Having the right farm insurance program can make the difference between your farm surviving in the face of a challenge or going out of business for good.
But although it is important, farm insurance can also be confusing. Insurance loves jargon, whether it is an excess or rates, PL (public liability) or PI (professional indemnity) the industry can be difficult to understand.
This is where a specialist insurance broker comes in. A broker can help you understand what you are covered for, how much cover you’ve got and if you need any more.
Trevor Madden is a farm insurance specialist at Gallagher, who has helped thousands of farm clients across Australia better understand their insurance and recover from catastrophe. Here he explains four things to remember when it comes to farm insurance.
Farm insurance policies often cover much more than just your farm. They are a bundle of 10 to 12 different policies that cover all aspects of your farm business. What this means for a farmer is that you can cover the lot and only have to pay one premium.
“A farm insurance bundle usually covers house contents, farm shedding, fencing, livestock and hay, including theft which is put into one section,” Madden said.
“Another section is motor vehicles, normally separated between farming vehicles and private vehicles.
“You then have personal accident, public liability, machinery breakdown, business interruption and you can put your boat or caravan or other items on there too.”
This does what it says on the tin, if your business is interrupted by fire, for example, and has to down tools, you could make a claim depending on your policy.
“Business interruption is one of the covers many people don’t realise is available under a farm insurance policy,” Madden said.
Business interruption, or farming interruption as it is sometimes known, is one of the common misunderstandings of a farm insurance policy as Madden said that it can help farmers deal with the fall-out from bush fire or severe hail storm that can cripple their business for long periods of time.
“People are not aware of it and it extends into loss of pasture by fire, so if you lose your pasture and your feed for cattle and sheep, you can cover against that,” Madden said.
Business interruption insurance can also be used for agistment costs and can play a key role in getting a farm business back on its feet.
Many people think that once you’ve bought an insurance policy your payment details are set, but that isn’t necessarily the case.
There are options to pay premiums annually or monthly and payment schedules can be arranged to fit your business cash flow.
“Farmers often aren’t aware that they can choose a date that suits their cash flow to pay their premiums,” Madden said.
“Everyone thinks they have their policy due when it is due and we prefer they have it when their cash flow is in so they can just pay the bill and be done with it.”
Multi-peril crop insurance
While stand-alone fire and hail crop insurance cover can be the best bet for many farmers, a new cover called multi-peril crop insurance can also help.
Multi-peril crop insurance helps to protect your crops from multiple perils which can include cover against loss from insects, disease, fire, hail, frost, drought, or others depending on policy.
“The problem with multi-peril crop insurance is that it is expensive to take out but it can help farmers get back on their feet if something should go wrong,” Madden said.
“With what we have seen in New South Wales and Queensland just this year, multi-peril crop insurance could help keep some farmers afloat. But it does come down to price and while it can work for some, it seems too expensive for others.”