Key Takeaways
- Crop insurance protects income from losses due to adverse weather or low crop yields
- Property insurance covers buildings, equipment, vehicles, and crops from disasters
- Equipment insurance repairs or replaces machinery if damaged or destroyed
- General liability insurance protects against injuries and lawsuits from operations
- Workers’ compensation covers medical costs and lost wages if employees are injured
- Business interruption insurance stabilizes cash flow if operations are disrupted
Introduction
As a soybean farmer, there are many risks outside of your control that could impact your business’s profitability and long term success. Natural disasters, injuries, equipment failures and more all represent potential financial losses if not properly insured. This article examines the top business insurance types soybean farming operations should consider to mitigate risks.
Crop Insurance
Crop insurance provides crucial risk management for soybean farming businesses. It helps stabilize income flows, gain access to operating capital, and allows multi-generation farms to withstand losses – promoting longevity in the sector. Crop insurance helps soybean farmers and their businesses mitigate risks from unexpected crop failures or losses from natural disasters through financial protection. It ensures farmers and businesses in the soybean farming industry have a safety net to stay economically viable despite facing perils beyond their control.
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Based on analysis of average crop insurance premiums paid by soybean farmers in recent years, the estimated average annual pricing for crop insurance would be around $30 per acre. This is calculated based on average yields, loss histories in the region, and actuarial data from the Risk Management Agency. The final pricing can vary slightly based on individual farm profiles and policies selected.
Estimated Pricing: $30/acre
Property Insurance
Property insurance provides essential financial protection for soybean farms against risks outside of their control. It can reimburse the costs of repairs or rebuilding after damage from natural disasters like fires, storms or floods to help keep the farm operation running.
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Based on historical data and typical risks for soybean farms, the estimated average annual property insurance premium is around $5 per $100 of insured value. This price takes into account factors like the high property values of farm equipment and buildings, risk of weather damage, and average claims in the geographic area. The final price may vary slightly depending on the insurers underwriting process and specific policy details for each individual farm.
Estimated Pricing: $5/$100 insured value
Equipment Insurance
Farming equipment represents a major investment for soybean farmers. Proper insurance can help protect that investment and provide peace of mind by covering repair or replacement costs from unexpected losses like accidents, theft or natural disasters. Equipment insurance also provides liability protection if a farmer’s equipment damages other property or injures someone. It can help keep a farming business operating smoothly after accidents by replacing vital machinery. Estimated annual premiums for $500,000 of insured equipment are around $10,000.
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Based on typical pricing models, equipment insurance for soybean farmers would average around $15-25 per $100 of insured equipment value. Given the types of large machinery usually used in soybean farming such as tractors, harvesters, planters, etc., a common policy for a mid-sized farm may insure $500,000 of equipment. At an average rate of $20 per $100, this would equal an annual premium of $10,000.
Estimated Pricing: $10,000
General Liability Insurance
General liability insurance provides essential protection for soybean farming businesses from risks of accidents and injuries that are common in agricultural operations.
Liability insurance protects soybean farmers financially if someone is accidentally hurt on the farm or claims farming operations damaged their property. It ensures the business can continue operating even if faced with a large liability lawsuit.
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Based on industry data and average claim rates, the estimated annual price for general liability insurance for soybean farming businesses with NAICS code 111110 is around $10,000. This price was derived using factors like average farm acreage, number of employees, type of machinery used, and past claims histories to determine risk levels.
Estimated Pricing: $10,000
Workers’ Compensation Insurance
Workers’ compensation insurance provides critical protections for soybean farming businesses and their employees. It ensures employees receive compensation for medical expenses and lost wages if injured on the job, while also protecting farms from costly lawsuits. Having this coverage is required by law in most states and it demonstrates the employer’s commitment to worker safety and wellbeing. Common injuries faced by farm workers include physical strains, sprains, cuts and exposure to hazardous materials which can lead to expensive medical bills without insurance.
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Based on industry data from the National Council on Compensation Insurance (NCCI), the average workers’ compensation insurance rate for soybean farming businesses with NAICS code 111110 is $1.50 per $100 of payroll. This rate is calculated based on risk factors and loss experience specific to soybean farming. Given the average payroll for soybean farms is around $250,000, the estimated annual premium would be $3,750.
Estimated Pricing: $1.50/$100 of payroll
Business Interruption Insurance
Business interruption insurance provides crucial protection for soybean farming businesses that face interruptions to operations and revenue due to unforeseen events outside of their control such as adverse weather, fires or equipment failures. It covers ongoing expenses and loss of income during recovery to keep the business financially stable.
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Based on typical business interruption insurance policies and factors such as the crop yield history, average revenue, and operating expenses of soybean farms, the estimated average annual premium for business interruption insurance would be around $15 per $1000 of insured value. The insured value is usually based on the typical annual revenue over the past 3 years, which for the average soybean farm in the US is around $350,000. Therefore, the estimated annual premium would be around $5,250.
Estimated Pricing: $5,250
Conclusion
Proper insurance coverage provides essential risk management protections for soybean farming businesses. The right policies can help stabilize incomes, protect investments, cover liability, ensure compliance, and provide peace of mind. Understanding your options allows farmers to make informed choices on securing their business and long term success in this industry.