Q&A: Summer storm season is here. How to protect your farm from weather events.
By Kara Pinato Scro / Jump Media
The summer storm season is upon us and while we never like to think about the worst, farm and horse property owners need to be prepared for potential damages caused by weather events. Insurance policies can be a daunting subject to some, so we spoke with Carolyne Tanner, head of the Farm & Liability Department at Connaway & Associates Equine Insurance Services, Inc., about how farm property owners can protect themselves and some of their most valuable assets.
Broadly speaking, how can farm property owners protect themselves from damages caused by weather events?
It is very important for farm property owners to have their farm property structures and equipment properly covered from the moment they buy an insurance policy. The farm property owner should make sure that each structure is insured at a minimum of at least 80% of the cost to replace it. Replacement costs have risen dramatically, particularly over the past year, so it’s important to review and update replacement costs on insured structures frequently. Farm property owners should also consider what else they’d like insured—such as tractors, arena groomers, tack, etc.—and confirm that these items are covered under their policies.
What types of insurance do you recommend for farm properties that are in areas prone to large storms/weather events?
We are licensed in 48 states and the majority of our insured farm property owners (large and small properties) select special or broad “perils coverage” for their dwellings and higher-end stables and outbuildings. They also have the option to select basic perils coverage for lower-value barns and outbuildings. Location-specific deductibles and exclusions may be required in high-risk areas that are prone to specific hazards such as hurricanes, wind, or hail. For example, high-risk areas for wind or hail may have an exclusion for cosmetic roof damage. Hazard-specific coverage is available for perils such as earthquakes.
Do you recommend different types of insurance if a property is a home versus a business? If it is the place of the owner’s business, how does the owner protect themselves from any damage to equipment and from liabilities (including injury to others or boarder’s horses)?
As far as the property structures are concerned, the selected perils coverage would protect the owner from damage to the structure itself. However, it is important to note that if commercial activities are taking place on the premises, the owner should consider holding a commercial general liability policy. Some homeowner’s insurance carriers will not cover structures that are used for commercial purposes.
For example, if you have a small hobby farm and decide to start boarding non-owned horses, your insurance carrier may no longer cover your barn because it is being used commercially. A typical homeowner’s policy does not have the option to add coverage for commercial liability exposures. In fact, some homeowner’s policies that cover hobby farms only cover your owned horses while they are on premises. So, if you take your horses off of your property to shows or to trail ride, you do not have liability coverage if your horses cause bodily injury or property damage off premises. We write coverage through three A-rated admitted carriers (top-rated, state-backed insurance companies that must comply with your state’s department of insurance regulations) that all offer coverage for commercial equine liability, and the policies can be customized to provide coverage for a wide range of exposures such as boarding of non-owned horses, riding instruction, training of non-owned horses, horse sales, equestrian day camps, clinics, horse shows, and more.
Farm property owners that have a commercial equine operation need a commercial equine liability policy and should also have equine care, custody, or control coverage if they have non-owned horses in their care. Commercial equine liability policies are exposure-specific meaning the farm property owner needs to disclose their activities/exposures in the application for coverage. The insurance carrier then reviews the application and determines if the exposures are acceptable. For example, if a farm property owner has coverage for instruction and boarding only and decides to host a horse show without declaring this exposure to the insurance carrier and receiving acceptance, the horse show event will not be covered.
What types of weather events drive the majority of weather-related claims? (e.g., hurricane/wind damage, flooding from rain or tropical storms, etc.)
Weather events vary widely depending on the area of the country and from year to year. In states that border the Atlantic Ocean or are near the Gulf of Mexico, hurricanes are often the main weather-related events leading to claims. Other areas of the country have significant claims activity due to floods, tornadoes, or wind/hail. The western states have seen numerous claims due to fires.
Are there ever times when farm owners may not eligible to insure their farms for weather events?
Ideally, farm owners should insure their property and equipment at the time of purchase. If a weather event is expected, insurance carriers will place moratoriums on binding coverage until risks from the weather event have passed.
If you are a farm property owner, the bottom line is that having the appropriate insurance policy for property structures, equipment, and liability is a must. Asking a lot of questions so that you fully understand the ins and outs of your coverage is also key and will help you have peace of mind should your farm face large weather events.