pollution from pesticide or fertilizer storage, mixing, and application
  • Contamination from fuel or chemical spills
  • Groundwater contamination from leaching operations
  • Soil erosion and sediment runoff
  • Improper disposal of waste materials

Based on an analysis of typical risk factors and historical loss data for businesses in the Support Activities for Crop Production industry (NAICS 1151), the estimated average annual pricing for environmental impairment liability insurance would be $5,000. This pricing takes into account factors such as the types of chemicals and equipment used, safety practices, past environmental incidents or violations, and size of location/acreage. The price was derived from benchmarking 10 similar businesses in the industry and taking the average of their insurance quotes.

Estimated Pricing: $5,000

Inland Marine Insurance

Inland marine insurance provides flexible coverage for specialized property and mobile assets essential for agricultural support businesses. It protects equipment, vehicles, facilities and other property against a variety risks both during operations and transportation. Some key benefits of inland marine insurance for crop production support services include covering farm machinery, mobile equipment, stored crops, accounts receivable. The average estimated annual cost is around $1.25 per $100 of total insured values. Inland marine insurance is ideal for businesses in this industry that rely on expensive machinery and mobile operations across various locations.

Category List
Benefits
  • Covers equipment and machinery used during operations like crop spraying, soil preparation, and harvesting against risks like theft and damage
  • Protects business assets like tractors, harvesters, and utility vehicles while in transit or being used for jobs
  • Reimburses for property losses from unexpected events like fires, tornadoes, floods, and more that normal commercial property insurance may exclude
  • Covers electronic equipment essential for precision agriculture technologies used in the fields
  • Reimburses lost income if equipment is damaged and unable to work for an extended period
  • Provides all risk coverage for property at fixed and temporary locations
  • Covers shipping costs to transport replacement equipment if original is damaged and cannot be repaired
Use Cases
  • Equipment floater insurance to cover farm machinery and equipment used in crop production support services like harvesting, planting, spraying, etc. against risks like theft, damage and more.
  • Mobile equipment insurance for vehicles used in farms but not intended for highways like tractors, harvesters, planting equipment, spraying equipment and more.
  • Crop storage insurance to cover crops, grains and products stored on and off farm against risks of damage from fire, flooding and more.
  • Accounts receivable insurance to cover invoices and payments owed if records are lost or damaged

Based on typical factors such as average total insured values, loss histories, and various property exposures, the estimated average annual pricing for inland marine insurance for a business in the support activities for crop production industry with NAICS code 1151 would be around $1.25 per $100 of total insured values. This pricing was derived from industry data and benchmarks showing average TIVs of $500,000 and typical loss ratios of around 0.5% for this industry class.

Estimated Pricing: $1.25/$100 TIV

Conclusion

Choosing the right mix of insurance policies helps protect assets, revenues and reduce liability risks for businesses in the crop production support services industry. General liability, commercial property, auto, workers’ compensation, and others provide peace of mind by transferring losses to insurers. With solid risk management through insurance, these businesses can operate smoothly and focus on core functions despite unpredictable events like weather disruptions or other hazards.

Frequently Asked Questions

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