Washington state and the Pacific Northwest are home to some of the best farming lands in the US. When considering expanding your home garden to a hobby or small farm, your insurance will need to change to keep you, your property, and your business venture protected. Relying on your homeowner’s insurance policy won’t be enough.
We asked our two local Washington experts, Stephanie Seeds and Darcey Beck, to discuss the differences between a homeowner’s and farm policy, plus give guidance on determining when to upgrade. Both Stephanie and Darcey have been in the insurance industry for over 15 years and are highly experienced with small and large farm configurations.
You may listen to Stephanie and Darcy’s interview, watch the video, or read the full transcript below.
- The difference between a farm and home insurance policy (jump to section)
- Can acreage determine when you need a farm policy? (jump to section)
- Additional buildings and structures on home and farm policies (jump to section)
- Animals on your property and farm protections (jump to section)
- Selling at markets, farm stands and making a profit (jump to section)
- Risk and liability differences for farm policies (jump to section)
- Other considerations when choosing the right policy for your property (jump to section)
This transcript was generated using a combination of speech recognition and human transcribers. It has been lightly edited for clarity and general grammar corrections but still may contain errors.
Dominic: Here in the beautiful Pacific Northwest, there’s ample land, sun and water, the three main ingredients needed for a fantastic farm. Having a small farm at your home is fun and potentially profitable. Our topic today is the difference between a homeowner’s insurance and a small farm policy. The difference between the two, depending on what type of farm that you’re operating. Here with me today are Stephanie and Darcey, two experts on home and farm insurance policies with Cross Insurance Agency. They’re here to answer some common questions about what is commonly called a hobby farm. And before we begin, I’d like to have each of them introduce themselves. Stephanie?
Stephanie: Hello, I’m Stephanie and I focus on all of the farms here at our agency. I pretty much focused on the farms the last six years for Cross Insurance agency and have been in insurance for the last about 15 years.
Dominic: And Darcey?
Darcey: Hey, I’m Darcey. So I am a personal lines account manager for cross insurance, and I’ve been with Cross for a little over a year, but I’ve been in the industry for well over 17 years, primarily focused on personal lines. So homes, autos, boats, motorcycles, and more. I also help out on the farm and agribusiness sides of the insurance as well. And I love chatting with clients who have classic or collector cars and their dogs. I liked dogs.
Darcey: Personal side, I grew up in Port Angeles, Washington, and I’ve lived all over Washington, calling Skagit Valley my home for a bit or the Lake Roosevelt area near Colville home for a short time. But Port Angeles is my place that I choose to live in. And I love being here. I love being part of the community. I love watching my daughter grow up here as well.
Dominic: The Pacific Northwest is such a great home. And like I mentioned, for farms that there’s booming East or West of the mountains. It’s a great place farm and agriculture here. Thank you both for taking some time to answer some common questions that we have received through various means about having a small farm and having that small farm also be part of your home.
Section: The difference between a farm and home insurance policy
Dominic: And I think that’s a good place for us to get started here is the difference between a farm owner’s policy and a homeowner’s insurance policy when your making the consideration for that change. Stephanie, I’ll start with you. How would you describe the differences between a farm owner’s policy and a homeowner’s policy?
Stephanie: Both policies are really designed to protect and cover your personal property and your liability exposures that you have, but the types of coverage that you can add to a farm policy really do vary. Some people do raise cattle, some people raise crops, you really do need to tailor each farm policy to each individual farmer.
Darcey: For the homeowner side, how I distinguish between whether it needs to go home or go on the farm is just kind of the overall look of it. As Stephanie mentioned, there are several reasons and several things that we look at to say, yes, this is definitely a farm or no, we can go on homeowners. And some of that is kind of in a gray zone. And so we just have to ask a lot of questions. It’s okay if you have some farm animals, but it’s a matter of how many. It’s okay if you have some farm exposures, but it’s a matter of what it is, how big of an operation. And there is some distinguishing factors in between a homeowner’s and farm. And we just look at it all to say, yes, we need to go farm. Nope, we can do this on a homeowners.
Section: Can acreage determine when you need a farm policy?
Dominic: Sure. And when we were preparing to discuss this topic and pulling together the idea between and the difference between the two, there’s kind of these top five reasons why you should consider one over the other, depending on what’s happening on your property. And so, number one we’re going to start with is purely the size. And I’m interested to know how acreage comes into consideration when you’re just trying to decide between, if I just continue to use my homeowner policy versus switching to a small farm policy. Stephanie, let’s start with you again. Why is acreage an important factor into that decision?
