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What brokers should know about risks in farm and agriculture

With the huge variety of businesses involved, farm and agriculture insurance policies need to cover both general liabilities and more specialized exposures.

“[Agribusinesses] need coverage for general liability. Often, they also need inland marine for their farm machinery and property. The biggest concern we see is that people have coverages for their general liability but don’t have anything for exposure to something like a chemical drift,” Tucker told Insurance Business.

“That’s something we like to offer through our agribusiness programs. We offer the [general liability coverage] for a sprayer, and they also have E&O (Errors and Omissions) so if they make a mistake, that’s also covered along with the chemical drift and the pollution.”

Tucker is an agribusiness and farm insurance specialist initially with Sierra Specialty, which was acquired in 2019 by XPT Group, a specialty insurance distribution company. The California-based MGA is rebranding to Sierra Farm under XPT.

Sierra Farm’s exclusive agribusiness program covers a wide range of farm classes, including pesticide and herbicide spraying services, farm consultants and managers, farm labor contractors, and more. The program is available in all 50 states.

By far, one of the most significant risks plaguing the agribusiness and farm industry is wildfires. For instance, large wildfires that razed parts of California’s Napa Valley in 2020 still have lingering effects on agribusinesses in the state.

Read more: US wildfires: Broker bares grim outlook in early season

“Some wineries are still dealing with the smoke damage to their grapes. The wildfire may not have burned their crops, but they’re coping with the damage two years later. Their production is messed up,” Tucker said.

There are limited options for wildfire insurance for California businesses, most of whom must go through the California FAIR Plan for coverage.

“Most of these farms are in wildfire land, so they’re paying thousands and thousands for very limited coverage with a state plan. Montana, Oregon, Utah – all these places currently deal with wildfires,” Tucker said. 

However, fires that break out on an insured’s property are still generally covered by agribusiness policies. “There’s a difference between a wildfire and a fire. Let’s say you have a custom harvester in the field, and there’s a backfire with his mobile equipment that causes a fire. That would be something that could get covered. But that’s different from wildfire through and wiping out thousands of acres,” Tucker explained.

As farms and agricultural ventures adopt more and more technology to boost their productions, their cyber risk profile is also growing. Farms increasingly rely on GPS mapping, drones, and automated tractors and sprayers – all potential avenues for cybercriminals to strike.

“We definitely see a lot more technology involved in these businesses’ risks. I’m seeing tractors who need cyber coverage because a computer controls them, or you have a lot of these sprayers who are no longer just using their spray rigs and are also using drones. So now you need drone coverage, which is hard to get right now,” said Tucker.

Cyber coverage is a growing necessity for agribusiness and farms, but owners still need to be educated about the risks to their data and computer systems. Ransomware is a particular concern, with the potential to cripple a farm’s operations.

Read more: Cyber criminals target “low-hanging fruit” in agribusiness

“[Cyber insurance] is a hard sell because if they have a farm, they already spend thousands of dollars on their insurance. Adding another thing to spend money on is hard to sell to them. But the need is enormous because many of these tractors are all operated by computers,” Tucker said.

“If you have a large farm of 5,000 acres, for instance, anybody could hack onto your tractor, stop all of the production or harvesting, and set a ransom for $2 million. Then they will say they won’t let these machines go until [the owner] pays this ransom.”

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