Farm Insurance

Farm insurance is insurance that specifically caters for businesses in the farming sector. Farming equipment is covered under a business equipment or contents insurance policy, so farm insurance refers to compensation for losses that have been documented. This means that an insurance inspector documents actual loss before the insurance company pays out. If there are large numbers of livestock involved, it will take longer to document which sees the farmer lose money. This insurance is quite expensive as farming is unpredictable, which makes it inappropriate for smaller farms.

Index insurance, unlike conventional farm insurance, covers farms for variant perils instead of calculable losses. That is, if a farm loses large crops as a result of drought or heavy rains or other natural perils, the insurance company will be able to index damages and give an overall approximate reimbursement. This type of insurance was developed for farms in poorer areas and is cheaper than other farm insurance.