Stephanie: I do have some clients that own quite a bit of property in acreage. And instead of just letting it sit, they lease or rent it out. If you have acreage that you lease or rent out, that is a prime reason for you to think about your liability and what you’re doing on that acreage and what other people are doing on it. For example, I have some clients that lease out their land to farmers for just strictly growing Christmas trees. Very low limit of liability. They’re just growing their trees.
Stephanie: I have one farmer who, himself, he doesn’t own a lot of land. So he leases well over 20 different parcels of land for his own hay and crop growing. And all of these locations are covered under his farm policy. So, whether you own acreage and you lease or rent out, or whether you work on somebody else’s land and you lease their land, that’s a great reason for you to move over to a farm policy as well.
Darcey: I’ll add a little bit to that. In regards to acreage for personal line side, we definitely look at how much you have. If you have 200 acres, what are you doing on that land? We’re probably going to go farm because of that. But if you have 20 acres where only 18 of it might be nothing but timber and two acres of it is cleared and that’s where your house sits and your garage, you’re going to be just fine on a homeowner.
Darcey: I do have a client who has about 20 acres, who has about six or seven sheep. And they only have about four acres of it cleared, but their sheep are pure personal use only. And they only use those four acres for their sheep and their house and living on their land. The rest of it is all forested timberland. And they’re on a homeowner.
Stephanie: I’ll add to that. When you’re saying that the homeowners have sheep and they’re just their own personal pet. And I, on the farm side, I have a client who has 20 goats. And she doesn’t really look at them as a farming exposure, except it is because, with those 20 goats, what she does with them is that she buys goats and she raises them. And then she sells them to the four H. And so she’s generating an income from goats and those goats on her land.
Section: Additional buildings and structures on home and farm policies
Dominic: So it sounds like the size of the lot doesn’t matter as much as what your intentions are with it. Same thing with the animals or what you might be growing on there, it comes back to what your intentions are in the end. So speaking of those outbuildings, Darcey, I’ll ask you this question: if you have a big or small, but you have a number of buildings on that property, again, with that intention in mind, when should you start to consider with those additional buildings in your personal policy versus a farm policy?
Darcey: A lot of it has to do with use. If you’re using it to store hay, if you’re using it to store a lot of machinery, especially farm machinery, if you’re using it to… Is it a loafing shed for your cows? Is it barn for your horses? Is it your chicken coops. If you have a lot of those, then certainly we’re going to look at the farm side.
Darcey: If you have just one barn and you have no farm animals, you may not even have a dog, but the barn was on the property when you bought it and that’s where you store your RV, you’re fine. You’re okay on a homeowners. But if that barn is used for more than that, especially farm stuff, then we’re going to look at the farm side.
Stephanie: For knowledge that on your farm policy, your farm policy doesn’t just extend an automatic percentage for your detached farm use structures. So it’s important for me, as a farm agent, to find out about all of the outbuildings on the property and how each and every one of them are used. Whatever building is used for farm really does need to be listed separately in order for any coverage to apply to it. If there are other, like maybe have a shed next to your house, and you only use it for your personal garden equipment, that’s fine. You don’t need to cover your shed under us as a farm property.
Stephanie: But if you have things, like Darcey mentioned, like animal shelters, hay storage buildings, machine shed, even your livestock fencing. If you want coverage for your fencing, you need to have that listed separately also for any coverage to apply. Farm policy is really kind of à la carte. You have to add the coverages that you want, or it’s excluded, pretty much.
Dominic: Interesting. And that was a way that I didn’t think about, not just in the buildings, but the facilitation of the farm, the other structures that might be on the property that is needed, that goes along with it. So, like you were saying, the fencing.
Stephanie: Well, I think we’re going to get into it a little bit later, but even like irrigation equipment, you want to list that too.
Darcey: And Stephanie did bring up a good point about specifically having coverage for those structures. Your homeowners does automatically give you a certain amount for some structures, and it’s probably just fine for most of the detached structures. If you just have a little hole pole barn or a pole shed, you probably have enough coverage, but if you have four of them and you also have a very, very nice garage that you just built and you have your garden shed, it probably is all personal use, but now we’re going to look at it and say, okay, we need to have some extra coverage for this because your automatic coverage is not enough.
