Why might a farmer require insurance?

A farmer might require insurance primarily to cover potential employee injuries or damage to property because agricultural activities inherently carry risks. Farming operations can be hazardous, involving machinery, livestock, and various environmental factors. Insurance can help mitigate financial losses that result from workplace accidents, protecting both the farmer and the employees. It also covers damage to farm property, such as buildings and equipment, allowing farmers to recover costs associated with repairs or replacement in the event of incidents like fires, storms, or vandalism.

While the other options do represent valid concerns for farmers, they do not highlight the direct role of insurance in these specific situations. Rising commodity prices, health coverage for the farmer, and risks of crop failure during droughts all relate to broader financial management and risk mitigation strategies, but insurance specifically serves to address liabilities associated with employee safety and property damages more directly.