Hobby farm insurance vs home insurance: what's the difference?

If you live on a hobby farm or acreage property, it isn't always obvious whether you need home insurance or farm insurance.

The answer usually depends less on what you call the property and more on what you actually do there.

A house on a few hectares with no farming activity can have very different insurance needs from a similar property with cattle, tractors, sheds and produce being sold.

What is a hobby farm?

There isn't one definition of a hobby farm that every Australian insurer uses.

You might hear terms such as hobby farm, lifestyle property, acreage property, rural residential property or small farm.

An insurer may look at things like:

• the size of your property
• whether you earn money from farming
• the type of farming you do
• how many animals you keep
• the machinery and equipment you own
• sheds, fencing and other farm property
• whether people visit the property for farm-related activities

This means a property that one insurer treats as a hobby farm may be treated differently by another.

Can you insure a hobby farm with home insurance?

Sometimes.

Some home insurers may cover certain rural or hobby properties, depending on how the property is used and their eligibility rules.

The important thing is not to assume that everything on the property is covered just because the house is.

Your home policy might be suitable for the house and your personal belongings, but you should also check how it treats things like farming activities, machinery, livestock, sheds, fencing and liability.

If you're unsure, tell the insurer exactly what happens on the property before taking out cover.

When might farm insurance be worth looking at?

There isn't one rule, such as owning more than a certain number of hectares, that applies to every insurer.

Instead, there are a few things that could mean it's worth looking at farm or rural insurance.

You keep livestock

A couple of chickens in the backyard is very different from keeping cattle, sheep, goats, alpacas or other livestock.

If you have animals on the property, check whether they're covered and whether having them changes the type of policy you need.

You own farm machinery

Tractors, slashers, farm vehicles, irrigation equipment and other machinery can be valuable.

Don't assume they're covered under your normal home contents policy.

Check what needs to be listed separately and whether you need farm property, farm vehicle or machinery breakdown cover.

You have farm buildings and fencing

Your property might have sheds, stables, barns, fencing, water tanks or other structures that aren't part of the main house.

Check whether they're covered by your home policy and whether any limits apply.

You make money from the property

Selling produce, livestock or other farm products can change how an insurer views the property.

The amount you earn can also matter, and insurers may have different rules about how much farming income they'll allow under different types of policy.

You offer agistment

If other people keep animals on your property, tell the insurer.

Agistment can create different property and liability risks, so it shouldn't be treated as something the insurer doesn't need to know about.

You have paying guests or visitors

Farm stays, farm-gate sales, tours, events and other activities involving visitors can also change your insurance needs.

Again, the safest approach is to tell the insurer or broker exactly what you do rather than assuming it's included.

What's the main difference between home and hobby farm insurance?

Home insurance is primarily designed around your home and personal belongings.

Farm insurance can go further and cover farm-related property and activities, depending on the policy.

That might include things such as:

• farm buildings
• fencing
• machinery
• tractors and farm vehicles
• livestock
• hay and grain
• farm liability
• the farmhouse and its contents

Not every farm policy includes all of these things automatically. Farm insurance is often made up of different sections, so check exactly what you've selected.

Does the size of your property decide which insurance you need?

Not on its own.

Some insurers use property size as part of their eligibility rules, but there isn't one hectare limit that applies across the Australian market.

What you do on the property can be just as important.

A large acreage used purely as a home could be treated differently from a smaller property being used to run a farming business.

What about a lifestyle property with no farming?

If you simply live on a larger rural block and don't carry out farming activities, you may not need a farm policy.

But rural properties can still have features that are different from a suburban home, such as large sheds, extensive fencing, water infrastructure or other structures.

Check that the policy you're considering covers the property you actually own.

What should you tell an insurer?

When getting a quote, be clear about how you use the property.

It's worth mentioning:

• the size of the property
• any livestock
• farming or growing activities
• farm machinery and vehicles
• sheds and other buildings
• whether you sell anything produced on the property
• agistment
• farm stays or paying guests
• other businesses operating from the property

Giving the full picture makes it easier to work out whether home, hobby farm or broader farm insurance is the better fit.

Home insurance or farm insurance?

There isn't one answer for every acreage or hobby farm.

For some properties, home insurance may be enough. Others may need a rural or farm policy because of the animals, machinery, buildings or activities on the property.

The important thing is to compare policies based on how you actually use your property, rather than choosing one because it has “home” or “farm” in the name.