Every piece of ag land is different. And in a skyrocketing farmland market, it’s more important than ever to make sure you’re protected from the many liabilities that come from farmland ownership.
Learn about your land
If you’re a first-time landowner, that process starts with getting familiar with your land. A clear picture of what is raised on or supported by your farmland is the first step in identifying the liabilities you may face as a landowner. Consider the following in that process:
- What happens on your farmland? Consider the primary work that happens on your land, such as crop or livestock production. Identifying the primary working purpose of your land can clarify the specific hazards for which you should seek insurance protection.
- What are the farmland operations, features or other variables that put you at risk? Ag operations such as spraying weeds on crop fields, maintaining fencing or grazing cattle on pastures can open the door to liability on your farmland. And any commercial businesses — such as a produce stand, for example — on your owned farmland carry with them specific liability risks. Also consider activities such as hunting, as they could potentially bring visitors onto your land and create liability. Having a strong relationship with your leasing farmer or rancher can help with this effort.
- What level of coverage do you need? Do you need additional options? Farmland values are surging, and it’s important to first ensure that you have the right coverage levels in place to cover any potential losses. Given the diverse potential for liabilities on farmland, you’ll also want to match specific policy options and endorsements to the work and any other activities that take place on your land. Find additional coverage.
- What are your long-term financial plans for your land? Farmland is often a financial component of a larger portfolio, such as an estate or trust. Given the financial implications to such long-term financial planning, consider how to protect your farmland assets, especially if they’re intended to go to an heir as part of a succession plan. Learn about financial and legacy planning.
“The specific working purpose of your land determines the specific liabilities you could face. If you’re a new landowner, you need to know the main purpose of the entire operation,” said Nationwide Risk Management Director Doug Becker. “Think about the purpose of the land, any activities that are part of that process and the liability those activities may create. If it’s cropland, that means things like spraying crops or operating large machinery and equipment.”
Enlist the right help to find the right liability protection
Once you’ve discussed these working details about your farmland, you’re armed with the right information to help select insurance coverage to protect you from potential liabilities. In many cases, a simple endorsement on a homeowner’s insurance policy doesn’t provide adequate coverage. It’s best to discuss your options with someone who not only knows your land well, but also your specific insurance coverage options, whether they’re endorsements or entirely new policies.
“Talk with someone who is local to the farmland you own or otherwise has strong, working knowledge of that land,” Becker said. “It’s also good to know the history of your land. If it’s cropland, information like its annual production history can help determine its working value and, as a result, the amount of insurance coverage you should consider.”
Watch on-demand webinar, Managing Farmland Leases
Produced by Nationwide and moderated by Andrew McCrea, farmer and award-winning host of The American Countryside, the webinar features a panel of farmland experts discussing how landowners and renters can work together to create and maintain mutually beneficial partnerships.
Your long-term plan for your farmland also contributes to how you insure for potential liabilities. If your land is an asset in a succession plan or other long-term financial agreement, for example, you may seek different coverage options than if it’s simply to generate annual income from rent payments or the crops or livestock it supports.
Your local Nationwide Farm Certified agent or financial advisor can help you adequately account for those types of variables in finding the right liability protection. Nationwide Land As Your Legacy® can also help you protect your farmland investment through legacy planning.
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