For more on this part of the insurance industry:
1. visit our farm insurance page for a look at all products in this sector
2. or focus in on all of the hobby farm insurance products available on IB Markets!
Hobby farm insurance safeguards small-scale Australian farmers who operate primarily for pleasure, not profit. It covers property, livestock, equipment, and liability, protecting against risks like natural disasters and accidents.
In 2024, hobby farmland prices in the country averaged around $200,000 per hectare, reflecting the sector's growth. Operating such farms involves significant costs, including land acquisition, equipment, and maintenance. Insurance is vital to mitigate financial risks associated with unforeseen events.
Hobby farm insurance in Australia faces challenges from natural disasters and liability risks. Extreme weather events, such as bushfires, floods, and storms, threaten property and livestock, requiring robust insurance solutions. Meanwhile, accidents or injuries on farms highlight the importance of liability coverage to protect against financial setbacks. Other key concerns include:
premium discount program: firms are starting to offer reduced insurance premiums to farmers adopting sustainable practices and certifications, encouraging better land management and lower risks
modern rural challenges: farmers meet modern issues like biosecurity threats and neighbour disputes, driven by demographic shifts in rural Australia, according to recent research
flood insurance access: high costs and limited availability of flood coverage highlight the need for improved risk management and advanced data modelling in Australia
Theft and vandalism remain persistent risks for hobby farmers, with valuable assets like machinery and livestock often targeted.
Brokers should advise clients to consider policies that cover replacement or repair costs for stolen or damaged property.
In Australia, a hobby farm is typically a small-scale agricultural property. Owners often maintain off-farm income sources. Hobby farmers usually engage in agricultural activities part-time, balancing them with other professional commitments.
Hobby farms in Australia generally range from just a few acres up to no more than 50 acres, making them too small for a commercially viable farming operation. This size allows for personal enjoyment and small-scale production without the pressures of large-scale farming. The manageable acreage suits individuals seeking a rural lifestyle while maintaining other employment.
Hobby farm activities in Australia are generally not taxable as they are not considered businesses. Income earned from a hobby farm does not need to be declared to the Australian Taxation Office (ATO), and related expenses cannot be claimed as tax deductions.
For tax purposes in Australia, a hobby farm is distinguished from a business under Section 6-5 of the Income Tax Assessment Act 1997 (Cth). This law defines assessable income, specifying that only activities meeting the criteria for carrying on a business are taxable.
Hobby farm operations lack the scale, repetition, and intent to make a profit that make up a business. Therefore, they are not subject to business taxes or eligible for business-related tax concessions.
Hobby farm insurance in Australia offers various coverage options to protect small-scale farm owners from potential risks. Common coverage areas include:
Selecting appropriate hobby farm insurance ensures hobby farmers safeguard their investments and maintain peace of mind while enjoying their rural lifestyle.
Individuals who need this insurance include:
Indigenous Australians also engage in farming activities that align with hobby farming, including small-scale crop cultivation and livestock raising.
Yes, many Australians reside on their hobby farms, enjoying a rural lifestyle while engaging in small-scale farming activities.
If your hobby farm is for personal enjoyment and not run as a business, you do not need an Australian Business Number (ABN). However, hobby farm insurance can still provide valuable protection for your property and activities.
