Farming in Arkansas comes with risks - from severe weather to market fluctuations. Protecting your livelihood requires the right farm insurance coverage.
Here’s a quick overview of the 5 essential farm insurance types every Arkansas farmer should consider:
- Crop Insurance: Safeguards harvests against disasters, price drops, and more.
- Livestock Insurance: Covers individual animals, herds, or all livestock against risks like illness or weather events.
- Farm Equipment Protection: Protects costly machinery from breakdowns, theft, or damage.
- Farm Liability Coverage: Shields against legal claims, property damage, and visitor injuries.
- Buildings and Structures Coverage: Ensures barns, silos, and other infrastructure are covered for damages like fire or storms.
With nearly 90% of Arkansas farmland insured, these policies provide a safety net for farmers to stay resilient against unpredictable challenges.
Arkansas Farmer Explains the Importance of Crop Insurance
1. Crop Insurance Coverage
Crop insurance plays a key role in supporting Arkansas farmers, safeguarding over 5.5 million acres with $3.3 billion in liability coverage as of 2023 [5].
Farmers in Arkansas can select from various coverage types designed to protect their crops:
- Multi-Peril Crop Insurance (MPCI): This option shields against risks like natural disasters, insect infestations, plant diseases, and wildlife damage [1].
- Revenue Protection (RP): Covers both yield losses due to natural events and revenue drops caused by declining prices [1]. In 2023, insurers paid out $181.8 million in claims, compared to $86.7 million in premiums [5].
- Area Risk Protection Insurance (ARPI): Instead of focusing on individual yields, this coverage looks at county or regional performance. It’s especially useful for new farmers who lack historical yield data [1].
- Crop Hail Insurance: Protects against hail, fire, lightning, and even vandalism [1].
These insurance options complement federal programs like ARC and PLC, which help stabilize income for major crops such as rice, soybeans, corn, and cotton [6]. Together, they create a safety net for farmers.
Additionally, new farmers benefit from a 10% discount on premiums during their first five years [2].
To make the most of crop insurance, farmers should:
- Keep Detailed Records: Accurate production history can lead to better coverage options.
- Plan for Input Costs: Calculating expenses for the next season helps determine the right coverage level.
- Monitor Market Trends: Stay informed about commodity prices to decide on price protection.
- Seek Expert Advice: Collaborate with crop insurance specialists to create a customized coverage plan.
2. Livestock Coverage Options
Arkansas farmers have access to insurance programs specifically designed to protect their livestock. Farm Bureau Insurance's Ag Promise program provides coverage options tailored to farms of all sizes [4]. Here's a closer look at the choices available to address livestock-related risks.
Coverage Options
Farmers can choose from several types of livestock coverage:
- Individual Coverage: Assigns a specific value to each high-value animal [7].
- Herd Coverage: Covers a set number of animals under one policy [7].
- Blanket Coverage: Includes all livestock, structures, and equipment under a single, preset value [7].
Understanding the risks that threaten livestock is just as important. Research highlights the most common causes of cattle deaths:
These coverage options are designed to integrate seamlessly into a farm’s broader risk management plan, ensuring long-term stability.
Protection Levels Available
Farmers can select from different levels of protection to meet their specific needs:
- Basic Coverage: Covers risks like fire, windstorms, and vandalism [4].
- Broad Coverage: Adds protection for events such as electrocution, animal attacks, and drowning [4].
- Special Coverage: Offers the most extensive protection, covering all direct physical losses unless explicitly excluded [4].
For added financial security, Livestock Gross Margin (LGM) policies can help offset risks from market changes, such as higher feed costs or lower livestock prices [8]. Farmers Union Insurance also provides coverage for livestock within Arkansas and up to 100 miles beyond state borders, offering flexibility for farms near state lines [3].
Key Coverage Considerations
When choosing livestock insurance, keep these factors in mind:
- Review policy exclusions carefully, as some plans may not cover risks like disease or illness [7].
- High-value animals, such as sheep or goats, may require a separate animal mortality policy [7].
- Ensure newly acquired livestock are covered by evaluating policy extensions [4].
- Work with an insurance specialist to fine-tune your risk management approach [8].
Farm Credit Mid-America also offers Livestock Risk Protection (LRP) policies, which can help safeguard income during market price fluctuations, providing an added layer of stability [8].
3. Farm Equipment Protection
After crops and livestock, protecting farm equipment is another key part of managing risks effectively. Equipment is central to daily operations, and for Arkansas farmers, it often represents a huge investment, with machinery costs running into hundreds of thousands of dollars [4].
Coverage Types and Limits
Farm equipment insurance can cover mechanical, electrical, and hydraulic failures, among other issues. Here's a breakdown of common coverage limits:
Key Coverage Features
Ag Promise policies often include protection for:
- Mechanical Breakdowns: Covers internal failures and operator errors.
- Electrical Systems: Protects against power surges and malfunctions.
- Pressure Systems: Includes hydraulic and pneumatic system failures.
- GPS Equipment: Protects precision farming tools.
- Irrigation Systems: Covers components like pivots and other irrigation equipment [11].
What’s Not Covered
Most standard policies exclude:
- Wear and tear from regular use.
- Damage caused by poor maintenance.
- Equipment left in unsafe or unattended conditions.
- Intentional damage [10].
Tips for Better Coverage
Farmers can make the most of their policies and manage costs by:
- Assessing equipment age, condition, and safety features to secure better rates.
