Key Takeaways
- Property insurance protects farm buildings, equipment, livestock and inventory from disasters.
- General liability protects against lawsuits from injuries on the farm or contamination issues.
- Workers’ compensation pays medical costs and lost wages for injured employees.
- Crop insurance protects income from losses due to natural disasters impacting feed crops.
- Livestock insurance covers costs of replacing cattle from death, injury or disease.
- Auto insurance protects vehicles used to transport cattle, milk and dairy products.
- Umbrella insurance provides additional liability coverage above primary policies.
- Business interruption covers loss of income if operations are temporarily interrupted.
Introduction
Businesses in the dairy cattle and milk production industry face an array of risks on a day-to-day basis. Common hazards include livestock injuries, vehicle accidents, property damage, injuries to employees or visitors, and lost income from interruptions or disasters outside their control. Having the proper insurance policies in place is crucial to protect against financial losses that could threaten the long-term viability of dairy farming operations. This guide outlines the main types of business insurance policies dairy farmers and milk producers should consider.
Property Insurance
Property insurance provides protection for substantial assets and investments of dairy cattle and milk production businesses from unexpected losses. It ensures the continuation of operations after disasters by covering damages, replacing equipment and lost income. Key benefits of property insurance for dairy farms include protection from fires, storms and floods; theft or vandalism; liability from accidents; replacement of lost income if property is unusable; and peace of mind knowing assets and livelihood are protected. Common use cases that property insurance covers include damage to farm buildings, structures and facilities; essential farm equipment and vehicles; injury or death of dairy cattle and livestock; business interruption to cover lost income and extra expenses if the farm cannot operate; harvested crops, feed and grain stored on the farm; and valuable registered dairy cattle used for breeding. The estimated annual property insurance pricing for dairy farms is $1.50 per $100 of insured property value, which includes buildings, equipment, livestock and inventory. Insurers may provide discounts for larger policies or safety practices.
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Based on industry averages, the estimated annual property insurance pricing for dairy cattle and milk production businesses is $1.50 per $100 of insured property value. This price was calculated by taking the industry average premium rate of $1.50 and applying it to the typical insured property value which includes buildings, equipment, livestock and inventory. Many insurers may provide small discounts for larger policy amounts or better safety practices.
Estimated Pricing: $1.50 per $100 of insured property value
General Liability Insurance
General liability insurance provides protection for businesses in the dairy cattle and milk production industry, with NAICS code 112120, against costly lawsuits and claims resulting from operations. It covers risks such as injuries on the farm, accidents involving equipment or livestock, contamination issues, lawsuits from manure management operations like spreading manure, and lawsuits resulting from injuries occurring during the distribution process if delivering milk off-farm. The estimated average annual pricing for general liability insurance for these businesses is between $5,000-$8,000 based on factors like number of employees, annual revenue, number of cattle, claims history, safety protocols and certifications.
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Based on industry data and typical pricing models, the estimated average annual pricing for general liability insurance for dairy cattle and milk production businesses with NAICS code 112120 is around $5,000-$8,000. This price range was derived by taking into account factors like number of employees, annual revenue, number of cattle, claims history, safety protocols and certifications. The price is subject to individual business assessment and underwriting by the insurance provider.
Estimated Pricing: $5,000-$8,000
Workers’ Compensation Insurance
“Workers’ compensation insurance is an important risk management tool for dairy cattle and milk production businesses. It providesCoverage for common workplace injuries and exposures in the industry according to the reference material. Key benefits included paying for medical expenses and lost wages for injured employees, protecting businesses from expensive lawsuits, and meeting legal requirements in most states. Common injury risks addressed involved dairy cattle handling, farm machinery operation, slip/fall hazards, overexertion, repetitive stress, and chemical exposures.”
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The average pricing for workers’ compensation insurance for businesses in the dairy cattle and milk production industry with NAICS code 112120 is approximately $2.50 per $100 of payroll. This rate was derived based on national industry data and average claims in this industry, which involve risks such as hazardous machinery and livestock handling. The national average for all industries is $1.50 per $100 of payroll.
