There’s a certain kind of magic that comes with trading suburban fences for a slice of the Australian countryside.
For some, it’s the ultimate lifestyle change – a hobby farm where the air smells of eucalyptus, just-laid eggs are on the menu each morning, and an alpaca or two dot the back paddock. For others, it might be the realisation of a lifelong dream to run an income-generating agribusiness.
Regardless, rural life can quickly deliver a unique set of hands-on realities, everything from feeding farm animals to maintaining boundary fencing to tracking down parts for a trusty ride-on mower – and ensuring you have an appropriate level of insurance in place.
But with various types of insurance on the table, working out which one might suit your property best can be confusing. If you’re living on one of the country’s more than 60,000 hobby farms,1,2 do you need farm insurance or is home insurance appropriate? If it is, should you also consider a separate farm machinery insurance policy to cover your essential farming equipment and vehicles? How can you tell for sure if you’re living on a hobby farm or running an agricultural business? And what exactly is farming insurance anyway?
To help you wrap your head around how your insurance needs might differ depending on the type of property you own, we’ve put together this guide to answer all of the above questions – and more.
What is farm insurance?
Farm insurance is a specialised type of combined commercial property and business insurance that’s designed for farmers working in the agricultural industry.3
What does farm insurance cover?
While inclusions can differ between insurers, farming insurance might provide cover for loss or damage to a farm’s:3
- Property – which might include buildings, equipment, machinery and livestock
- Vehicles – such as tractors, harvesters and even standard utes
- Crops – including those that are in the ground or in storage
- Liability – for example, if someone makes a claim against your farm for personal injury or property damage as a result of your business operations
- Home and contents – your personal belongings and the structure of your home on the farm might even be covered by a farming insurance policy.3
Essentially, this means that farm insurance in Australia could act as crop insurance, livestock insurance, farm equipment insurance, farm liability insurance and rural property insurance, all rolled into one policy. However, Youi doesn’t offer this specific type of product.
Who might need farming insurance?
People who rely on their farms to generate an income might need to consider getting farm insurance3 – or some other type of business insurance4 – to cover for loss or damage caused by events such as natural disasters, theft and accidents.3,4
People who live on hobby farms may also want to consider specialised farm insurance, especially if they need to cover crops or livestock as well as assets such as machinery and vehicles.3,4
What is a hobby farm?
In Australia, hobby farms are essentially small-scale farms that typically occupy an area of land no bigger than 50 acres (20 hectares).1,2
Generally speaking, hobby farming is done more for pleasure than for profit.5 So, while a hobby farm might end up making money – even if it’s just from selling eggs or produce at a farmgate stall6 – it’s not usually the main source of income for the property’s owner.5
Hobby farms vs business farms – where’s the line?
There’s no single factor that determines whether your farm is a small business or a hobby farm for tax purposes, but it’s likely you’re running a business farm if:7
- You have an ABN.
- You’re making or intend to make a profit.
- Your farm activity is planned, organised and carried out in a businesslike manner.7
In contrast, in addition to the land measurement consideration,1,2 a hobby farm might mean:7
- You tend to it in your own time.
- You gift or sell farm produce for the cost of materials – in other words, you’re not making a profit.
- You have no obligation to keep records or declare the amounts you make to the Australian Taxation Office (ATO).7
If you’re unsure, or to learn more about the difference between a hobby and a business for income tax purposes, you can visit the ATO’s website.
Do hobby farmers always need farm insurance or hobby farm insurance?
Not necessarily.4 Sometimes a standard home insurance policy may be suitable for a hobby farm or rural home, depending on what you want to insure.4
For example, home building insurance can cover the physical structure of your residence as well as other structures on the property, such as garages, fences and sheds.8 Meanwhile, contents insurance covers your personal belongings.9
“If you have Contents insurance with Youi, this can include your farming tools and even a ride-on lawnmower you use at the property,” says Mervyn Hartley, Youi’s Head of Product – Home and Small Business.
“If you do have a home insurance policy with Youi for your hobby farm and you start selling goods or produce or using the farm to do any type of work that produces income, it’s important to let us know – even if you don’t think the ATO would classify you as a business. There are exclusions for business activities, and you may need to consider adding optional Business Items to the policy.10 You might even want to think about taking out a separate small business insurance policy.”
What doesn’t home insurance cover on a hobby farm?
