What is the difference between farm and hobby farm insurance? | Insurance MD & DE (2024)

Avery Hall Insurance
Farm Insurance
What is the difference between farm and hobby farm insurance?

Posted on January 29, 2020

Whether big or small, your farm needs protection. However, it can be tricky to determine what kind of insurance will best suit your farm’s needs. Every farm is different, but when it comes to insurance, there are two main types of farms. These include hobby farms and commercial farms. Understanding the difference between these two is crucial in guiding you in your farm insurance decisions.

So, for clarification, ahobby farmis a smallholding or small farm whose maintenance is without expectation of being a primary source of income. Acommercial farmis a type of farming in which both crops and livestock are for business use only. It is a modernized method of agriculture undertaken on a large scale.

Now, how do you classify your farm or determine the insurance it needs?

Hobby Farm insurance covers smaller farms.

A hobby farm is usually around 30 acres or less. They also reside in a single location. Although small, your typical homeowner’s policy will not cover adequality enough.

Farm property insurance covers larger farms.

Commercial farms are larger and more complicated businesses. They require more equipment, have more animals, and overall maintenance involves great time dedication. Commercial farms also have different needs than hobby farms. Farm property insurance covers farms that are operating full-time.

Both farms generate profit, just on a different scale.

Hobby farmers usually are considered part-time, while commercial farms are a full-time business. Hobby farms bring in less than $10,000 annually. Hobby farmers often sell their farmed goods at local markets. Commercial farming operates on a much larger scale within the agricultural industry.

Farm Insurance is generally more in-depth.

Every farm and its needs are different. There is no one-size-fits-all policy. Since farm insurance covers large, commercial farms, there are usually many various aspects involved in the creation of these policies. You may need to purchase additional coverage depending on your situation.

Both are necessary.

Some people believe that their homeowner’s policy alone is enough to protect their farm. This is a common misconception. If you are generating any profits, you need a form of farm insurance.