Texas Ranch Insurance: Essential Coverage Guide

Everything is bigger in Texas, and that goes for the farmland as well as the sky. Whether it’s a cattle ranch or acres of corn, agricultural clients in Texas need ranch and farm insurance to protect their assets and their home. Insurance retailers should familiarize themselves with the Texas ranch and farm industry so that they can put together an insurance bundle that covers all potential risks. Let’s explore the different types of ranch and farm clients and their insurance needs.

What is Texas Ranch and Farm Insurance?

Texas ranch and farm insurance is intended to protect the many assets and investments that make up a farmer’s livelihood. It differs from other insurance products, such as homeowners insurance, in that it is a hybrid insurance product. While farm insurance can protect the client’s home and personal possessions, it can also be extended to cover farm personal property such as machinery and equipment, livestock (e.g., sheep, horses, cattle), and grain, feed, or seed stock. It’s important to note that farm insurance is not all-inclusive. Growing crops requires separate insurance, while buildings, fences, and pens need to be specifically scheduled for coverage to apply.

Key Client Categories in Texas Ranch and Farm Insurance

Insurance retailers should understand the types of clients that may need ranch and farm insurance in Texas. They can be grouped into three broad categories: farmers and ranch owners, agricultural producers, and contract-based farming services.

Ranch Owners and Farmers

Texas ranchers and farm owners are the obvious client demographic for Texas farm insurance. This category is generally limited to family farms and ranches, rather than corporate-owned commercial operations. These clients typically have a need for farming insurance that covers their home and personal property, as well as their machinery and livestock.

Agricultural Producers

Agricultural producers are a category that includes large-scale commercial farming and ranching operations. As such, these clients require insurance products that are tailored for commercial needs including product transportation and processing, commercial crop and livestock insurance, commercial property insurance, equipment breakdown coverage, and workers’ compensation.

Custom Farming Operations

Contract ranchers and farmers are responsible for raising and growing crops and livestock owned by a third party. As such, they have a degree of liability known as Care, Custody, and Control (CCC). CCC insurance protects contract farmers from financial losses caused by negligence. For example, a contract farmer who housed cattle without proper ventilation would be on the hook if the cattle died as a result of their negligence. CCC insurance can help cover the financial obligation.

Types of Coverage in Texas Ranch and Farm Insurance

Let’s take a closer look at what is typically covered by a standard Texas ranch and farm insurance policy.

Property and Structures

Farm insurance usually provides coverage for important farming or ranching structures such as outbuildings, barns, and primary residences. However, base farm insurance does not typically include coverage for fences, pens, sheds, or similar farming infrastructure. These may require scheduling separately or separate policies for protection.

Farm Machinery and Equipment

Farm and ranch machinery can be expensive to purchase and maintain. A farm insurance policy can help clients in the event that essential machinery and equipment – such as tractors, planters, hay rakers, or combines – becomes damaged. Note that vehicles such as trucks usually require a separate commercial auto insurance policy.

Livestock Insurance

Farmers and ranchers with livestock need to protect them from injury or death. Most farm insurance includes basic and broad named perils for livestock coverage. Clients need to select which types of perils they want their livestock to be protected against, such as natural disaster, drowning, vehicle collision, and wild animal attack. Coverage can be expanded to include even more types of peril. Note that equine animals are a special case due to the variety of purposes they can serve on a ranch or farm, and they may need specialized mortality insurance policies.

Farm Liability Insurance

This type of coverage offers essential protection for ranchers and farmers against property damage, bodily harm, and medical bills resulting from farming operations. Farm liability insurance can also cover legal fees for claims or lawsuits leveled against the farm or ranch owner. Farm liability insurance also applies to accidents that do not occur on their owned property.

Specialized Coverage Options

There are a number of specialized farm insurance products that may be required for various types of agribusiness:

• Inland marine insurance covers goods like grain and livestock that are transported overland by truck or train. (Despite the naming convention, it has nothing to do with water vehicles or mariculture.)
• Custom farming liability insurance protects farm owners who hire custom farmers to do work on their property.
• Livestock collision insurance protects ranchers and farmers in the event that a wandering animal is struck by a vehicle. Coverage usually includes veterinary care, loss due to death, and animal replacement costs.

How Texas Ranch and Farm Insurance Protects Rural Property

There are many risks faced by Texas ranch and farm owners. Inclement weather and natural disasters could devastate a year’s crops or kill off cattle. Machinery could become damaged or even stolen. It’s important that insurance retailers work with their agricultural clients to anticipate all the perils and risks they may be exposed to. That way, their farming insurance policy can be tailored to protect both personal and commercial assets. This is typically done by selecting a “Named Perils” policy and a “Special Coverage” policy. Named Perils protects against specific risks listed in the policy; Special Coverage provides protection for events that are not explicitly excluded from the policy.

Common Exclusions in Texas Ranch and Farm Insurance

As we’ve mentioned, farm and ranch insurance is not all-inclusive. There are specific common exclusions that insurance retailers should make their agricultural clients aware of, then work together to find products that can fill those gaps.

Crop Insurance

Farm insurance does not provide coverage for seeds, grains, or other crops that are planted and grown on the property. Instead, clients would need to purchase a separate crop insurance policy. This provides financial security in the event that crops are destroyed by blight, infestation, or certain natural disasters.

Earthquake and Flood Coverage

Certain named perils may be excluded from standard farm insurance, such as earthquakes and floods. There are specific insurance products that can protect loss of personal and commercial property due to these events. Insurance retailers should help their clients determine which disasters pose the greatest risk, and find coverage to match.

Exclusion Related to Negligence

Farm insurance policies may deny coverage if the damage was caused by the owner’s own negligence. This can include illegal activities, intentionally-damaged property, and fraud. Other exclusions may be less obvious, such as bodily injury to a visiting family member. Insurance retailers should make sure their farm and ranch clients are fully briefed on their policy exclusions.

Customizing Coverage for Texas Ranch Clients

Finding the right insurance offerings for Texas ranch and farm clients can be a challenge. The agribusiness landscape is constantly growing and evolving, and many farmers face new difficulties caused by a changing environment. Insurance retailers should conduct thorough consultations with their clients, including visits to their property, to fully understand their specific needs and match them with the right types of coverage.

Offering the Right Texas Ranch and Farm Insurance

Texas ranch and farm insurance can help agricultural clients protect their most vital assets, including personal and commercial property. But the risks of farming are diverse and not always obvious. That’s why it’s so important to fully understand the array of farm insurance products on offer, as well as the intricacies of the agricultural industry.

If you are a broker or insurance retailer interested in expanding your insurance offering, Novatae is a wholesale insurer specializing in placing insurance coverage for unique, complex, or hard-to-place risks. For more information on our farming insurance services, reach out to our team of specialty insurance experts today.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.