Depending on your policy, some things might not be included in regular Home insurance cover.4
“Youi’s Contents insurance excludes cover for animals of any kind, and our Building insurance doesn’t cover dirt or gravel driveways, or plants. And Liability cover is excluded for any business activities – this is where a separate business insurance policy may need to be a consideration,” says Hartley.
Vehicles aren’t covered by home insurance at Youi either.11 So, for example, if you own and use a ute, quad bike or motorcycle to get around your hobby farm, head into town or visit a neighbour’s property, you’d need to:12
- Organise Compulsory Third Party (CTP) insurance with the registration, which covers injuries to people caused by your vehicle
- Consider getting a level of additional car insurance or motorcycle insurance to cover damage to the vehicles or other property.11
Youi’s Small Business Insurance does offer cover for non-standard vehicles and other high value machinery which might be used for a farming business, though.11
What about hobby farm tools and equipment?
At Youi, if you’re not selling goods, livestock or produce from your hobby farm, some of this gear may be covered by a home contents insurance policy.12
“Alternatively, if you are running some type of business from your hobby farm, there’s an option to add some cover for business items – which can include farm tools and equipment – to your Contents policy, for an additional cost,” says Hartley.10
Does Youi’s Small Business Insurance cover farms?
Yes – Youi’s Small Business Insurance could serve as small farm insurance for a range of different farming businesses, depending on the type of cover a farmer might want or need.14
“While a farmer would still need to consider a Home insurance policy if they wanted to cover the farmhouse’s building and contents, Youi’s Small Business Insurance automatically includes public liability and products liability cover for their farming business,” says Hartley.
If you’re running your hobby farm as a business, public liability insurance can provide cover if a member of the public suffers an injury or their property gets damaged, and you’re found to be negligent.15
And if your hobby farm makes, sells or supplies goods, product liability insurance can cover you against claims for injury or damage caused by defects in those products.16
“From there, eligible businesses can also choose from a number of optional covers to add to a Small Business Insurance policy at Youi, for an additional cost, one of which is Business Property Damage.”17
Under this option, the contents items used in your business and/or the stock kept at your hobby farm is covered for loss or damage caused by an accident or unforeseen event, such as a fire, storm, flood or theft.18,19
“This can include cover for some types of farm machinery and vehicles such as tractors and ATVs,” says Hartley. “However, it does exclude livestock and growing crops or pastures.”18,19
Cultivating your own pocket of rural paradise can be an incredibly rewarding journey, but it’s rarely a set-and-forget adventure, which can make it all the more worthwhile to have a suitable insurance policy in place.
To see how Youi’s home insurance options might cover your lifestyle acreage, give us a call on 13 9684 or consider starting a quote online. Or, if your hobby farm has recently mushroomed into a business, you might like to give our dedicated Small Business Insurance team a call on 1300 010 648 to discuss your options.
Public and Products Liability Insurance issued by Youi Pty Ltd. Consider the Small Business Insurance PDS and TMD to decide if this product is right for you.
1 Source: realestate.com.au – Escape from the rat race, buy a hobby farm, October 2022
2 Source: Farmbuy – Hobby Farms For Sale: Guide To Finding Your Dream Property, n.d.
3 Source: Finder – Farm insurance, April 2026
4 Source: TASALERT – Fact Sheet 7: Insuring your rural property against natural disasters, n.d.
5 Source: Enterprise Legal – Hobby Farm v Farming Business – Understanding GST on Rural Properties, October 2024
6 Source: ABC News – Can working from home void my home and contents insurance policy?, July 2022
7 Source: Australian Government Business – Difference between a business and a hobby, n.d.
8 Source: Canstar – What does building insurance cover?, March 2024
9 Source: Canstar – What is Contents Insurance and What Does it Cover?, March 2024
10 Additional costs, limits and exclusions apply. For full details, see the Home Insurance PDS.
11 For full details, see the Small Business Insurance PDS.
12 Exclusions, limits and additional fees may apply. For full details, see the Home Insurance PDS.
13 Source: Moneysmart – Choosing car insurance, n.d.
14 Exclusions, limits and additional fees may apply. For full details, see the Small Business Insurance PDS.
15 Source: Business Victoria – Find the right insurance, n.d.
16 Source: Australian Government Business – Types of business insurance, n.d.
17 An additional cost applies for optional covers. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
18 Business Property Damage cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
19 Loss or damage caused by flood, storm or bushfire within the first 72 hours of your policy commencing is only covered in limited circumstances. For full details, see the PDS & Policy Wording.
