<b>By SARAH B. AUBREY<br>
Indiana Correspondent</b> </p><p>

PENDLETON, Ind. — Though both are agribusiness, when it comes to liability insurance and coverage, agents say that there is a significant difference between larger, more commercial, farmers and their “niche” or small-venture counterparts.</p><p>
According to Pendleton-based agent Jim Rich, there is a big issue with new small farm business owners, as he said they often overlook adding liability coverage for their new ventures or mistakenly believe that their homeowner’s policy will provide adequate coverage for the new business.</p><p>
“Questions can seem simple, but they really are complicated,” said Rich, an insurance agent since 1980, who’s been with Pendleton Insurance for more than 20 years. “Liability for any type of business concern is much different than just a house, barn and a few acres.</p><p>
“There are two types of categories: premise liability and personal liability.”</p><p>
Experts seem to generally agree that anytime small farm business owners expose themselves to the public by selling products and services or open up the farm to visitors, they immediately incur a great measure of risk. That’s not to say current coverage is unable to be upgraded.</p><p>
“Many (small farm businesses) can still be written as a homeowner’s policy with a farm endorsed to it. They may have farm liability automatically built into it,” Rich said, adding that a review of coverage with a qualified agent is a must when opening a new ag business.</p><p>
The reason is simple – Rich said the risk incurred by the business owner is often directly correlated to the types of products offered and the venue in which they are sold (such as off the farm or at a farmers’ market). Further, risk is incurred simply because the producer is engaged in selling to the public and promoting the product’s features and benefits.</p><p>
For those kinds of businesses, Rich said homeowners’ policies can be enough.</p><p>
“There are so many wrinkles in liability coverage. But, most farm policies include coverage for premise and roadside stands and the liability exposure on them; but beyond that, you will probably need more,” he said.</p><p>
Rich encouraged small-farm-venture owners to be honest with their agents about how buildings and equipment on the farm are being used, as well.</p><p>
“A homeowner’s policy will specifically exclude buildings if you now use those buildings for a business. Tell your agent exactly what you’ll be doing and let them advise you,” he said.</p><p>
Adding an umbrella policy is another option that allows producers more coverage over and above the farm or homeowner’s policy limits. “Umbrellas are sold in increments of $1 million. You can decide on your limits with your agent based on the number of risks or exposures,” Rich explained.</p><p>
 So how much does it cost to protect your small farm venture?
“Generally speaking, liability insurance is relatively inexpensive,” he said, adding that deciding on the amount of coverage is always done on a case-by-case basis, but a good start is to get a quote for the minimum recommended amount of liability insurance for personal, commercial and an umbrella. This is often done based upon gross receipts for the business.</p><p>
Bundling several coverages together can also help with cost. “Most companies that you get an umbrella with will require all the other policies and will give a discount for that,” said Rich.</p><p>
Just as most business planning experts will recommend annual reviews, Rich encourages producers to review their policies at least once a year, prior to an automatic renewal. “Coverage review just depends on how rapidly your business changes,” he suggested.</p><p>
Though he doesn’t want to scare small farmers, he encourages awareness of options to prevent major financial liabilities later on.
“Realize, most likely, if you have a farm owner’s policy, you already have liability coverage,” he said. “But anything that you’re doing that’s new or out of the ordinary, I recommend that you talk to your agent and make sure (the coverage is) enough.”</p><p>
Below is a list of sample questions that new small farm ventures owners should ask their insurers:</p><p>
•Is the dollar amount of coverage enough?</p><p>
•Is the deductible too large?</p><p>
•Is the premium affordable?</p><p>
•Does the policy cover bodily injury?</p><p>
•Does the policy cover property damage done by owners and employees?</p><p>
•Does the policy cover advertising injury?</p><p>
•Does the policy cover injury from the company’s products?
•Is the insurer financially stable and do they have a history of paying claims on time?</p><p>
•Finally, are there any exclusions to note?