For all those crop farmers out there, I’m sure insurance is the last thing on your mind. Fair enough too. The weather, the machinery, the planning, and the implementation come seeding time is enough to go on with for now.

There are seasonal implications for insurance though and whilst you are sitting on that tractor it might pay to mull them over.

Machinery & Asset Protection

It might seem obvious, but you do need to look at your sums insured regularly (and not just at renewal time).

We see a lot of media reporting issues with insurance companies and claims that follow a large event. Some assets are simply not insured, and some are not insured for the event that has caused damage (flood for instance). Those claims are generally straightforward.

There are bigger problems where claims are impacted by underinsurance, supply chain delays, labour shortages and those things that we are all dealing with these days. Insurance companies are not magicians. Even if the sums insured are adequate, there will be delays in finalising claims due to those issues mentioned above.

Insurance companies will sometimes offer cash settlements. Be careful. Whilst that gets the claim off the books, you are then landed with the responsibility of dealing with builders, suppliers, councils and planning authorities or sourcing replacement assets. Seek advice.

What can you do to protect yourself?

Machinery / Vehicles

Make sure the sums insured reflect the market value of your items. With the delays in sourcing new machinery, the second-hand market has become crazy and the value of your existing machinery and vehicles may have increased. Any settlement will be limited by the sum insured you have selected. Unless that is reviewed regularly there is every chance you will be underinsured now. Review the sums insured regularly.

Buildings

Review these and make sure the sums insured are high enough to allow for the increased costs that most industries are experiencing. You may need to allow for the removal of debris (clearing the site), architects fees, and other costs (council, planning).

Fuel, Fertiliser Chemicals and Livestock

With increased costs and supply constraints, fuel, fertiliser and some chemicals are now more valuable than ever. Make sure your sum insured is adequate and that you have these items insured (either specifically or covered by your farm contents definition).

“Please review your Theft sums insured. We are seeing more reports of theft from farms, particularly as the value of these items makes the risk/reward calculation attractive to thieves.”

Additional Costs

If you suffer a loss and you are forced to wait for buildings to be replaced (rebuilt), or if there is a delay in replacing or repairing buildings or contents or machinery then you will almost certainly incur increased costs that you would not otherwise incur and there may also be additional costs incurred because of an insured loss. Some of these will be insurable. Make sure you have some cover as the delays currently being experienced will cost your business.

Crop Insurance

Crop insurance continues to evolve. We have yet to see what capacity is out there (what insurers are able to insure) but there are some interesting products currently available that a prudent farmer would do well to consider.

Traditional Crop Cover

These products cover what has been covered for years. Usually, this will be fire and hail and there will be a requirement for you to declare the type of crop, the expected yield (although there are some products that will allow you to declare actual yield following harvest) and an agreed value (per tonne) for your planted crop. There may be additional benefits for livestock straying, chemical overspray, transit, storage on the farm, and that sort of thing.

Parametric (single peril)

These products provide solutions for those farmers that want protection against single perils such as (but not limited to) too much rain, too little rain (drought), frost (or other temperature fluctuations), wind and probably much more. They give the farmer the opportunity to truly transfer a risk-based on individual circumstances and risk appetite.

Generally, the earlier you get on to this the better. Have a budget in mind (treat insurance as an additional input cost, like what you might allocate for fertiliser or chemicals), decided what you are most concerned about and then speak to your insurance advisor.

There are examples (including claims examples) of how these products work and your insurance advisor will certainly be able to talk you through them

In summary, whilst right now, it may be all about the weather and getting a crop in (and out of the ground), insurance does play a part in ensuring that your farm business and livelihood are protected. It can be best done if you and your insurance advisor are on the same page.

Grant Brokenshire – Rural & Distribution Manager

If you have a current insurance policy, whether it be with Ausure or somewhere else, we invite you to contact us to discuss your insurance questions or concerns. Ausure advisers take the time to understand your individual circumstances and provide you with tailor-made insurance solutions that work for you. Contact Ausure today by calling us on 1300 587 225, or finding a broker here.