What insurance does a farm need?
For 6,000 years, Britain has had a farming culture and, today, three main types of agriculture exist here. There’s pastoral farming, which deals with animals and animal produce, arable farming, which is focused around crops like barley and wheat, and a combination of the two.
Within these principal types, there are many sub categories, such as highland sheep, lowland beef, diary units, chicken and egg production, fruit farms, arable and vegetable production to name only a handful. All of these can happen on varying scales from smallholder hobby farmers to large scale intensive and commercial farms. And we haven’t yet mentioned diversification.
Whatever type of farming you are doing, insurance is a good way of managing or reducing risk and providing peace of mind. Not every farm is exactly the same, so tailoring an insurance policy to your needs is important.
We appreciate that reviewing the insurances or starting from scratch can be a daunting prospect, so we’ve written this guide to farm insurance to help make things clearer.
What insurance does a farm need?
The insurance you need depends on the size and type of farm you have, however, most farmers will want to consider buying cover for their farm buildings, machinery, equipment, livestock, business interruption, public, employers and environmental liabilities and their vehicles. They will also likely want cover for their house, contents, personal possessions and valuables.
When taking out farm insurance, consider your possible exposures and what risks there are. Some of the things you’ll want to think about include the likelihood of fire, flood and storm damage, what the crime rate is like in your area and whether you have anyone working for you. In each instance, what loss would one of these events result in?
At A-Plan, one of our advisors will go through all of this with you to ensure you have the right level of cover. But before you speak to us, you might find it helpful to read this article, which explains what you can expect from buying farm insurance.
Who are farm insurance policies for?
Both working farms and smallholdings should consider buying an insurance policy to so that they’re protected themselves in case the worst happens.
Insurers understand that many modern farms are now deviating away from traditional activities. So, if you also own or run a farm shop, riding stables, campsite or B&B, these can often be covered on a farm insurance policy too.
What’s covered on a farm insurance policy?
You can tailor your farm insurance to suit your own individual requirements, although there are some things that are commonly included. When deciding on what cover you need, consider the below points.
Residential and farm buildings
Property damage can be provided on an “all risk” basis or for specified perils such as fire, storm, flood subsidence and accidental damage to name a few. This cover is there to replace or repair the building in the event of a total or partial loss.
For residential buildings, the insurance often provides cover for alternative accommodation if you need to move out for a time and loss of rent where the property is tenanted.
If you run a non-commercial smallholding, some of your activities may be covered on your standard homeowner’s insurance policy, however it’s unlikely to cover any of your farming activities — leaving you exposed.
Farm machinery, tools and equipment
Farm equipment doesn’t come cheap, so cover is there to protect you in case it’s damaged, stolen or breaks down.
It’s good practice to carry out maintenance and security checks in order to manage your risk level and comply with health and safety obligations. Some insurers will require you to do so as a condition of the cover.
Produce or deadstock
Similarly, fertiliser, sprays, hay and straw all come at a cost and cover can easily be included for these items.
Business interruption / loss of revenue
Business interruption or loss of revenue cover does what it says on the tin. Where grain is lost to fire or flood, milk is contaminated, stock is stolen or rental income is reduced because of lost buildings, this cover is designed to make you whole.
Livestock
With livestock, there is a value to both the animal and its produce — be that milk or offspring. All of these values can be insured against the perils already discussed (for example, fire, storm or theft), however there are more specific perils too, such as disease and infection, worrying and disappearance.
You can also get protection for when your livestock is in transit.
Employers, public and products liability
Suitable liability cover is crucial, as the claims have the potential to run extremely high. Changes to the way serious injury and fatal claims are compensated has meant that payouts can run into the tens of millions of pounds.
If you have people under your employment, employers liability insurance is one of the few legally required insurance policies you must have. The protection is there to cover the compensation pay-outs and legal fees that can arise when someone is injured or ill as a result of work. The cover is also there to defend you if the incident wasn’t your fault.
Public liability insurance will protect you where you or your businesses has caused injury or damage to a third party or their possessions.
If you sell produce to the general public, you’ll want to make sure you have product liability insurance so that if your produce makes someone ill and they make a legal complaint against you, the cost of legal defence and compensation pay-outs will be covered.
Environmental liabilities
The farming industry is a heavily scrutinised and regulated business. Environmentally-friendly practices are a focus of the government, the population and the farming community, as many farms use potentially harmful chemicals and pollutants.
If you use things like pesticides on your farm, it’s a good idea to make sure your insurance policy covers you for property damage caused by chemical or fuel spills and accidental pollution you’ve caused to the environment.
Contract farming
Where you are farming for someone else — be that drilling, spraying or harvesting — it is important that your liability insurance is extended to cover these contract farming activities.
