Though greenhouses and hydroponic farms are controlled, self-contained growing environments, greenhouse growers still face some unique risks. While training employees, taking precautions, and following industry best practices can minimize costly mistakes, accidents can still happen. To protect the business from the financial fallout of worker injury, insect infestation, and other threats, horticultural insurance is an absolute necessity.
If you’re a broker selling horticultural insurance or agriculture business insurance, one of the keys to success is showing prospects you understand their operation, risks, and risk management needs.
Here are some of the top questions brokers face when selling horticultural insurance.
1) What types of insurance coverage do horticultural businesses need?
Since horticultural businesses can vary significantly, the types of insurance coverage they need can differ. For example, floriculture insurance or plant nursery insurance for growers specializing in non-edible flowers would probably have different insurance needs than a vertical farm producing lettuce. While the nursery might need more coverage for long-haul shipping, the risk of E. coli liability probably wouldn’t be their chief concern because no one is consuming what they’re growing.
Specialty insurance allows plant cultivation businesses to customize their coverage. Nevertheless, most green industry operations will benefit from the following coverages:
- General liability: General liability insurance is the cornerstone of every commercial policy and provides broad – albeit basic – coverage for businesses that are liable for property damage or injury to third parties.
- Property insurance: Greenhouse insurance risks can also include damage to the structure or other business property caused by fire, theft, and other threats. Property insurance protects the business from the financial losses associated with these incidents and more.
- Workers’ compensation: For businesses with employees, workers’ compensation is required by law in 49 of 50 states (Texas is the lone exception). But that’s not the only reason to carry this type of insurance. Workers’ compensation is beneficial to both employers and employees and can provide mutual comfort for both parties.
- Commercial auto: If the business has vehicles, commercial auto is a must, not only to cover liabilities related to auto accidents but also to insure the value of the vehicle itself.
- Inland marine: If a greenhouse or nursery transports or stores plants, seeds, or other supplies, inland marine coverage can protect those assets while they’re in the care of the business or on the move.
- Umbrella/excess liability: In the event of a particularly costly liability, umbrella insurance can increase the amount of coverage (e.g., an additional $1 million in coverage).
- Pollution liability: Environmental insurance that covers pollution liability can protect the business from expenses associated with chemical contamination, spills, or another accidental discharge of a pollutant. For example, runoff of water with herbicide from a nursery or greenhouse might accidentally contaminate a waterway.
2) How can horticultural insurance protect against liability claims?
Horticultural insurance can protect against liability claims by covering a portion of the costs related to these claims. Different types of farming and growing business insurance are designed to cover different perils greenhouse growers and nursery owners might face. For instance, let’s say a greenhouse employee accidentally adds too much of the insecticide imidacloprid to the plant’s nutrient supply. The contaminated runoff then gets into the water supply of several nearby neighbors, several of whom fall ill. Fortunately, the greenhouse owner’s horticultural insurance policy covers both the medical bills for the affected neighbors, as well as the losses of the greenhouse’s crops.
3) What factors affect the cost of horticultural insurance?
Like other types of insurance, the cost of horticultural insurance varies based on the insurer’s assessment of the business’s risks. Insurance premiums may also be influenced by state limits and laws, provided the insurer is admitted in the state(s) in which it does business. (Admitted insurers meet the regulations set forth by the Departments of Insurance in their states of operation, while non-admitted companies do not meet those requirements.)
When underwriters evaluate a greenhouse’s or nursery’s risk profile to determine premiums, they’ll look at everything from the location to the types of crops the business grows. A greenhouse or nursery located in an area that experiences frequent severe weather events is likely to pay higher premiums for their insurance than an area with predictable weather and a low risk of natural disasters. Similarly, a greenhouse that grows hardy, lower-cost produce will probably enjoy lower premiums than a grower specializing in exotic fruits known to be susceptible to disease.
The coverages and deductibles a greenhouse or nursery chooses will also influence the cost of horticultural insurance. Unsurprisingly, broader coverage, higher coverage limits, and lower deductibles will increase premiums. Conversely, more limited coverage and higher deductibles translate to the business assuming more risk, which typically means lower insurance costs.
4) How can horticultural businesses ensure they have the right coverage?
Greenhouses and nurseries both grow crops and plants, but their insurance needs can differ based on the size of the business, the specific operations, and the business’s risk tolerance. Horticultural businesses have unique needs, which is why a robust, specialized risk management solution can help protect against the perils these businesses face. To help ensure horticultural businesses have the best possible coverage, use these six nursery insurance broker tips:
- Conduct a thorough risk assessment to understand the business’s risks.
- Consult with a commercial insurance broker (preferably one with expertise supporting horticultural businesses).
- Consider your options and weigh the risks against the costs. (E.g., Does the business need excess liability coverage?)
- Understand the coverages, exclusions, and limitations before there’s a loss.
- Meet with your insurance broker at least once per year – or anytime the business makes any major changes – to review your coverages.
- Update coverage as needed.
5) How can horticultural businesses minimize claims risks?
By following certain best practices and preparing employees to handle the hazards of the job, horticultural businesses can minimize claims risks. First and foremost, horticultural businesses and their employees should prioritize a safety-first state of mind that goes beyond basic legal requirements. Horticultural businesses should provide an employee handbook and an emergency procedures checklist, in addition to training all employees on how to use safety equipment, operate machinery, and navigate an emergency. Growers must also regularly maintain, inspect, and repair greenhouse structures and equipment, and if they work with pesticides, take extra precautions to properly store, label, and apply these chemicals. Finally, in the event of an accident, businesses should maintain detailed records of the incident and continually strive to improve safety protocols, training, and adherence.
Conclusion
Brokers may encounter several questions when speaking with horticultural business prospects, but what’s more important than the answers is having access to the insurance solutions that can protect their businesses. GrowPro by NIP Group is the industry specialist in greenhouse and nursery accounts, from indoor vertical farms to hydroponics and hemp. Growers deserve better horticultural coverage by design, and GrowPro offers the specialty coverage they need to protect their businesses.
