What is Incidental Farming Coverage?

As people realize the benefits of clean eating and consuming organic products free from toxic chemicals, many have started hobby farming. They may use this hobby as a side hustle of sorts that can help them generate some extra income. The damage or loss suffered during such activities is not covered in either business insurance or home insurance policies. For such cases, incidental farming coverage is added to the policy.

Read on as we discuss more about what this insurance policy entails.

What is Incidental Farming Coverage? 

Incidental farming coverage is for any farming activity that takes place on your premises or anywhere near the insured location.

Since hobby farming or related business activities are not a part of any other policy, you cannot get compensation for any damage or injury to a third party that happens during this activity. 

For some more clarity, let’s consider a hypothetical situation:

Mr. and Mrs. Andrews own a large country home and run a little farm for personal consumption. Their property is insured with a standard homeowners policy. Their farm is not a primary source of income, but they run it as a leisure activity.

After some time has passed, their yield increases and they decide to start a little stall at the farmer’s market nearby to sell the extra produce. They are also helping out a friend by keeping a horse in their barn for a small amount. Over time the number of hens on the farm has increased, and they are also selling the extra eggs they cannot consume. They have even bought farm equipment and machinery to help with their work. 

Mrs. Andres loves to bake and occasionally sets up a dessert stall nearby. As their operations expand, they often let people visit their country home and enjoy the fruits of their labor without charging any fee.

Despite recent changes, they have failed to notify their insurance agent of the small farm and business being run on the property. This means there is a high chance of Mr. and Mrs. Andrews incurring huge losses. 

The first thing we need to understand is if this can be qualified as a fully functioning farm.

In this case, the Andrews family sells produce, charges a fee to keep a horse, has farm equipment, has visitors on the farm, and runs a stall. They file Schedule F on taxes which indicates they are operating a farm even though their primary source of income is different. 

Now let’s look at how incidental farming coverage can help this family with losses incurred within and away from insured premises. 

Incidental Farming Coverage Within Insured Premises

As mentioned above, Mr. and Mrs. Andrews have visitors over to enjoy their hobby farm and do not charge a fee for it. This wouldn’t be considered a business activity, since they aren’t charging for it. 

One fine day, a visitor gets into an accident on the farm and gets injured on the property. Their homeowner policy says nothing about compensation in case of third-party injury, and they have to bear the medical expenses from their pocket.   

Since they didn’t inform the insurer of this activity and their policy did not cover the liability, they had to pay a large sum when they got sued over the injury the person suffered.

This hypothetical situation could have been different if they had opted to get incidental farming coverage once their activities expanded.

It is essential to define every activity that goes on at your premises. Failure to do so will result in not getting coverage for related damage or loss because it wasn't declared.

Incidental Farming Coverage Away from Insured Premises

One day, Mrs. Andrews carried the produce in her vehicle for delivery to the farmer’s market. Unfortunately, a rainstorm causes her vehicle to break down, leaving her stranded on the road for hours. Help did arrive a little while later, but her produce had over-ripened and was no longer good enough to be consumed, much less sold for a price. 

This time luck is on the Andrews’ side. They learned from their previous mistake and had gotten their policy revised to add incidental farming coverage. 

You see, the coverage includes produce that could be stored away from the insured premises. It could be in close proximity or another location specified in the policy. 

In such a case, coverage also applies to mobile machinery if it hasn’t been separately insured. If incidental farming coverage specifies the particular mobile machinery, then the damage is covered in the policy, and you need not worry about any such incidents. 

ISO HO 24 72 and ISO HO 24 73

The homeowner policy does not cover farming or related business activity. However, it can be modified to add endorsements like ISO HO 24 72 and ISO HO 24 73.

ISO HO 24 72 is Incidental Farming Personal Liability and is beneficial for people who do hobby farming for personal consumption. It covers different kinds of liability coverage as long as you mention all farming/business activities happening on the premises. If you do not mention a certain activity, the insurer will not be liable to pay any sort of compensation for damages incurred through this particular farming/business activity.

ISO HO 24 73 is Farmers Personal Liability Insurance which protects people involved in true hobby farming and operating a small farm. However, the same consequences of ISO HO 24 72 apply if you fail to mention a farming/business activity. For example, a buyer from Mrs. Andrews’ dessert stall gets food poisoning. If the family gets sued, they won’t be liable to receive compensation because of failing to declare the particular activity. 

Wrapping Up

It is evident that incidental farming coverage is helpful if you are open and declare all the farming/business activities you are involved in. It may seem like hobby farming may not cause you much damage or losses, but the hypothetical situations mentioned in the article must have changed your opinion. There is great value in broadening your homeowner insurance to include incidental farming coverage. 

Get in touch with our insurance experts at Elemental Risk Management to discuss adding incidental farming coverage to your homeowner policy.