Darcey: So you can still have all personal use and we could add extra coverage and we can still cover everything. And then it goes back to what do you have in there? What do you use those far? Is it farm? Is it not?
Section: Animals on your property and farm protections
Dominic: I see how it could get complicated. As we know, there’s lots of classic car collectors out there that might have a really fancy garage on the back of their property, but then also have a barn with some farm equipment in it. And that’s why talking to someone who can view both of them as individuals, or maybe as a group say, okay, what’s the best for your scenario. So speaking of fencing, and then we talked earlier about what types of animals you might have on your property, I know the animals is a big component to deciding whether or not you should have a farm policy versus just using your home policy. So Stephanie, I’ll ask you: Based on the types of animals, what should you take into consideration in this stage?
Stephanie: I don’t see a lot of my farmers insuring much livestock. I would see it more if farmer had a big herd, maybe 50 or more head of cattle and they want to ensure their livestock for a loss, such as fire or flood or electrocution of these animals while they’re out in the field. Even other animal attack. Typically a cap limit paid out per head, and the insurance company expects the farmer to ensure a hundred percent of their herd. And some farmers do want to ensure maybe even an individual animal that might be of higher value. It could be one of their bulls or a Quartermaine horse that’s for show. Not a true mortality policy on this hobby farm or farm policy, but it’s going to open up the coverages for these higher value animals. And they’re listed separately on the policy just kind of like the storage buildings are.
Darcey: On the home side, I look at how many you have and what you do with those animals. There’s a lot of people who live in the city and they have three chickens, or they might have a duck and that’s it. And they use those chickens and those eggs just for themselves. But if they were to grow their flock to have 25 chickens, then that is something that we definitely need to look at because we might need to change some things around. We do have a lot of families who have kids who are in 4-H and in NIFA and they raise their pig or their goat, or their cat, their horse, or whatever it is to be auctioned off later. And we can look at that of how many of those pigs do you have and how many do you raise?
Darcey: You make a lot of profit off of it. There’s all kinds of things that we can look at and we have to look to see if we should move to a farm policy or not. Side of the city. When you have a lot of land and you do start having more than one or two animals, like cows, again, it comes down to use. One of my clients, they have about 10 acres outside of Port Angeles, and they raised roughly about three cattle, three cows a year, and is used only for personal use. They’re not sold. They’re not enough. They are just raised and then used for their own meat for the year. And they’re on a homeowners. Again, though, if they were to jump that number up to 10 or 15, definitely, we have to look at that and decide whether or not we should go over to the farm side because now there’s more exposures. There’s more to be covered.
Section: Selling at markets, farm stands, and making a profit
Dominic: And I think that fits in line with this fourth thing to take into consideration, which is making a profit. And this has come up a few different times. What’s your intentions with the property? What’s your intentions with the animals or the crop that you’re growing? And because there’s a big shift from, I have three cows that I grow for my own meat versus I increase that to 10 and now I want to sell at a farmer’s market. And so you start to really take into consideration, okay, that’s a big jump to go from, just for me versus making a profit. So Stephanie, I’ll ask you: When someone’s ready to make that jump, where should they begin? What advice would you give them?
Stephanie: A lot of folks say, well, if you begin to work at, or if you begin to sell at farmer’s markets, you’ll at least want a hobby farm insurance policy, so that you can have that liability den to you at the farmer’s market itself. One of the first questions I typically ask somebody when they’re saying, Hey, I want to sell my products at the farmer’s market is, what exactly do you want to sell? And how do you plan to sell it?
Stephanie: Another thing, not just for farmer’s markets, but, well, I was going to go back another step with the farm animals on making a profit. Some people have horses and they like to board horses. And that’s one big thing on farming is that if you do board horses, you really need to look into a farm policy because your typical homeowners insurance does not want to cover anybody else’s animals.
Dominic: I think that’s a great point when it comes to other people’s animals too and how you’re taking that into consideration with your policy versus like on the homeowners side, I’m sure that’s something that they will look at and say, well, that’s not even your animal.
Darcey: We do. We do look at that. And definitely, in regards to certain animals like horses, boarding horses, just for a friend or neighbor, companies don’t always like that. So we definitely have to go on a farm for that. It really is about making a profit and the intentions of what you do with the land and what you do with the animals and what you do with the hay that you cut and all of that.
Darcey: In your homeowner’s policy, there is a set limit for an annual income that you can make from a business inside your home. But it is a very, very low limit, usually about $2,000. How I look at it, it’s for those people who love to craft and might show up at a Christmas bazaar one year and sell some craft work. Or maybe they’re selling Avon or some other direct seller company.
