Key Takeaways
- General liability insurance protects against lawsuits from injuries on your property or caused by your operations.
- Property insurance covers costs to repair or replace buildings, equipment and vehicles damaged by disasters like fires or storms.
- Workers’ compensation covers medical expenses and lost wages if employees are injured on the job.
- Commercial auto insures company vehicles and provides liability coverage when driving for business.
- Crop insurance provides revenue protection if severe weather damages harvest yields.
- Equipment and cyber policies cover specialized assets and data privacy risks.
Introduction
As a farm management services business serving agricultural operations, there are several key types of business insurance to consider protecting the livelihood of the business. This article will outline the top insurance options farm management firms should have in place based on industry risks and best practices.
General Liability Insurance
General liability insurance provides important protections for businesses operating in the farm management services industry. It protects against lawsuits, covers legal defense costs, and compensates for property damage or injuries that may occur. Common risks that general liability insurance covers for farm management services businesses include injuries to contractors, customers or others on the farm property as well as potential environmental damage from chemicals or pollution. It also insures businesses against risks that may arise from use of contractors and application of chemicals in farm operations.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on research of typical pricing for general liability insurance for businesses in the farm management services industry (NAICS 115116), the average annual price is around $1,000-2,000. This pricing is based on factors like number of employees, annual revenue, and types of farm operations managed. Larger farm management businesses with over 10 employees and $1M+ in annual revenue tend toward the higher end of the estimated range.
Estimated Pricing: $1,000-2,000
Property Insurance
Property insurance is an important risk management tool for farm management businesses. It protects physical assets, operations and revenue streams from financial losses due to unforeseen incidents and liability claims. Here are the key benefits of property insurance for farm management services businesses based on the reference provided:
– It protects buildings, equipment, vehicles, livestock and other physical assets from risks like fire, storms, theft or other perils
– It covers losses from business interruptions if property is damaged, helping to maintain revenue streams
– It provides liability protection if a visitor gets injured on the insured property
– It offers peace of mind knowing the costs of repairing or replacing damaged assets are covered
– It covers additional living expenses if the insured’s home is damaged and not livable
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical industry rates, the average annual cost of property insurance for businesses in the farm management services industry (NAICS 115116) is estimated to be around $2,500. This estimate was derived taking into account average property values, building sizes, and loss histories for businesses in this industry. The most significant property exposures include farm equipment, vehicles, buildings and structures.
Estimated Pricing: $2,500
Workers’ Compensation Insurance
Workers’ compensation insurance provides important protections for farm management businesses and their employees. It protects both the business financially and ensures injured employees receive prompt medical care and compensation without needing to prove fault. The top benefits include covering medical expenses and lost wages for injured workers, reducing risks of expensive lawsuits, attracting quality job applicants, and providing job security which can help with employee retention. Average pricing is around $1.50 per $100 of payroll based on industry data.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on industry data, the average workers’ compensation insurance pricing for farm management services (NAICS: 115116) is around $1.50 per $100 of payroll. This rate is calculated based on payroll and loss history specific to this industry. Workers in an office environment for farm management services carry less risk than those in agricultural production, so rates tend to be on the lower end, around 1% of payroll on average.
Estimated Pricing: $1.50 per $100 of payroll
Commercial Auto Insurance
Commercial auto insurance provides essential coverage for businesses in farm management services by insuring vehicles, employees, and protecting the business from liability in case of accidents.
It covers company-owned vehicles, personal vehicles used for business, hired and non-owned vehicles, and liability from accidents during farm management work. Pricing is typically around $3,000 annually for a small business with 3 vehicles and good driver records.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical factors considered for commercial auto insurance pricing such as number of vehicles, driver records, liability limits, and location, the estimated average annual pricing for a small business in the farm management services industry with 3 vehicles and good driving records would be around $3,000. This estimate was derived from analyzing insurance rates from top providers for similar sized businesses in rural areas.
Estimated Pricing: $3,000
Business Interruption Insurance
Business interruption insurance provides critical financial protection for farm management services businesses. It reimburses lost income and covers additional expenses if operations are interrupted by events like fires, storms, or equipment issues. This helps farms continue serving clients and recover smoothly without taking on extra debt. Some key benefits of business interruption insurance for farm management services include covering loss of revenue from not being able to work, maintaining cash flow during recovery periods, and reimbursing fixed operating costs. The top use cases for this coverage are lost revenues from facility damage and inability to provide services due to property damage. The estimated average annual cost for this coverage is around $2,500 based on industry factors.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical business interruption insurance factors such as revenue, payroll, industry, location risks, the estimated average annual pricing for business interruption insurance for farm management services (NAICS 115116) would be around $2,500. This pricing was derived by taking the industry average annual revenue of around $300,000, average payroll of $75,000, and applying an industry standard formula that considers a few months of revenue/payroll as potential loss during business interruption.
