The Rise of The Farmer’s Side Business and The Coverage Gaps It Creates

• August 1, 2026

By Stephanie Bittner

A modern farm may look very different from the one an agent insured five years ago. Today’s farm might sell corn in the morning, host a wedding that afternoon and welcome overnight campers by evening, all on the same property.

As farms increasingly evolve into diversified businesses, many owners are still operating under coverage that has not evolved alongside them.

The significant shift in the way farms run is accelerated by generational transition.

As many aging farm owners begin handing operations down to the next generation, newer farm operators are feeling increasing pressure to keep the family farm profitable in a far more complex landscape. Shifting expectations around technology adoption, market access, commodity mix and income growth are shaping how farming is approached.

It’s within this changing environment that a farm’s side businesses have taken on new importance.

For many farms, they have become essential for maintaining viability and sustaining operations well into the future. For independent agents, that reality creates both a challenge and an opportunity to help these customers recognize when the farm has changed and ensure their coverage reflects how the operation truly functions today.

What Today’s Farm Looks Like

Farming is being shaped by a combination of economic pressure, operational uncertainty and environmental shifts. Margins remain tight as farm owners contend with rising costs for seed, fertilizer and equipment, while commodity prices fluctuate and global markets remain unpredictable.

At the same time, weather volatility continues to complicate production planning. More frequent and severe storms, drought conditions and flooding events have made outcomes less certain year to year. Farming forecasts reflect these trends, projecting continued pressure on farm income. National totals are expected to decline this year by about $1.2 billion compared to 2025, according to the U.S. Department of Agriculture’s 2026 Economic Research Service (ERS) farm income forecast.

In response, many farmers are exploring new side ventures and investing in value-added strategies to stabilize income and secure a more resilient future. As many as 40% of today’s U.S. farms now generate some form of farm-related or off-commodity income, according to the ERS, with small and midsize operations more likely to rely on this supplemental revenue. These additional activities often emerge gradually as owners seek ways to ensure their operations stay strong for the long haul.

Diversification in agriculture is not new, but its form has changed significantly. Historically, supplemental income might have come in the form of custom harvesting, periodic boarding of livestock or seasonal roadside produce sales.

Today’s farming side businesses are often more public-facing and commercially varied. Agritourism and agritainment have grown particularly quickly because they allow farms to monetize the land and buildings they already own. Farms are connecting to their communities and responding to consumer interest in experiential activities by offering access to more pumpkin patches, apple orchards, hayrides, petting zoos, equine lessons, seasonal festivals, educational tours and onsite dinners. Others have expanded into offering their property for event venues, short-term accommodation, direct-to-consumer sales, solar leases and even cell towers.

As part of this gradual evolution, each change may feel incremental to the farm owner because the new offerings often expand naturally from what came before. But even a small operational shift can carry meaningful insurance implications. A seemingly minor move from selling tomatoes to producing salsa, for instance, can increase liability and may not be covered in the base contract.

A Coverage Gap Emerges

While farming itself has changed, insurance coverage has not always kept pace. What may begin as a modest seasonal activity can alter how a property is used, who enters it, how products are sold and how exposure accumulates. In some cases, farm-side operations are set up as separate LLCs, even though the related activities occur on shared farm property or rely on common assets, causing misunderstandings and assumptions of what is being covered by the current policy.

Traditional farm policies are generally structured around agricultural production, farm buildings, livestock, machinery and certain incidental exposures. They may not include newer streams brought in by side businesses that are unrelated to commodity production. Because these additions often occur incrementally, they may not prompt a formal review of the insurance.

The result is that many farms now operate with more complex risk profiles while still relying on coverage designed for a narrower, more traditional definition of farming. Most agritourism operators manage multiple activities rather than a single attraction, according to the “2024 National Agritourism Producer Survey.” From a coverage perspective, those additions—and affiliated risk—can add up quickly.