Stephanie: Lavender. I have some folks that cut their lavender ahead of time and then sell the cut lavender at the farmer’s market.
Darcey: For the home though, you’re, you’re capped at that $2,000 limit. So if you make beyond that, then it really is a question of, should we go farm? Should we not go farm? And tell me more about what your intentions are.
Section: Risk and liability differences for farm policies
Dominic: Mixed into all of this and all the considerations, something that you really need to consider when going from, it’s my home to now, it’s my business. I’m making a profit, I’m dealing with other customers. They might be coming on to my property. I might have other farm labor coming onto my property. There’s all these other considerations. The biggest thing that all comes down to is, what’s your liability? So Stephanie, I’ll ask you: When taking liability into consideration, why would that be something that really needs to be evaluated? Part of these policies?
Stephanie: I have one example where I have a farmer and he has quite a few head of cattle. And some of these, they’re huge. Some of these, he calls them heifers and they’re huge. And one of the big old heifers got through part of the fence out in the field. And he said, somehow the fence was flattened down. So it must have been like a wire kind of fence. And the heifer got out on the roadway and a vehicle struck it. And there wasn’t really a lot of damage to the actual heifer. He didn’t insure that heifer, but the car that got wrecked from hitting that heifer in the roadway that shouldn’t have been there, that car that got wrecked, that was covered under the farmers liability under his farm policy. The farm policy paid out for property damage to the automobile, and also it paid out the medical limit per person on a policy for that actual auto accident.
Stephanie: Even though this is not an auto policy, the liability for having these larger animals, such as the heifer going out and getting in the road in the middle of the night, that’s a huge liability exposure for that farmer on your property. Do you have people coming on and off your property to buy your hay? So a lot of the liability is how many people do you have coming on and off the property? Do you need more liability than just what your farm policy might even cover? Have you thought about an excess liability policy, which is like an umbrella policy over your farm? So those are some of the things that I think about and explain to people. What about a claim scenario that might happen?
Darcey: I’ll add to that for the liability side. On the homeowners, there really isn’t much difference in what liability does from home versus farm. It’s there to protect you for things that you are liable for. It does protect you on your property. If we’re trying to distinguish between whether or not we need a home or farm and where the liability will come into play, we could ask, do you have a stand at the end of your driveway where you sell your flowers or your lettuce that you grow? Are you going to the farmer’s market? How often are you going to the farmer’s market? If it’s just a one and done thing, or is it once a month? Are you selling your items to a local restaurant?
Darcey: I had a customer doing just that. She had a lot of chickens and she ended up needing a farm policy because her eggs that she was getting from these chickens, she was selling to a local crepe shop. So that’s where we had to move it from a home to a foreign policy because of that exposure. Liability in itself though, it’s not just for the property, but it’s for you on your machines or it’s your family members that live with your children and your wife or your spouse and your grandchildren if they’re living with you.
Darcey: It also covers your animals in the sense of a dog or a cat. Liability extends over to a lot of things and can cover a lot of different scenarios and it is very important to look at to make sure that we have the right coverage and the right type of policy for where that liability can really play for you.
Stephanie: Yeah, we really just don’t want any surprises, especially when it comes to liability and having coverage for somebody comes onto your property and gets injured.
Dominic: And you definitely don’t want to find out the hard way, right? Like when something happens. Have those discussions up front.
Stephanie: And that’s why it’s so important that we continue to educate ourselves in the farm aspect of even the farm machinery and the equipment and how to ensure it and making sure that the policy holder understands what kind of coverage is actually on that machinery.
Section: Other considerations when choosing the right policy for your property
Dominic: Great point. And there’s some other things that should consider things like the farm machinery and the equipment, how much coverage you need for that? How much is it worth? What are some other things to consider here in our last few minutes, some other things to think about other than just these top five?
Darcey: One of the things that I think about a lot is your vehicles. So, there are a lot of farmers who might have three or four different trucks. And we look at that and say, how many of those vehicles are you using for farm purposes? And oftentimes it’s usually all of them and they might have one for their spouse. And that one’s the nice one. And the rest of them are very much farm vehicles. And there is a way that we can ensure those two have a good rate for them because they’re just used for farm. And we can do that both on personal side.