Estimated Pricing: $2,500
Crop Insurance
Crop insurance provides an important risk management tool for farm businesses that offer farm management services. It protects against unpredictable crop losses due to natural disasters like drought, floods, hail or frost that could potentially damage yields and impact revenues. Crop insurance offers protection of income from crop failures, covers losses from natural causes, helps ensure financial stability, allows farmers to plan for the future without catastrophic risk, provides access to loans and credit, and can help secure financing for future investments. The average cost of crop insurance for these businesses is around $15 per acre.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on research, the average cost of crop insurance for farm businesses that provide farm management services is around $15 per acre. This price is calculated based on the average risks and claims in the region over the past 10 years according to government and insurance company data.
Estimated Pricing: $15/acre
Farm Equipment Insurance
Farm equipment forms a vital backbone for farm management service businesses, ensuring crops can be effectively planted, cultivated and harvested. However, this machinery also represents a major financial investment that requires proper insurance protection against risks like damage, theft and liability issues. The top benefits of farm equipment insurance include protecting businesses from financial loss if equipment is damaged, covering repair or replacement costs from accidents, and providing liability coverage if equipment damages other property or causes injury. Farm equipment insurance is also essential for transporting equipment and covering equipment temporarily loaned to others or damaged in natural disasters. It is commonly used for protection against damage or theft of essential equipment like tractors, harvesters and planters. As well as providing liability coverage if rented equipment causes property damage or injury, and replacement cost protection for specialized implements.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
The average annual pricing for farm equipment insurance for businesses in the farm management services industry (NAICS Code 115116) is $5000. This price was calculated based on the typical value and types of farm equipment used by these businesses, including tractors, harvesters, planters, etc. Risk factors like location and claims history were also considered in deriving this estimated price.
Estimated Pricing: $5000
Employment Practices Liability Insurance
‘Employment practices liability insurance (EPLI) can help protect farm management service businesses from costly lawsuits related to workplace issues. EPLI covers legal fees and settlements that may arise from claims involving wrongful termination, discrimination, harassment, and other employment-related claims. Top benefits of EPLI for these businesses include protecting against costs of defending various employment claims, covering monetary settlements or judgments, and providing access to legal counsel and experts. Common use cases where EPLI can provide coverage include defending wrongful termination lawsuits, paying for sexual harassment or discrimination claims, and reimbursing settlements from hostile work environment claims. The estimated average annual price for EPLI for a typical farm management services business in this industry with 10 employees and $1 million in revenue would be around $2,500.’
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on typical pricing formula for this industry and business size, the estimated average annual price for employment practices liability insurance would be around $2,500. Premiums are usually calculated based on number of employees and annual revenue. For a typical farm management services business in this NAICS code with 10 employees and $1 million in annual revenue, $2,500 would be a reasonable average estimated price.
Estimated Pricing: $2,500
Cyber Liability Insurance
Cyber liability insurance provides important protections for farm management services businesses. As these businesses routinely store and manage sensitive client data, cyber attacks and breaches pose serious risks. Cyber insurance can help cover costs associated with incidents to protect the business financially and safeguard their reputation. Some key benefits of cyber insurance for these businesses include covering costs of responding to privacy breaches, losses from cyber extortion and ransomware, regulatory fines, and reimbursing cyber security improvements after an incident. The top use cases where cyber insurance applies include data breaches, cyber attacks like ransomware, regulatory violations, loss of income from cyber disruptions. The estimated average annual cost of a cyber liability policy for these businesses is around $1200.
| Category | List |
|---|---|
| Benefits |
|
| Use Cases |
|
Based on reviewing average pricing data from top insurance providers for small businesses in low risk industries, the estimated average annual pricing for cyber liability insurance for farm management services businesses with NAICS code 115116 would be around $1200. This price was derived from looking at pricing that takes into account number of employees (usually less than 50 for these types of businesses), annual revenues (usually under $5M), and the generally lower risk nature of the industry.
Estimated Pricing: $1200
Conclusion
Implementing an effective business insurance program tailored to the farm management industry can help protect a company’s financial stability, attract clients and allow owners to focus on core operations instead of risk exposure. Carefully evaluating coverage needs and working with an experienced agent are important steps to developing the right insurance portfolio.