Crop insurance and farm insurance protect different parts of an agricultural operation. Crop insurance generally protects eligible crops, production or agricultural revenue. Farm insurance typically protects buildings, machinery, stored property and liability exposures.
The distinction matters because neither policy automatically replaces the other. A crop insurance policy may respond when drought reduces an insured corn yield, but it generally will not pay to rebuild a barn destroyed by fire. A farm insurance policy may cover the barn, but it usually will not compensate the producer for a weather-related reduction in crop yield.
Many U.S. agricultural operations need both types of coverage to avoid leaving major financial risks uninsured.
Key Takeaways
- Crop insurance primarily protects crop yield, revenue or both.
- Farm insurance generally protects agricultural property and liability exposures.
- Federal crop insurance is administered through the USDA Risk Management Agency and delivered by approved private insurance providers.
- Farm insurance is normally purchased from a private property and casualty insurance company.
- Crop insurance does not ordinarily cover barns, tractors or general farm liability.
- Farm insurance does not ordinarily guarantee crop yield or commodity revenue.
- Many farms need a combination of crop insurance, farm property insurance and specialized endorsements.
What Is Crop Insurance?
Crop insurance is designed to protect agricultural producers against qualifying losses involving insured crops or crop revenue.
Depending on the selected plan, coverage may be based on:
- The producer’s individual crop yield
- The producer’s crop revenue
- County-level yield or revenue
- A weather or rainfall index
- The farm’s overall agricultural revenue
The United States has a federal crop insurance program administered by the Federal Crop Insurance Corporation and USDA Risk Management Agency, commonly called RMA. Licensed private agents sell the policies, while approved private insurance providers service them.
The federal government subsidizes part of the premium for eligible federal crop insurance policies. The producer pays the remaining premium and must comply with the policy’s reporting, production and loss-notification requirements.
Private crop insurance products also exist. Crop-hail insurance is one common example. Private coverage may supplement a federal policy, but it has its own terms, deductibles, limits and exclusions.
What Does Crop Insurance Cover?
Coverage depends on the crop, county, plan and individual policy provisions.
Federal multiple-peril crop insurance may protect against unavoidable production losses caused by covered events such as:
- Drought
- Excessive moisture
- Hail
- Wind
- Frost or freeze
- Natural fire
- Certain plant diseases
- Certain insect damage
- Failure of an irrigation water supply caused by an insured event
- Prevented planting when included under the applicable provisions
A Revenue Protection policy may also respond to a covered decrease in crop revenue resulting from yield loss, price movement or a combination of both.
Area-based policies work differently. Instead of measuring only the producer’s individual results, they use yield or revenue information for a wider geographic area. An individual farm can experience a loss without receiving an indemnity if the county-level result does not trigger the policy.
Farmers should therefore identify exactly what the policy measures before purchasing it.
What Crop Insurance Usually Does Not Cover
Crop insurance is not a general property or business insurance policy.
It generally does not insure:
- Farmhouses
- Barns and sheds
- Tractors and machinery
- Farm vehicles
- Tools and mobile equipment
- General liability claims
- Employee injuries
- Agritourism activities
- Product liability
- Ordinary equipment breakdown
- Theft of farm property
- Fire damage to farm buildings
- Personal property kept at the farm
Crop insurance may also exclude losses caused by poor management, failure to follow recognized good farming practices, missed reporting deadlines or causes not listed in the policy.
A low yield does not automatically produce an insurance payment. The loss must meet the policy’s cause-of-loss, deductible, reporting and documentation requirements.
What Is Farm Insurance?
Farm insurance is a property and liability policy designed for the combined personal and commercial risks found on a farm or ranch.
A farm is different from an ordinary home. The property may contain a residence, barns, workshops, machinery, livestock, stored products, employees and members of the public. A standard homeowners policy is not designed to cover all these agricultural exposures.
Farm insurance may combine several protections into one package, including:
- Farm dwelling coverage
- Farm building coverage
- Personal property coverage
- Farm machinery and equipment coverage
- General farm liability
- Additional living expenses
- Loss of farm income
- Livestock coverage
- Stored agricultural products
- Optional commercial endorsements
The National Association of Insurance Commissioners describes farmowners insurance as property and liability protection recognizing that residential and business exposures are intertwined in agricultural operations.
However, “farm insurance” is not one federally standardized product. Coverage forms and terminology can vary among insurance companies and states.
What Does Farm Insurance Cover?
A farm insurance policy can be customized around the operation’s physical property and liability risks.
Farm Dwellings
The policy may cover the owner-occupied residence located on the farm, including attached structures and certain personal property.
