Trim Your Financial Risk with Greenhouse/Florist Insurance
Because of the highly perishable nature of flowers and plants, insurance plays an important role in the success of a greenhouse/florist business. An insurance professional who specializes in the horticulture and agriculture sector can help you put together an insurance plan to safeguard your business.
In addition to the normal forms of commercial insurance all businesses should have – such as liability, property and workers’ compensation – you’ll also need insurance for the unique operational risks of growing, storing, transporting and selling your plant products.
The advantages to growing plants indoors include longer growing seasons, climate control, pest protection, higher yields and greater variety. With severe swings in weather and supply-chain disruptions, greenhouses have become a popular alternative to field-grown plants. But greenhouses have their own set of challenges.
In addition to your investment in a modern greenhouse structure, you also have the potential for financial losses related to a sprinkler or drip-line irrigation system, a climate-control system to combat extremes in temperature and humidity, and a lighting system. Commercial property insurance can protect your investment in all of these.
There is also the risk of spoilage, fire, vandalism, power outages and lost income if you are down during your busiest season.
A commercial property policy designed to meet the needs of plant growers and florists can cover many of these risks. Among the things you’ll need to cover:
- Equipment and tools used to cultivate and prepare your plants
- Refrigerators to cool fresh-cut flowers and arrangements
- Water supply and irrigation systems
- Property in transit or stored off site
- Hail, lightning, high winds and snow
- Power outages
- Fire, theft and vandalism
Many of these perils are covered under a standard commercial property insurance policy. For your business, though, you may need specialized coverage that includes equipment breakdown and inland marine insurance (for property that is transported or used at a job site).
You may also need a cyber risk policy written to protect your balance sheet from product destruction due to a cyber attack that shuts down your computer-controlled watering and temperature systems.
If you own a garden center or nursery, make sure a greenhouse can be added to your existing property policy. Insurance companies won’t cover a temporary or poorly constructed greenhouse, such as one made of plywood and sheets of plastic. Insurers also might not cover certain events, such as collapse from the weight of snow and ice.
Ask an insurance professional to help you establish the appropriate insurance-to-value ratio so that you are fully covered against a claim. Make sure your equipment, heating, lighting and irrigation systems are covered as well, as these may need to be insured separately from the building.
Insurers that specialize in horticulture often offer crop insurance to protect your plants during the growing season. Given the investment you’ve made in their cultivation, it’s a purchase worth considering.
One of the disadvantages of greenhouses is that pests and diseases can spread quickly through confined spaces, ruining an entire crop. Pollination is another challenge with greenhouses. Ask your agent about crop insurance for greenhouses and what it covers.
Specialty insurers also offer policy add-ons, called endorsements, that are tailored to the type of growing system you use. For example, a hydroponic endorsement would add coverage for your hydroponic operation that may otherwise be excluded from a standard property coverage.
A growing-stock endorsement covers plants that have been removed from the protection of the greenhouse. For example, when you place plants in an adjacent garden center or prepare them for delivery, be sure they are adequately insured.
Commercial general liability insurance
Commercial general liability (CGL) insurance covers bodily injury, property damage and advertising injury that occurs during the course of your business operation. Advertising injury includes false advertising, libel and slander.
If a visitor is injured on your property, some live plants you sell to a flower shop contain insects that infest their store, or an employee forgets to put away shears and a customer’s child gets hurt, you could face a liability claim seeking monetary damages from you.
Commercial general liability insurance helps pay for your legal defense, settlement costs and judgments.
Other commercial insurance coverages
If your business has vehicles it uses to deliver flowers, you’ll need commercial auto insurance. Commercial auto insurance can cover collision damage, theft, vandalism, non-collision damage (like floods or flying debris), and bodily injury. You can also name additional insureds to your policy so that everyone who drives your vehicles is covered under your plan.
Business income insurance helps replace lost income when physical damage to your covered property shuts your business down. Examples include a fire, windstorm or other perils named in the policy that may force you to suspend operations. You can include coverage for extra expenses, such as the cost of renting a space, while you recover.
Business owners policies (BOPs) bundle many of the coverages a typical business needs into one, less expensive policy. Most BOPs include CGL, commercial property and business income insurance. However, BOPs usually don’t include commercial auto or workers’ compensation insurance. In some cases, your agent or broker might recommend a program of insurance, which – similar to a BOP – bundles coverages specifically needed in the greenhouse and flower-growing industry. A program often contains more liability coverage than a BOP.
Workers’ compensation insurance is a requirement in most states if you have employees. It pays for lost wages, medical expenses and rehabilitation costs when an employee is injured on the job.
Get the insurance you need
Those with a green thumb and a love for the beauty of flowers and plants will find the horticulture business has many rewards. Greenhouses are flourishing due to increased demand for plants and vegetables that can be grown year-round in a climate-controlled environment.
But there are risks as well. Flower shops must compete with supermarkets and online retailers, and plants grown in greenhouses can be lost due to a fire, disease or spoilage. Insurance can help reduce your risks and ensure that your business has a good chance of succeeding, even after a disaster. Talk to an agent or broker who specializes in horticulture about an insurance plan that meets all of your needs.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.