Farm Insurance: Review Your Coverage

Wednesday, April 23, 2025

‘It’s important to fully understand what you are covered for.’

By Mary Loggan

Insurance is not a one-size-fits-all solution for our farm businesses. As operations grow in scale and complexity, so do the associated risks.

What may have been sufficient coverage in the past may no longer be enough to protect against new challenges. From technological advancements and crop diversification to expanding on-farm businesses, farmers face a broad range of evolving risks that require constant evaluation of their insurance policies.

As farm operations become more diversified, including ventures such as agritourism, processing, and direct-to-consumer sales, ensuring comprehensive coverage is more critical than ever.

Adapting farm insurance strategies to match these changes is key for maintaining protection and minimizing potential losses.

Better Farming recently spoke with John Taylor, president of the Ontario Mutual Insurance Association, to discuss the importance of tailored solutions for producers looking to expand or evolve their operations.

Finding the right coverage

According to Taylor, insurance is not a one-time purchase; it’s an ongoing process in which you must regularly evaluate your coverage to ensure it meets your current needs.

“What worked last year may not be sufficient this year.

“Farms are increasingly complex businesses that include new technologies and new income streams,” Taylor says.

“The growth and potential growth of the agriculture sector have resulted in a greater intensity in traditional farming operations and greater diversity in the types of on-farm businesses, from production to processing to transportation and retail.”

He points out that coverage requirements can change based on several factors, including crop rotation, changes in livestock, farm expansions, or even shifts in climate.

A well-meaning policy purchased at one time may no longer offer sufficient protection after a significant change in the farm’s operations.

“Bigger structures and equipment mean greater concentration of risk.

“With more ‘eggs in one basket,’ insurance coverage becomes critical to risk management. With a broader range of activities such as agritourism, processing, and farm-gate sales, insurance coverage must consider these risks.”

Taylor notes that one common issue is difficulty assessing risks that aren’t immediately visible. Producers may not always consider insuring for specific natural events or market fluctuations until they are directly impacted.

While most policies and wording are relatively standard, he says, “They are not all the same, and it’s important to fully understand what you are covered for.”

He points out that the best approach is to work with an experienced farm insurance agent or broker.

“They must understand your business and ensure the insurance policy matches your farm or business.

“They need to be out to see your place and build a solid relationship and understanding of your needs.”

Key risks and challenges

“Insurance is a big challenge for everyone,” Taylor says.

“It’s an abstract product that can seem expensive, and if all goes well, you never get to use it.

“That being said, I have always considered farmers superior risk managers because every decision you make on the farm means doing the math on the risk involved.

“This means physical risk in farming activities, financial risk in loans and expansion and marketing, weather risk in crop management – you can go right down the line.”

He points out that one of the challenges is that farmers are entrepreneurs at heart and thrive on managing things on a daily basis.

“There is not always as much time or focus to get right into the heart of assessing your insurance needs or thinking of all the possible things that might go wrong that you need to or might need to insure against.”

“It tends to be a once-a-year conversation. And insurance can seem expensive, so it may not be a farmer’s favourite thing to spend money on or consider.”

However, he stresses it is critical to realistically assess the values of your equipment and buildings.

“Inflation and supply chain constraints have greatly increased the cost of repairs and rebuilding, and it is very easy to become underinsured because you have not been keeping up with building and equipment costs, whether that be new or used.”

Taylor also adds that recent National Construction Code and Ontario Building Code changes (which came into effect on Jan. 1) will increase the cost of new farm buildings.

However, he says, “In general, insurance, like any expense, is not always about the lowest cost; it’s about having the right advice and coverage.

“I also firmly believe in building a long-term relationship with vendors, including your insurance company.

“You can always check price from time to time, but a solid track record over time with an insurer generally results in a better risk management program.”

Expanding the farm

“If you have expansion plans, it makes sense to involve your agent or broker while you are planning and let them know what you are thinking,” Taylor advises.

“There may be some coverage you must add while a building is going up or being substantially redesigned. You may need a new type of coverage for new areas you are getting into, like farm gate sales, processing, or custom work.

“You also need to get a handle on new technology you may introduce to your operations. This can be a big-ticket item and should be considered in the values and coverage on your policy.”

He also advises farmers that new technology brings increased cyber risk. Criminals are actively looking to hack farm computer systems, and that is a relatively new risk to consider.

From a farm building design and orientation standpoint, Taylor stresses the importance of working with your builder to ensure good separation of structures, fire breaks where it makes sense, and good access for firefighting efforts.

“As you consider expansion, particularly with new and bigger farm buildings, you should consider loss prevention technology that you can integrate into your build.

“An example of this is electrical system monitoring, a well-established loss prevention technology that can be a game changer in detecting electrical system anomalies that eventually lead to fire losses.”

He says that given the size of farm operations, this type of technology could become mandatory over the next few years because barn fire losses, including newer barns, have been devastatingly significant over the last few years.

“An ounce of prevention and planning still goes a long way.”

He notes expansion is a natural part of many farming operations, but it brings its own set of risks and challenges

“Whether a farmer is growing their land, investing in new technology, or diversifying into different types of agriculture, each move needs to be covered to ensure business continuity.” BF