Tales from the Field: One Farmer’s Path to Finding Insurance Coverage
This post is part of Farm Commons’ “farmer profile” series, where we highlight the stories of members of the Farm Commons community to help educate, inform, and inspire. If you have a story that you think others could benefit from hearing, please email email@example.com.
Please note: The names and identifying details in this story have been changed to protect the privacy of the farmer. This is, however, a real story. If you would like to be connected with the real “Cathy” to learn more about her situation, please email firstname.lastname@example.org.
What happens when you do everything “right,” but you can’t get anyone to insure your operation? Cathy Hardwell knows first-hand how hard it can be to find the right insurance agent and coverage for all the activities of a diversified farm. She recently shared her story and what she learned with the hopes that it will help other farmers in the Farm Commons community.
Cloudy Skies Farm lies on 25 acres of mostly wooded land in Minnesota. Cathy and her husband, Joe, raise poultry, hogs, and grow fruit on the farm. Eight years into their farming journey and with a solid customer base and track record, Cathy quit her off-farm job and the pair began to ramp up production. One venture they added in at that point was production of culinary vinegars made with the farm’s honey, herbs and fruits. Cathy wanted to make sure she did everything by the books and knew that she needed to get liability coverage for this new value-added product. She called up her insurance agent, who she had been working with for the past eight years to cover the farm’s activities.
This is where Cathy’s problems began. Since the beginning, Cathy had made an effort to be transparent about everything that went on at the farm and all the facets of their operation. She even made sure to include the agent on her farm’s email listserv that sent out regular updates on farm activities. She had nothing to hide – all of their processing, growing and selling was done with the proper equipment and permits and in-line with all state and federal regulations. Despite this, when Cathy’s agent went to re-evaluate the farm’s policy to consider adding in additional coverage, he seemed surprised by the scope of the farm and the variety of activities that Cathy and Joe were performing. It turns out that the email updates had been going into his junk e-mail folder, and he had never visited the farm’s website. Additionally, when the policy was first instated, he didn’t come out to the farm for a visit. The agent had vastly underestimated the scope of the farm. It turned out that Cloudy Skies had been under an incorrect insurance policy all along. The agent came out to the farm to re-evaluate.
Cathy said, “Instead of seeing a diversified farm as more secure because it’s diversified, our agent saw each one of the things that we do as a huge risk. To him, raising five hogs was as much risk or more as someone who raises 1,000 head and that’s all they do. The company looked at my operation at all they saw was risk, risk, risk.”
That was the start of a long and arduous journey to find the right coverage for Cloudy Skies and all the components of the business. Cathy was frustrated, to say the least. “If I don’t have insurance, I can’t own a farm. I can’t even own my home, because I have a mortgage. We had to find a solution.”
After unsuccessfully working with four different insurance agents, the fifth was able to find a policy that covered Cloudy Skies’ primary production and processing operations, with some modifications.
One example of a limitation in their new policy is with their mobile poultry processing equipment (MPU). Cathy and Joe used to rent out their MPU to other farmers in the region. This allowed them to increase their revenue while also making processing more accessible for small producers. Their new insurance company is not comfortable taking the risk that an accident or food safety incident could happen on another farm and get back to Cloudy Skies. So, for now, the MPU will stay on the farm. While modifications like these are not ideal, they are the result of a compromising process that will ultimately allow Cloudy Skies to continue to perform their core activities. Cathy and Joe are considering moving away from poultry processing altogether in the future to lower their premium and expanding their vinegar production, which is seen as exceedingly safer.
Cathy offered the following takeaways from her experience:
· Be persistent. You might have to talk with many agents and do a lot of research before finding the right fit. Even once you find the right agent, it still might take him or her some time to figure out a solution. “The guy we finally worked with wrote two policies that got denied before we ended up with our current policy. But we really felt like he was on our side and that he was doing the best he could along the way.”
· Make sure that your agent is clear on what you’re doing, and update him/her on your progress and growth. “Our agent never came out to visit the farm once in seven years. That wasn’t our fault, but if I had known how much he misunderstood what we were doing, I would have made sure to get him out here.”
· Work with an agent that has experience with operations similar to yours. This goes back to our last point about Cathy’s agent not comprehending the scope of her farm and how the description on paper translated into reality. Ultimately, an agent who truly understands what you are doing will be able (and likely more willing) to figure out what the right policy is.
For more information about insurance, listen to Farm Commons' tutorial, "Efficiently Manage Your Farm's Risks With Insurance" Part I and Part II. Also keep an eye out for our new insurance guide, scheduled for release later this summer!