When the annual agricultural insurance policy renewal notice arrives, many of us simply pay the amount due and never question whether the policy is still fit for purpose.
We may be paying too much because there are more competitive providers on the market or we may be paying too little because we don’t have insurance.
Being guilty of the former is simply financial mismanagement. Being guilty of the latter could have serious ramifications.
Although farm insurance is often seen as unnecessarily complex, it can be simplified into two things: protecting other people if you cause them harm (liability); and protecting your own property.
Refers to insurance that will protect the public if they are injured or suffer damage caused by the negligence of the farmer.
The key to this is the term neglect. The farmer is to blame for this insurance paying on his behalf.
The audience is everyone outside of your family or an employee. Agricultural contractors are not employed.
Agricultural accidents are very common and many can result in a claim against the farmer for compensation, so it is imperative that your policy has adequate coverage to meet a very substantial claim.
I found cases where there was not adequate coverage to cover the full extent of the compensation claimed in cases of agricultural accidents. Such a situation can threaten the very existence of the farm.
Employers liability insurance
This is similar to Public Accountability, except that it protects employees and not the general public. The term used includes a neighbor who lends you a hand, even if he is not being paid.
Coverage may be available to family and non-family workers. Some policies will also cover volunteer helpers.
Sometimes there can be a gray area between whether someone is an employee or a contractor. While it can be complex, the general rule of thumb is that if you pay someone a fixed price, they are likely to be a contractor, but if you pay for time, they are likely to be an employee.
Regardless, a farmer will need public and employer responsibility to cover both.
Environmental damage insurance
This is vital coverage that many farmers don’t even realize is missing from their policy. It covers environmental damage and associated cleaning costs.
Without this included in their policy, farmers are not covered for gradual pollution from, say, a slurry tank or oil tank.
Public Liability will cover you if the slurry tank wall suddenly collapses, but it will not cover you if there is gradual seepage, say through a cracked wall. You need environmental damage coverage for this.
Other types of coverage
These are some of the other coverage items that will be applied on many farms. With some specialist companies, it may be necessary to inform the insurer.
■ Farmhouse and Farm Outbuildings – Coverage must include contents, storm damage and firefighter charges, and accidental damage.
■ Tractors and agricultural vehicles – coverage for accidents and theft
■ Legal expenses—covers issues such as property disputes, alleged wrongful dismissal of employees, or contractual disagreements.
■ Theft — coverage for stock, diesel and tools.
■ Specialized Equipment — All risks cover specialized equipment, including AI vials, cameras, tacks, trailers, birthing cameras.
■ Worrying sheep — protection for your flock of sheep from fatal injuries from dog attacks.
■ Lineage cattle — cover for death or infertility.
■ Milk loss — covers losses due to power failure or loss or accidental contamination.
■ Forestry — storm cover and resettlement cover and fire cover.
Construction of new facilities
Many farmers would use separate contractors for different parts of a construction job – someone for the formwork, someone for the steel, someone for the electrical, etc. In these cases, you become the project manager and are responsible for insurance for the job.
Some insurers will accommodate construction work in the agricultural policy, but others will not. Check this out before committing, as you may not want to be left with such a huge exposure to high-risk work.
It is important that you inform your insurer or broker of any new buildings or equipment, as if the insured amount is less than the replacement cost, you can only be partially compensated in the event of a claim.
The table below presents a quote I recently received from a major underwriter for a fairly typical 90ac farm. The quotation was €1,755; does not include motor vehicle coverage.
Shop around as farm insurance is currently quite competitive.
Martin O’Sullivan is the author of the ACA Farmers’ Handbook and is a Carrick-on-Suir-based agricultural tax and business consultant; www.som.ie