Key Takeaways
- Farm and Ranch policies are PACKAGE policies combining dwelling coverage, farm buildings, liability, farm personal property, and often farm income protection
- The FARM OWNERS-RANCH OWNERS (FARO) policy is similar to a homeowners policy but designed for agricultural operations with farm-specific coverages
- Farm property coverage includes machinery, livestock, harvested crops, and stored grain—with special provisions for seasonal value fluctuations
- Livestock coverage can be BLANKET (covering all animals) or SCHEDULED (listing specific high-value animals like registered breeding stock)
- Farm liability differs from homeowners by including coverage for farm operations, farm employees, and products sold from the farm
Last updated: January 2026
Farm and Ranch Insurance
Why Standard Homeowners Doesn't Work
Standard homeowners policies are NOT designed for farming operations:
| Homeowners Coverage Gap | Farm Solution |
|---|---|
| Business Property Excluded | Farm policy covers machinery, equipment |
| Business Liability Excluded | Farm policy covers farm operations liability |
| Outbuildings Limited | Farm policy provides adequate limits |
| Livestock Not Covered | Farm policy covers animals |
| Crops Not Covered | Farm policy covers harvested crops |
Quick Answer: A farm requires specialized coverage because farming is a BUSINESS operation. Homeowners policies exclude business activities, but farm policies embrace the unique risks of agricultural operations.
Farm Owners-Ranch Owners (FARO) Policy Structure
The FARO policy is a package policy with multiple coverage sections:
Section I: Property Coverages
| Coverage | What It Protects |
|---|---|
| Coverage A - Dwelling | Farmhouse where owner lives |
| Coverage B - Other Structures | Barns, silos, sheds, fences |
| Coverage C - Personal Property | Household contents |
| Coverage D - Loss of Use | Additional living expenses |
| Coverage E - Farm Personal Property | Equipment, machinery, livestock, crops |
| Coverage F - Other Farm Structures | Additional farm buildings |
Section II: Liability Coverages
| Coverage | What It Protects |
|---|---|
| Farm Premises Liability | Injuries to visitors on farm |
| Farm Operations Liability | Liability from farming activities |
| Products Liability | Injuries from products sold (produce, animals) |
| Custom Farming Liability | Work performed for others |
Farm Personal Property Coverage
What's Covered
Farm personal property includes:
- Machinery and Equipment: Tractors, combines, implements
- Livestock: Cattle, horses, pigs, poultry
- Harvested Crops: Grain in storage, hay in barn
- Feed and Supplies: Stored feed, fertilizer, seed
- Farm Supplies: Fencing, irrigation equipment
Blanket vs. Scheduled Coverage
| Type | How It Works | Best For |
|---|---|---|
| Blanket | One limit covers all items of a type | General livestock, equipment |
| Scheduled | List specific items with values | High-value registered animals, expensive equipment |
Example: Blanket coverage for 100 head of cattle at $150,000 vs. scheduled coverage listing a specific $25,000 registered bull.
Livestock Coverage
Coverage Options
| Option | Description |
|---|---|
| Basic Perils | Fire, lightning, theft |
| Broad Perils | Adds drowning, collision, attack by wild animals |
| All-Risk | Covers all perils except specifically excluded |
Common Livestock Exclusions
- Disease and illness (unless collision/accident caused)
- Escape from enclosure
- Mysterious disappearance (theft must be proven)
- Predation by domestic dogs
- Intentional destruction by government order
Mortality Insurance
For high-value animals:
- Covers death from accident or illness
- Veterinary verified cause of death
- Used for registered breeding stock, show animals, horses
- May require veterinary exams
Crop Coverage
Types of Crop Insurance
| Type | Coverage |
|---|---|
| Harvested Crops | Crops stored in bins, barns, silos |
| Growing Crops | MPCI (Multi-Peril Crop Insurance) through USDA |
| Named Peril | Specific perils like hail or fire |
| Crop-Hail Insurance | Specifically covers hail damage |
Important: Most farm policies cover HARVESTED crops only. Growing crop coverage requires federal crop insurance through USDA's Risk Management Agency (RMA).
MPCI (Multi-Peril Crop Insurance)
| Feature | Details |
|---|---|
| Administered By | USDA Risk Management Agency |
| Subsidized | Federal premium subsidies |
| Perils | Weather, insects, disease, price decline |
| Required | Often required for farm loans |
Farm Liability Coverage
Differences from Homeowners Liability
| Homeowners | Farm Policy |
|---|---|
| Personal activities only | Farm BUSINESS operations |
| Excludes business | Includes farm employees |
| No products liability | Products sold from farm covered |
| Limited premises | All farm acreage |
Farm-Specific Liability Exposures
- Visitor injuries (agritourism, farm stands, pick-your-own)
- Farm employee injuries (workers' comp may also apply)
- Livestock escape causing auto accidents
- Products liability (contaminated produce, injured buyers)
- Custom farming for neighbors
- Pollution from manure, chemicals
Farm Equipment Endorsements
| Endorsement | Coverage Added |
|---|---|
| Mobile Equipment | Coverage while equipment travels on roads |
| Hired Equipment | Rented or borrowed machinery |
| Comprehensive Farm Liability | Broader operations coverage |
| Farm Employee Coverage | Medical payments for farm workers |
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Test Your Knowledge
Why can't a farmer simply use a homeowners policy for their farm?
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Test Your Knowledge
What is the difference between blanket and scheduled livestock coverage?
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Test Your Knowledge
What covers growing crops against weather, insects, and disease?
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