Farm insurance review

(J.M.) WHAT DO GRAIN FARMERS NEED TO KNOW ABOUT REVIEWING INSURANCE POLICIES?

(M.B.) Insurance is part of a good risk management plan, and as business owners, farmers should have a good understanding of their insurance policies and coverage.

Working with someone who understands what it is like to live and work on a farm and find the best insurance coverage that reflects your farming livelihood is also important. That’s why working with an agricultural insurance specialist who can help you review your policy on at least an annual basis is so important. Your policy renewal should trigger a meeting and discussion with your broker or agent each year. Make the time to review and update your farm inventory and coverage limits and discuss any future plans, like new buildings, to ensure all your business activities are covered.

WHAT QUESTIONS SHOULD FARMERS ASK THEIR INSURANCE ADVISER?

Do I need business interruption insurance? Farm insurance is about protecting your income, not just your assets. Business interruption insurance depends on the type of farm and is especially beneficial to livestock producers who may be unable to operate and generate income if they lose their barn or livestock. In the case of grain farmers, machinery can be replaced in many cases, but what would happen if equipment were lost or damaged during planting or harvest? Or consider the impact of a mechanical breakdown at the elevator during harvest.

Farmers should ask their insurance adviser how business interruption insurance could benefit their operation and weigh the risks

of not having coverage to help during emergencies or stressful situations that could impact their bottom line.

Do I have enough liability coverage? It’s important to ensure you have enough coverage to account for everything and everyone on your farm. This includes covering all parties involved in the farm business, like shareholders and individual family members. Ask your adviser for assistance to ensure your liability coverage is adequate.

Do I have the correct outbuilding coverage? This is a good question when reviewing coverage of farm outbuildings. First, it’s important to understand the type of coverage – is the building replacement value the actual cost or the replacement cost? The appropriate coverage depends on what you would do if you lost that building. Would you replace it and rebuild it, or would you build something different in its place? Understanding how much it would take to replace the building with your future intended purpose will help determine how much coverage you need.

When discussing coverage, clarify what is covered under the named perils coverage (perils covered are listed in the wording) and what is covered under a broadform policy (perils not covered are outlined in the policy wording). Also, check for items that have been missed or valued incorrectly, and be sure to update the policy.

HOW CAN FARMERS SAVE MONEY ON INSURANCE?

Deductibles are a good place to start if you want to save money on insurance policies. There’s no point in keeping deductibles lower

than what you may claim in the event of a loss, so start by asking your insurance adviser if your deductibles are high enough and how much you could save if you increased those deductibles. You need to make sure you are balancing your risk tolerance, so be sure to understand what risks could put you out of business and carefully consider how much risk you are willing to take to save money.

Everyone needs the right coverage at the right price, regardless of their farm situation. The cheapest option may not always be the one you need, but if you’re shopping around for a second opinion, work with a trusted insurance broker who can check the markets for price and coverage options for your farm.

CAN YOU OFFER ANY OTHER ADVICE TO FARMERS?

Keep everything in good repair and working order, and do anything you can to protect and prevent risk. This advice extends to machinery, buildings, equipment, electrical systems and farmyards. Do everything you can to avoid slips, trips, falls, fire hazards and breakdowns.

Many insurance companies offer risk assessments and have access to thermal cameras that can be especially helpful when inspecting electrical panels for unseen issues. Remember that electrical panels need to be working on load for a thorough assessment. Several new electrical monitoring systems available for farms can help detect electrical anomalies or faults or even equipment malfunctions before they happen. The savings cost alone on maintenance compared to emergency electrical repairs is something all farmers should consider. •