In times of crisis, it is even more important to make sure your insurance cover is right; the country is in lockdown and in crisis – and now is the time to ask yourself if your farming enterprise is safe, and suitably insured, says Chris Clement, Commercial Director.
The purpose of insurance is to cover financially for the unexpected – such as today. Chris says that in times of uncertainty businesses may be tempted to reduce insurance costs. He is keen to remind that now really is not the time to do this. “To prevent any damage or loss it is much more important to evaluate risk to manage the safety of, your business, and also to make sure you are complying with safety rules and legislation, which impacts both on insurance and your business.”
Buildings Insurance is a good example of this. This is not a place to cut corners on the cost of premiums, unless it is for a better like-for-like deal. Do you have the Correct Cover? It is vitally important to ensure that your buildings are adequately covered to cover the whole loss, should the worst happen. Full removal and replacement often gets overlooked. An insurance specialist can advise on full reinstatement cost which will take into account demolition and removal.
Are you protected from loss through Fire? Fire Prevention is the place to start as not having to deal with the loss and distress in the first place is always the preferred option. Ensure that all fire protection systems are active, tested and maintained within regulations and that any faults identified are reported and fixed as soon as possible. This protects property, and if the worst does happen your insurance cover is still valid.
If fire stopped you in your tracks, what then? If a key storage areas was gutted you could replace the items stored and rebuild the buildings, but how long would it take you to get up and running again, and what is the value of losses should you not be able to carry on? If the dairy parlour was hit, how long would it take to re-instate the buildings and milking machines? You may lose all income as you may have to sell the cows in the meantime.
This introduces Business Interruption Insurance. What would you do if your business was completely immobilised? Many businesses across the country are experiencing this scenario right now, and farming is not exempt. If this current, or any other, crisis forces you to diversify in a hurry, your business interruption insurance and other relevant insurances must reflect any farm diversification.
It can take up to three years to get back on track after a disaster, and few farmers are prepared for protecting that. If your business is out of action and income is impacted, the bills, mortgage and insurance costs will not go away, so it’s one cost you just simply can’t afford to scrimp on.
Livestock insurance is a further concern. Often this is not at the full value of the animal or the number. After lambing and calving, do you update your insurance accordingly based on the actual increase of livestock? After calving your 100 head of cows, you now have 200, and what about your 250 lambing ewes? You cover needs to be at least doubled. Numbers can vary considerably year-on-year and this should always be taken into account when re-insuring. Don’t shave costs on Disease Insurance. BSE and Foot and Mouth will always be a reminder to farmers of the need for this.
Save on Property Let Insurance and you may run the risk of having no public liability cover. If a loss or major accident occurs you would have no cover whatsoever and these claims can be shockingly substantial!
Equipment Inspections must not be neglected. Not keeping equipment and engineering in good order and inspected is part of industry practice. Failure here also means that you are in breach of LOLER (Lifting Operations and Lifting Equipment) regulations, which could cost dearly.
Transporting your livestock correctly can get farmers into hot water. A certificate of competence to transport livestock requires farmers to minimise their risk and it is an EU requirement for all journeys over 40 miles. This also provides assurance to the food chain that animals are being transported with their welfare in mind.
Chris concludes on an optimistic note: “Farmers are very good at ensuring that when they have young people staying or family members starting to work on the farm they are fantastic at making sure tractors and trailers are tested. Farm safety and security is so important and it is encouraging to see that so many of our customers do take this very seriously.
It is still really important to discuss with an insurance specialist what the worst-case scenario would look like in relation to all aspects of your business, and insure to that all levels are fully covered.”
H&H Insurance Brokers is an independent insurance broker, who in addition to providing competitive and bespoke farm insurance also advises on farm health and safety through its H&H Safety brand.
– ENDS –