Personal accident and sickness insurance
This includes cover for you, your directors, your partners and your employees against accidental bodily injury and sickness.
Cover is helpful where you have key workers or key persons that you could not operate without.
Diversification
Farm diversification is common practice these days, and as such, insurers are often accommodating of changes such as holiday lets, workshops and renewable projects.
They key is to notify your insurer, in advance, of the project before it is underway. That way, they can ensure that the right cover is found.
Note that there may be more specific covers and conditions.
Things that can go wrong on a farm
There are a number of risks associated with running a farm. When considering what insurance you need, we suggest considering what you have to loose, how a loss might occur and whether you can afford that loss. Here are a few examples of the things that can result in a loss:
Damage to your property caused by fire, flooding and storms Your property being vandalised or stolen Employees injuring themselves whilst working on your farm The general public injuring themselves whilst on your farm Livestock escaping and getting lost or causing damage to property that belongs to you or someone else Machinery or equipment breaking down
How much does farm insurance cost?
How much your farm insurance costs depends on a number of factors, such as what you want to be covered for, how big your farm is and what your risks are.
Finding the right cover at a competitive premium is important. If you feel you are unhappy with the amount you are spending on insurance each year, there are many ways you might be able to reduce your premium, without exposing yourself to much more risk. Read on to find out what they are.
Go through an insurance broker
If you use an insurance broker like A-Plan, they will act on your behalf to negotiate cover and premium with a range of underwriters. They will also advise on what cover is available and what cover is a sensible or appropriate. The net result is that you end up with a policy tailored to your own needs.
Regularly review your policy
Before finalising your farm insurance, double-check that you’re only paying for the features you need.
Double-check your policy
Before finalising your farm insurance, double-check that you’re only paying for the features you need.
Change how you pay
There is often an option to pay your insurance annually or monthly. There is also often a charge for paying in instalments, so it’s sensible to check what this charge is. Paying in one go avoids this additional cost.
Mange your risks
Having a risk management plan in place will help reduce the risk of a loss and the number of claims on your farm. Farms with good risk management are more attractive to insurers and therefore benefit from more competitive rates, cover and premium. Here are a couple of examples of risk management:
Increase security
Keeping your machinery and equipment locked up when you’re not using it and installing CCTV cameras can reduce the cost of your premium. Remember to tell your broker about any security measures you’ve taken.
Manage fire risk
Again, tell your broker about any precautions you’ve taken to reduce the risk of fire. Here are some of the things you can do:
Clean machinery and vehicles regularly, to make sure they’re free from any flammable debris and fuel Follow the manufacturer’s guidelines for maintaining equipment Store machinery away from external heat sources Ensure everyone working on your farm knows how to operate machinery and agricultural vehicles correctly and safely Put fire procedures in place, making sure to install fire extinguishers around the farm and inside agricultural vehicles
Tell your broker your no claims bonus
Insurers will normally reward you with a lower premium if you haven’t made previous claims, as your farm will be considered as less of a risk. Similarly, if you opt for a higher excess, the premium can often be reduced.
How many types of agricultural insurance are there?
No two farms are the same, which is why there’s such a wide range of farm insurance available. Some of the different types of specialist farm insurance you can get include:
Arable farm insurance Dairy farm insurance Livestock insurance Smallholder insurance Liability insurance Home and contents insurance Farm tools and farm equipment insurance Business interruption insurance / loss of revenue Agricultural vehicle insurance Specialist all-risks insurance (to include cover for specific things, such as milking and feeding systems and electronic equipment like computers)
Summary
Because every farm is different, what insurance you need will depend on your unique circumstances.
To give you an idea, though, there are some things that farmers commonly include on their farm insurance policies. With that in mind, you might want to consider insuring your farmhouse and outbuildings, farm machinery and equipment, other business ventures relating to your farm, products in transit, livestock and other produce including crops and deadstock. It’s also worth making sure you have employers, public and products and environmental liability insurance in case anyone takes legal action against you, accident insurance, pollution and contamination cover and business interruption / loss of revenue protection so you’ll be protected against loss of earnings due to situations out of your control.
Having the right level of insurance for your farm gives reassurance that you’ll be protected in the event that your property is stolen or damaged by fire, floods, bad weather or vandalism. It can also cover you in case your machinery or other equipment breaks down or your livestock escapes and gets killed or lost.
There are many different types of farm insurance available, so with the right advice and guidance, you should be able to find a policy that meets your individual requirements. We can make shopping around for a quote much easier. Simply give one of our friendly advisors a call, tell them what you want cover for and we’ll do the legwork for you. That way, you’ll know you’re getting the right level of cover at the right price.