Complicated insurance language makes these considerations harder for customers to recognize. Exclusions, endorsements, classifications and sublimits often hold the answer, but they are not always easy for non-insurance specialists to interpret. Many farm customers focus on whether they “have coverage,” not whether their coverage still aligns with how the farm operates today, which is often where the disconnect arises.

Where Traditional Coverage Begins to Fall Short

As farms diversify, one of the most critical inflection points is when certain activities no longer fit the traditional definition of “farming.” At that stage, exposure can outpace the policy structure, creating gaps across the types of coverage the farm currently relies on.

Commercial liability exposure is often the first place these problems appear. Many side businesses on farms involve public-facing activities. These may require broader commercial liability language than what is provided under a base farmowners policy, leaving the farm exposed at a time they least expect it.

Similarly, homeowners farm endorsements are not typically designed to grow alongside increasingly complex farming operations. They are intended to address limited, incidental farm exposures, not evolving multi-revenue businesses with commercial elements.

Business property coverage is another frequent pressure point. Many farmowners forms limit coverage to property that is considered “usual and incidental” to farming operations. Therefore, the equipment or property tied to a farm’s side businesses may not qualify under that definition.

For example, a Christmas tree farm that expands into retail sales or seasonal events on the property may introduce equipment, displays, signage and inventory that no longer fit within a base policy. An addition like the equipment needed to produce apple cider on-site, for instance, can be easily overlooked.

Insurance tools that support changing farms, such as umbrellas, cyber coverage and appropriate additional insured endorsements, play an important role in helping ensure the farm is positioned to weather both operational risk and generational change. When structured correctly, policies can offer the flexibility needed as operations expand and evolve. Recognizing when broader language or expanded coverage is needed can be the difference between a manageable loss and one that may threaten the long-term viability of a longstanding farm operation.

Asking the Right Questions

It’s important to recognize that side businesses are increasingly part of farms’ core financial strategy. For many small and midsize farms, this supplemental income supports cash flow stability and long-term continuity. From the farmer’s perspective, these decisions feel practical.

From an agent’s standpoint, however, resilience on the income side should be matched in the farm coverage. A farm that diversifies revenue without adjusting its insurance program may find itself more exposed than before.

As diversification becomes standard across agriculture, it should be treated as a routine underwriting consideration rather than an exception. Understanding modern farm risk requires more than confirming acreage and livestock counts. Here, agents can add significant value to the farm customer relationship by asking questions that reveal how the operation actually functions day to day.

These conversations should start ahead of renewal and explore how income is generated, what activities occur beyond production and how the business may have changed since the last renewal. The agent’s conversation checklist should specifically include asking what has changed in the farm’s operations over the past year, how the farm generates income beyond crops or livestock and whether members of the public come onto the property and for what purpose.

It’s also important to identify whether the farm hosts events, classes, tours, rentals or educational programs; sells products in natural or processed forms; or has repurposed or renovated any buildings.

Agents should encourage these customers to tell them about any recent changes, even if they feel small, such as selling a new product at a farmer’s market. Viewing these updates as a continuing conversation rather than occasional coverage checks helps ensure that coverage gaps won’t arise.

Many family farms do not think of themselves as commercial enterprises, even when aspects of their business now resemble one. A thoughtful insurance conversation respects tradition while acknowledging operational reality. As farm risks grow more layered, agents and carriers with dedicated farm expertise are better positioned to identify changing exposures and structure coverage accordingly.

For independent agents, this presents a meaningful opportunity. Those who know the right questions to ask can help customers distinguish incidental activities from those that may materially change risk. It also allows agents to adjust policy structures intentionally rather than forcing new exposures into outdated frameworks.

As farm diversification accelerates alongside generational shifts, many of these customers need guidance to recognize how those changes affect their policy. Agents who can translate evolving farm operations into appropriate coverage are helping protect livelihoods that span generations.

Stephanie Bittner is director of farm strategy at Liberty Mutual.