The best place to start in determining your direct farm business' insurance needs is visiting a qualified insurance agent, preferably one that is familiar with how direct farm businesses operate.  Be prepared to explain in detail your operation, and request an insurance proposal from the agent that addresses the operation's every risk and potential amount of loss.  You may also wish to compare policies from multiple agents.  Specific types of insurance products that may be necessary include:  premises liability, workers' compensation, physical damage to business property, product liability, motor vehicle, crop insurance, and some kind of casualty insurance to cover transactions until title passes to the purchaser.

Many of these insurance needs may be incorporated into a basic farm insurance policy.  These include losses to the farm dwellings, personal property (including tractors and other equipment), outbuildings and premises liability arising from some incidental on-farm business operations.  Depending upon the scale of the operation and the particular insurance company, roadside farm stands and U-pick enterprises may be covered under incidental business operations in the basic farm insurance policy.  Agritourism, petting zoos or seasonal farm festival activities generally are not considered incidental farm business operations for insurance purposes and will require specific endorsements.  Insurance field agents may review all of the above mentioned operations to implement best management practices designed to eliminate or reduce potential risks in the operation. 

Product liability arising from raw/unprocessed farm-grown products usually are covered under basic farm insurance policies.  These would include unprocessed items sold at road side stands or farmers markets.  Once the product is transformed to a processed good, however, the basic farm policy may not cover injuries arising from consumption of the product.  For example, a farm insurance policy would cover milk from a diary operation, but not an artesinal cheese produced on-farm.  A general commercial insurance policy would be required in this instance.  Similarly, an on-farm business with a commercial scale kitchen would not qualify as "incidental" to the farm operation, but rather a commercial undertaking with particular insurance coverage needs. 

Due to the variability of insurance coverage and prices depending upon the specific direct farm business, insurance needs and costs should be assessed early-on in the business planning process.  Bank financing may require insurance expenses to be incorporated as part of the cost structure and profitability models in the business plan.  Further, some potential customers (e.g., restaurants, institutional sales) may require proof of adequate insurance.