Important first steps to protecting your farmland investment

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.

“How you use the land determines the specific liabilities you are exposed to. As a new farmland owner, think about how you plan to use the land today and in the future,” said Nationwide Senior Consultant Erin Cumings. “Any activities that take place on that land create exposure and the type of activity and exposure can vary significantly.”