Farm insurance is one of those recurring farm costs which doesn’t get adequate attention.
Inadequate cover can leave you underinsured or worse still, with no insurance cover at all.
You can avail of a huge variety of types of farm insurance cover, the most basic being public liability insurance for your land.
Public liability insurance cover protects you in the event that a person trespassing on your land becomes injured.
This type of cover would also be relevant if trees fall out onto the road, causing damage to road users.
In that respect, it is important that your insurance schedule includes details of all lands farmed by you, including lands farmed under conacre or lease.
Failure to list all properties might leave you not covered in the event of an accident at those properties.
Buildings cover can include storm damage, fire and flood cover.
Check your policy carefully. Older buildings in your yard may not be covered for storm damage, maybe because you did not select storm cover, or an assessor has already deemed the buildings to be in poor repair for cover.
Even if you think you have storm cover, if the buildings are in poor repair, the terms of your policy may mean it is void.
Frequently, farm buildings are under-insured, where the farmer underestimates replacement costs. In the event of partial damage, the payout will be reduced accordingly.
Be careful to ensure that equipment in buildings is also covered.
For instance, if your milking parlour building is damaged in a storm, the milking machine, milk tank, water heating system and cooling plant or automatic scrapers or automatic calf feeders may need individual equipment cover, as the terms of your policy may not cover equipment in sheds.
Fodder stored in a shed such as hay, straw or grains would not be covered in the terms of a standard building policy. The amount of premium payable to cover such fodder is linked to the value of fodder stored.
Other types of cover include theft of tools and diesel. Generally equipment should be listed and specified individually with a value assigned to each asset. For diesel, the maximum quantity of litres covered should be listed.
Tractor cover can include fire and third party, third party only, or comprehensive cover.
Extras could include lost keys, or windscreen cover. Comprehensive tractor cover doesn’t generally cover damage to machinery attached to the tractor. You should consider obtaining insurance cover for specific attachments or trailers.
Fire, flood, transit and other specified event cover is available for livestock.
Lightning cover, electrocution and damaged slats cover are available. Other types of cover include product cover, for instance where a farmer sells produce which is defective.
Environmental cover can protect you from costs of arresting a source of pollution and remediating the environment after a pollution event.
Professional fees cover can protect a farmer in the event of unexpected legal fees and accountancy or professional taxation services.
Employers liability can offer protection against liabilities in the event of injury, illness, or death of the employee.
Care should be taken to ensure adequate insurance is in place to cover full-time, part-time and casual wages. Insurance premiums are usually linked to the declared amount of wages. In consequence, the amount of pay out in the event of a claim could be reduced, if wages were under-declared.
Cover is available for loss of income and increased cost of working during a business interruption period.
This type of cover may be relevant, for instance, where a milking parlour caught fire. Equipment and building cover would only reimburse you for damage to the physical assets, whereas business interruption cover would cover loss of income and increased costs arising as a result of hiring replacement equipment.
Insurance is a costly expense, and it is worth shopping around. New entrants to the market are creating extra competition, however when comparing policies between providers, it is important to ensure you have adequate cover, that the policy covers the risks you want to protect against, and that the level of insurance is adequate (the values have not been under-declared).
Finally, farmers should look at the fine print of each prospective policy document to understand the terms of insurance and specifically how the policies differ, in order that they can make an informed decision as to which policy provides best value. Farmers should obtain professional advice relevant to their specific circumstances.
- Kieran Coughlan is a chartered tax adviser (coughlanaccounting.com)