- Choosing between replacement cost or actual cash value coverage.
- Opting for individual or blanket equipment coverage.
- Adding endorsements, like cab glass breakage coverage [12].
- Bundling policies for discounts.
- Keeping a clean claims history.
Equipment breakdown coverage offers extra support, covering issues like mechanical failures and operator mistakes that standard property insurance doesn’t [11]. Farm Bureau Insurance also provides discounts for long-term customers and those with multiple policies [4], helping Arkansas farmers maintain their operations without facing overwhelming costs [9].
4. Farm Liability Coverage
Farm liability insurance helps protect Arkansas farmers from potential legal claims and financial setbacks by covering injury-related costs and offering legal defense against lawsuits [14].
Key Coverage Areas
Farm liability insurance typically includes the following:
Additional Coverage Options
Ag Promise provides extra coverage options tailored to the needs of Arkansas farmers [4]. These include:
- Agricultural Drift Coverage: Protects against damages caused by chemical spray drift.
- Limited Pollution Coverage: Addresses risks of contamination incidents.
- Custom Farming Protection: Covers farming activities on land not owned by the farmer.
- Farm Employer's Liability: Offers up to $25,000 for employee medical expenses.
These options allow farmers to better address specific risks tied to their operations.
Factors to Evaluate for Risk
When deciding on liability coverage, it’s important to evaluate risks unique to your farm. According to Farm Bureau Financial Services, liability needs vary depending on your operation [13]. Consider these factors:
- How often the public accesses your property
- The number of employees you have
- How waste is managed on-site
- Areas where equipment is used
- Proximity to neighboring properties
Agritourism-Specific Risks
Farmers engaged in agritourism face risks that standard policies may not cover [14]. To minimize these risks, consider the following steps:
- Post clear warning signs about hazards.
- Offer visitors thorough safety instructions.
- Keep detailed records of safety measures.
- Secure coverage designed for public-facing activities.
Legal Obligations for Farm Employers
Farm employers are responsible for maintaining a safe work environment. This includes training employees, ensuring equipment is in good condition, documenting safety protocols, and clearly communicating potential hazards.
For a liability claim to be valid, the event must cause harm or damage and result in legal responsibility [14]. Collaborate with experienced underwriters to determine the right coverage levels for your farm.
5. Buildings and Structures Coverage
Farm buildings and structures coverage is designed to protect the essential infrastructure of your farm. While crop and equipment insurance safeguards daily operations, this coverage focuses on the buildings and structures that form the backbone of your farming business.
Standard Coverage Protection
Typical policies include protection for:
- Fire and lightning
- Wind and hail damage
- Vandalism
- Structural collapse
- Smoke damage
- Key structural components and equipment like water pump systems and fixtures
Specialized Structure Protection
AgriChoice goes a step further by offering tailored options for high-value structures, such as:
- New Construction Coverage: Provides up to $100,000 in protection for 60 days after materials are delivered.
- Equipment Breakdown Protection: Covers mechanical failures in specialized systems.
- Extended Coverage: Includes fixtures and equipment located within 100 feet of insured buildings.
Flexible Valuation Options
Farm Bureau Insurance's Ag Promise program [4] lets you choose how your structure's value is assessed:
- Replacement Cost: Covers rebuilding with similar materials.
- Actual Cash Value: Accounts for depreciation over time.
- Agreed Utility Value: Offers specific coverage for specialized structures.
These options ensure your coverage aligns with the true value of your buildings.
Managing Your Coverage
Stay on top of your protection with these steps:
- Update Your Insurance: Notify your agent of any construction changes and document all improvements.
- Maintain System Records: Keep an up-to-date inventory of building systems and equipment.
- Review Policies Annually: Regularly check your coverage to account for new additions or modifications.
In Arkansas, where extreme weather is a constant challenge, it's crucial to revisit and adjust your coverage as needed.
Weather-Related Risks
Farmers in Arkansas often face weather-related threats. Policies typically cover:
- Structural collapse caused by ice, snow, or sleet buildup
- Damage from fire or lightning
Conclusion
Protecting a farm effectively means combining five key types of insurance: crop, livestock, equipment, liability, and structures. Together, these coverages create a strong safety net to shield farmers from financial risks.
How These Coverages Work Together
Farm Bureau Insurance's Ag Promise program shows how these policies can complement each other. For example, crop insurance steps in to protect harvests during bad weather, while buildings coverage safeguards physical assets. With nearly 90% of Arkansas farmland now insured [2], it's clear that farmers see the importance of having this level of protection.
Financial Protection for Tough Times
This high adoption rate highlights how farmers understand the need for financial security. Insurance acts as a safety cushion during difficult seasons, helping protect their investments and keep operations running smoothly.
Tailored Insurance Matters
No two farms are the same, which is why custom insurance plans are so important. The Martin Agency in Pocahontas, AR, offers farm insurance tailored to specific needs, taking into account factors like:
Customizing coverage ensures farmers are prepared for the specific challenges they face.
Planning for the Future
Banks often require farms to have full insurance coverage before approving loans [2]. Providers like Farmers Union Insurance offer solutions that cover most farm-related losses [3], giving farmers in Arkansas the confidence to focus on their work.
As farms grow and change, it’s important to review and update policies regularly. Working with Martin Agency, your experienced insurance providers, helps ensure coverage keeps pace with evolving needs. Combining these five types of insurance creates a well-rounded protection plan, helping Arkansas farmers stay resilient and prepared for whatever comes next.