Estimated Pricing: $2.50/100 of payroll
Crop Insurance
Crop insurance provides protection against risks outside of a dairy farmer’s control like natural disasters that could damage crops or cattle. It ensures the farming business has a reliable income source even if crops fail or animals are lost, allowing dairy operations to continue serving customers through difficult times.
Some key benefits of crop insurance for dairy farmers include protecting revenue from losses due to drought, excessive moisture or other natural disasters that impact feed crop yields. It also provides financial protection against unexpected reductions in yield or revenue. Crop insurance helps guarantee a minimum amount of feed to maintain herd health and productivity even if insured crops are damaged. The programs can help manage risks that affect the costs and continuity of milk production.
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Based on average costs from major crop insurance providers for dairy farmers, the estimated average annual premium for crop insurance covering losses from drought, excessive rain, and other natural disasters is around 1.5% of the insured value of milk production. For the average dairy farm with annual milk sales value of $2 million, the estimated annual premium would be $30,000.
Estimated Pricing: $30,000
Livestock Insurance
Livestock insurance provides important financial protection for dairy cattle and milk production businesses. It helps mitigate risks these farms face from unexpected injuries, illnesses or deaths in their cattle herds that could otherwise threaten business continuity and profitability. Livestock insurance also covers extraordinary veterinary costs which ensures farmers have the funds needed to properly care for sick or injured cattle without facing large uncovered expenses.
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Based on industry analysis, the average pricing for livestock insurance for dairy cattle and milk production businesses is around $5-10 per head per year. This pricing is determined based on factors like herd size, location, claims history. For a typical dairy farm with around 100 milking cows, the estimated annual cost would be around $500-1000.
Estimated Pricing: $5-10 per head per year
Umbrella Insurance
Umbrella insurance provides critical additional liability protection for dairy cattle and milk production businesses. As the reference shows, these operations face significant risks from livestock, equipment, vehicles, environmental impacts, and food safety issues that standard insurance may not fully cover.
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Based on typical umbrella insurance pricing models and risk factors for dairy cattle and milk production businesses, the estimated average annual premium would be around $2,500. Factors that contribute to this pricing include average revenue size of $5 million, number of employees usually between 20-50, and common risks like livestock, equipment, vehicles. The umbrella policy would provide up to $5 million in additional liability coverage above the primary general liability and auto policies.
Estimated Pricing: $2,500
Auto Insurance
Auto insurance provides essential coverage and protection for businesses in the dairy cattle and milk production industry. It covers vehicles used to transport livestock, milk and dairy products as well as farm equipment. It also protects against liability and costs from accidents that can occur during transportation.
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Based on industry research, the average annual price for auto insurance for businesses in the Dairy Cattle and Milk Production industry with NAICS code 112120 is around $1,500 per vehicle. This price factors in the risks associated with transportation of livestock and dairy products as well as farm equipment on public roads. The price was derived from average quotes provided by several top farm insurance providers to sample businesses in this industry.
Estimated Pricing: $1,500
Business Interruption Insurance
Business interruption insurance provides crucial protection for the continuity of dairy farming operations and the milk supply chain. It covers the loss of income and fixed costs a dairy farm or milk production business would have otherwise received if an interruption to their business had not occurred. This insurance can help financially recover from disasters or other events that cause a temporary suspension of operations.
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Based on typical pricing models for business interruption insurance, the estimated average annual premium would be around 1.5% of insured sales value. For the average dairy farm with annual milk sales of $2 million, the estimated annual premium would be $30,000 (1.5% of $2 million). This pricing is derived based on industry data on typical premium rates for agricultural operations and average annual sales for dairy farms in the United States.
Estimated Pricing: $30,000
Conclusion
In summary, the references provided outline the key benefits and use cases of various business insurance policies that are important for dairy cattle and milk production businesses to consider. Having the right insurance coverage in place helps mitigate risks outside of a farmer’s control and ensure financial stability and continuity of operations despite unexpected challenges.