Expert Tips to evaluate your Farm Insurance
Here are some expert tips from an Insurance Broker to help you understand Liability Insurance on your farm. Consider what may or may not be covered by your farm insurance package. Has anything changed on your farm? How does this currently affect your farming activities and relevant cover? This article aims to help equip you to have those important discussions with your Insurance Broker to ensure you choose the best and most up-to-date insurance protection for your farm and livelihood.
Do you have a farm insurance package?
If you have a farm insurance package – doesn’t matter if it’s big, small or somewhere in the middle – please consider this. There is every likelihood you have elected to insure your legal liability for the compensation payable for personal injury or property damage that happens during the period of insurance and caused by an occurrence in connection with your farm business.
It will usually be described within your farm insurance package as Farm Liability or something along those lines. Often, it is assumed this is all the cover you need or that is all the cover that is available. This is not true.
How to evaluate your cover
When evaluating your cover, it is important to read the exclusions in the Farm Liability section. This is usually shown as “what we do not pay” or something like that. Before you do that, please ensure that your business is described correctly, and that any “off-farm” activities or “farm contracting” activities are declared and accepted by the insurer (usually in writing and described on the schedule). If in any doubt, discuss it with your trusted Insurance Broker and declare it to your insurer. This is really important.
Firstly, look at the exclusions which can be overridden by optional extensions to the cover (and usually for an extra premium). Extensions to cover are usually available for the following but it is important that the extensions are requested if required:
- Farm hosting or short-term accommodation;
- Farm contracting (some cover is usually provided but has an annual turnover limit, either a $ figure or a % of your total farm turnover);
- Any activity not covered by the description of farm business within the PDS. The description needs to be accurate (if in doubt, declare it to your insurer);
- Aerial crop spraying (where you are doing it yourself or where you employ a contractor);
- Renovations, erection, demolition, alterations or construction (usually above a set $ limit).
Then, look at other exclusions which cannot be overridden by optional extensions to your farm package cover. There may be additional covers (separate policies) that are available. It’s important to take the time to discuss these with your Insurance Broker.
The insurance market has responded to some of the issues facing businesses (including farms) and there are now new products available.
These are common exclusions (and again, different insurers have different exclusions, so please read your Product Disclosure Statement, or take the time to discuss these in detail with your Insurance Broker). They can be quite complex.
Common exclusions include:
- Pollution (unless it is sudden and accidental);
- Employment Liability (Workers Compensation and employment practices);
- Claims for fines, penalties, damages or compensation imposed on you by the application of legislation or law, libel and slander;
- Any mining activity or mining activity on your property, and motor vehicle liability for registered vehicles (some cover is commonly provided).
Know which products can protect you.
There are products (some new to the market and some not well known or understood) that can protect you.
- Motor Vehicle
- Make sure vehicles that are registered or required to be registered by law are insured comprehensively or for Third Party Property Damage within the Motor Vehicle section of your policy.
- Workers Compensation
- Requirements vary from state to state but please make sure that where you are required to have cover, you do. In most cases, severe penalties apply if you do not comply with your legal obligations.
- Environmental Protection
- The pollution cover provided by your Farm Liability section only provides cover for sudden and accidental pollution.
- Management Liability for farmers
As you can see (above), your usual Farm Liability cover has a number of exclusions that can leave you and your business financially exposed to claims for compensation, should an excluded event occur. Some of these can be insured against and a Management Liability policy is becoming more commonplace within a farm insurance programme. Once again, please discuss this with your Insurance Broker and make an informed decision.
Commonly, these policies (and they are available for Companies, Sole Traders or Partnerships) can provide some protection against claims for:
- Breaches of Occupational Health and Safety (OH & S) regulations and/or breaches of state industry regulations that relate to your farm business (as you can see above, these claims are excluded in most farm liability policies);
- Other Statutory Liability;
- Other Employment Practices;
- Tax Audit expenses;
- Financial crime, such as fraud or embezzlement and sometimes external crime (not limited to employees);
- Employment practices claims
- Examples include unfair dismissal or harassment.
Even if some of these claims have no basis (in your opinion), the cost of defending or managing these claims can be significant.
It does not take too much internet searching to find examples of workplace incidents on farms and OH & S breaches. Farms can potentially be dangerous places, employees are sometimes casual and occasionally inexperienced, and accidents occur despite the very best efforts of the employer.
Whilst prevention (safety and compliance) should be an absolute given, and a safe workplace your priority, there are risk transfer options available to you and it’s highly advisable to discuss them with your trusted Insurance Broker.
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, completing the form below, or finding a broker here.
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