Day 3 - Insurance

31 Days of Homestead Living!

Hello!  Welcome back to our farm.  Today I'm going to talk about a topic that many of you may find boring.  But it is very important when you need it!  That topic is insurance!

Our barn

 

There are so many types of insurance you may need when you have a farm.  Everyone needs medical and auto insurance.  In our state auto insurance is mandatory now.  I guess medical coverage is about to be that way as well.  What about homeowners coverage?  Coverage for your tractors and farm equipment?  How about liability in case your cow walks out in front of a car?  What about if you let people come on your property and buy vegetables, and they fall?  Are you covered for that?

Our home

One of the most important types of insurance to have is homeowners.  If you have a bank loan to purchase your home or farm, your bank will require you to have homeowners insurance.  You can subtract the value of the land from the loan amount, and only insurance the value of the home itself, not the total loan amount.  But some banks will make you maintain a certain percentage of the loan value until the loan is paid off.  In April of 2011,  we were hit by a tornado.  We were involved in another tornado in March of 2012.  The 2011 tornado caused damage to our home.  Roof damage, loss of all the floor covering in our home, some furniture and appliances, as well as downed trees and rubbish removal.  Our insurance policy covered a portion of the costs we incurred.  Everyone thinks insurance covers 100% of your property value, and that is not true.  We carry a high deductible to make our insurance coverage more affordable.  We feel  we will be able to come up with a $2,500 deductible, to have lower yearly premiums.  We try to avoid filing insurance claims of any sort.  We live in an older farm house.  Insurance pays better for new home damage than it does for older homes.  Our insurance company wrote us a check for $8,000 to cover our damages.  The SBA would have allowed us $22,000 for our damages.  So you see there is quite a difference there.  None the less, we were pleased to get the check, and used it to help patch our roof and cover our floors.

Our premiums on the farm policy are outrageous.  The main reason they are so high is because we are half a mile off the road (I know you all are getting tired of hearing me say that), which means we are at least a half mile from a fire hydrant.  We have a large pond in our front yard, and the fire fighters have acknowledged  they would use that water to fight a fire at our home if necessary.  But our insurance company won't recognize this fact.  If we were on county water, we could  "buy" a fire hydrant of our own and have it placed back here, and our premiums would go from about $1,200 a year to $350 a year.  But the price of a fire hydrant is a couple of thousand dollars, so we will wait.

GrandBoy, Pappy, and our new tractor

We discovered a new insurance need about a year ago:  tractor insurance.  We had always paid cash for our farm equipment, but a year ago, my husband came across a great deal for a larger John Deere tractor we could use during hay season.  We got it (with the help of our local bank), but the bank required that the tractor have an insurance policy naming the bank as the loss payee.  We tried to explain that our current policy covered our farm equipment, but they wanted our tractor listed separately, to them.  We finally got that worked out without buying another policy.

Some of our cattle

Our farm policy does cover us for liability if a farm animal walks in front of a vehicle, or causes other property damage.  Even at the pastures we rent that are not attached to our farm.  Our state does not require this coverage, but it is nice to know we are covered, none the less.  We have had people drive through our fences several times.  A couple of times someone has hit a cow in the road.  Once a man had been drinking when he hit our cow, and he did try to get us to fix his car.  He said he only had liability insurance, that the law required, but it wouldn't fix his car.  I told him I was sorry, but the law didn't require me to have insurance on my cow.  Our state feels an animal walking in front of a car is like an act of God.  And for the record, never, has anyone who has driven through a fence, come back to pay us.  Or stayed to help try to round up cows in the dark.

If someone came on our property to buy a cow or maybe some eggs, and they fell and got hurt, it would be covered under our liability on our homeowners policy.  But if I start allowing groups of people to come on our farm for tours and someone falls off a hay wagon, I will probably need some type of additional policy.  And I'd be afraid to price it.

GrandBoy on the hay wagon

Another insuranc coverage used on farms is crop insurance.  We don't raise crops, so I don't know anything about it.  If you are thinking about raising a crop, call your farm insurance office for more information.

Stop back by tomorrow.  No telling what you'll learn!  Honey