Darcey: So on a personal auto side, and we can also do it on a commercial auto side too. And so we could play around with that a lot as well. Stephanie can certainly talk more on the commercial auto side, but we have a lot of small hobby farms that just ensured their 1988 Ford pickup on their personal auto policy and is just used to go to the feed store and to go move some hay for the day and go grab some more dirt.
Stephanie: And it’s a really good way, too, to get a discount on your actual farm policy with the company is to write your auto insurance with them as well, even if it is a personal auto policy. Or if you do move it to a farm auto policy, typically on a farm auto policy, your liability will start out higher.
Darcey: One of the reasons why we look at that too, and why we write the higher limits is because you’re not only using that vehicle or you may not just own that vehicle individually, but if you are a farmer and that is your livelihood, having something that can come back to you, that you are liable for, having those higher limits will not only protect you as as an individual, but will help protect that farm too.
Stephanie: Absolutely. And that’s why I also talk about adding an excess liability on top of your farm. So if you have your vehicles and your farm auto with the same company you have your farm policy with, you can do the excess umbrella liability too.
Dominic: There’s lots of other considerations. As you mentioned earlier, irrigation equipment. That’s some expensive equipment and it gets used year after year after year. There’s other pieces to take into consideration that could get damaged, or it could be part of your liability or just a core part of your business that you want to make sure it was covered.
Stephanie: Yeah. Some farm equipment like the tractors, they’re fine to be under your homeowners policy. Darcey can probably say that she’s added many garden tractors that maybe somebody financed it through Kubota and they have like a nice garden tractor. That can go on the homeowner’s policy. But when your farm machinery is used for more than just maintaining your property, then you really do want to add that type of machinery to a farm policy or you want to look to getting a farm policy. I have farmers that insure things from tractors to the irrigation equipment, hay rakes, combine, so many different things that can be covered separately.
Darcey: Scheduling some farm machinery, like she said, tractors in that, on both sides, farm and home, scheduling it does give the coverage for the physical damage of it. So if it’s stolen or if a tree falls on it, or if it’s sitting in the barn and the barn catches on fire, but it also gives the liability, especially on the homeowner side, the moment you take your tractor off your property, your liability ends.
Darcey: So by scheduling it, you can essentially give back the coverage. And that is something that a lot of customers who will go out and buy that John Deere and they’ll come back and tell me, and I’ll ask him, do you ever plan on helping your neighbor? And they’re like, Oh, I’m sure I will. Well, then we need to schedule that. And it’s the same thing, both on farm and home. It just adds the coverage back to it.
Stephanie: Not a lot of homeowner’s policies like to have you take your tractors or your gardening equipment to off-premise. They don’t like you to grade those gravel roads or clear the snow for other people.
Darcey: I’ll just add to that additional one would be ATVs and quads and side-by-sides. A lot of farmers do have them, especially if they’ve got a lot of property, they can just hop on their side by side and go fix that fence or run down the driveway, grab their mail. A lot of homeowners own them as well. It is important, similar to the other farm machinery, to add that coverage for that, again, liability and then physical damage.
Darcey: On homeowners side, a lot of people do you think that the homeowners automatically covers it and they do not. There is zero coverage for it, for physical damage for your purchase or your owned ATV or side-by-side or quad, whichever term you like to use.
Stephanie: Motorized vehicles.
Darcey: Yeah. So having a specific policy for it gives that coverage back to it. So if, by chance, your house does catch on fire, your ATV is still covered under its own policy.
Stephanie: Now, on the farm side, you can add the ATV to your farm policy.
Dominic: Thank you so much, Stephanie and Darcey, for discussing this topic. There’s lots of different places in different ways, different reasons on why you would evaluate one versus the other, and I hope that this discussion has opened the thought process for some people to think about what is my liability? What is the crops and the animals, and what do I plan to do with my property? And then have this discussion with your local independent agent.
Dominic: We are here to help you with that. If you would love to talk to Darcey or Stephanie more about this topic, you can call our agency. You can email, you can book an appointment. You can find all the ways that you can contact us on our website, crossinsuranceagency.com. We would love to talk to you about these topics. So feel free to go there. You can get a quote started. You can find our contact information and just reach out and maybe talk a little bit of farms or farm versus home with these two. We would love to do it.
Dominic: We really appreciate you listening to this discussion. And if you would like to hear more of these types of discussions, email us info at crossinsuranceacc.com or follow us on Facebook or Instagram. And you can let us know what you think about these types of topics to discuss with our experts on our team. Thank you so much for listening.