Coverage can resemble homeowners insurance, but the policy is adapted to a property where agricultural business activities occur.
Barns and Other Farm Structures
Farm insurance may cover structures such as:
- Barns
- Equipment sheds
- Workshops
- Garages
- Fences
- Grain bins
- Silos
- Greenhouses
- Storage buildings
Each structure should be listed correctly and insured for an appropriate value. A structure omitted from the policy schedule may have limited or no coverage.
Machinery and Equipment
Coverage may be available for:
- Tractors
- Combines
- Harvesters
- Irrigation equipment
- Planters
- Balers
- Portable tools
- Farm office equipment
The policy may cover listed causes such as fire, theft, vandalism or collision. Mechanical breakdown, wear and tear and poor maintenance are commonly handled differently and may require specialized coverage.
Farm Liability
Farm liability insurance can protect against covered claims alleging bodily injury or property damage.
Examples may include:
- A visitor is injured on the farm.
- Livestock escapes and damages neighboring property.
- Farm operations accidentally damage another person’s property.
- A customer is injured during a covered farm activity.
Liability coverage can pay for covered legal defense costs, settlements or judgments up to the applicable limits.
Livestock and Stored Property
Farm insurance may provide limited or scheduled protection for livestock, feed, seed, fertilizer and harvested products.
Coverage is not automatic for every animal or cause of loss. High-value breeding animals, poultry operations and large livestock inventories may require specialized endorsements or separate policies.
What Farm Insurance Usually Does Not Cover
A farm policy does not ordinarily compensate a farmer simply because crop yield or commodity revenue falls below expectations.
Common limitations can include:
- Drought-related crop yield loss
- Commodity price declines
- Flood damage without separate coverage
- Earth movement
- Pollution incidents without an endorsement
- Intentional damage
- Ordinary wear and tear
- Insect or vermin damage
- Mechanical breakdown
- Certain livestock diseases
- Employee injuries covered through workers’ compensation
- Commercial vehicles requiring a separate auto policy
- Public events or agritourism not disclosed to the insurer
Policies differ significantly. The declarations, coverage forms, endorsements and exclusions—not the general name “farm insurance”—determine what is insured.
Crop Insurance vs Farm Insurance: Comparison
| Feature | Crop Insurance | Farm Insurance |
|---|---|---|
| Main purpose | Protect crop yield or agricultural revenue | Protect farm property and liability |
| Typical insured property | Eligible crops or insured revenue | Buildings, machinery and other listed property |
| Weather-related crop losses | Potentially covered | Usually not covered as a crop-yield loss |
| Commodity price decline | May be covered by revenue plans | Usually not covered |
| Barns and sheds | Generally not covered | May be covered |
| Tractors and machinery | Generally not covered | May be covered |
| General liability | Not covered | Commonly available |
| Farm dwelling | Not covered | May be covered |
| Federal premium subsidy | Available for eligible federal policies | Generally unavailable |
| Purchase deadline | Crop- and county-specific sales closing date | Determined by the insurer and policy |
| Claims basis | Yield, revenue, index or specified crop loss | Physical property damage or liability claim |
| Primary regulator or administrator | USDA RMA for federal crop insurance | State insurance regulators and private insurers |
Examples of How the Policies Respond
Example 1: Drought Reduces Corn Yield
A drought reduces an insured farmer’s corn yield below the policy guarantee.
A qualifying crop insurance policy may pay an indemnity if drought is a covered cause and the verified production loss exceeds the applicable deductible.
Farm property insurance would not normally pay simply because the corn yield decreased.
Example 2: Fire Destroys a Barn
An accidental fire destroys a scheduled barn and damages farm equipment stored inside.
Farm insurance may cover the building and listed equipment, subject to the policy limits, valuation method and deductible.
Crop insurance would not normally cover the barn or machinery.
Example 3: Hail Damages Soybeans and a Roof
A hailstorm damages an insured soybean crop and the roof of an agricultural storage building.
The crop damage may fall under a federal crop policy or private crop-hail policy. The roof damage may fall under farm property insurance.
The farmer may need to submit separate claims to different insurance providers.
Example 4: A Visitor Is Injured
A customer visiting a farm stand slips, falls and alleges that the farmer was negligent.
Farm liability insurance may respond if the activity and location are covered.
Crop insurance does not provide premises liability protection.
Example 5: Commodity Prices Fall
A farmer harvests a reasonable crop, but the applicable harvest price is lower than the projected price.
Revenue Protection may respond if the policy’s revenue calculation falls below the guarantee. Yield-only crop coverage would not generally cover a pure price decline, and farm
