Farm hay insurance is just as important to review than any structural risks that may be insured on a farm. The value and supply of farm fodder can fluctuate throughout the year and it’s important that farms review their fodder insurance on a regular basis.
What Can Be Covered Under Farm Fodder Insurance
- Hay
- Silage (wrapped bales or pit)
- Grain (including pellets)
What Are The Risks Of Farm Fodder
The main risk associated with farm hay insurance is fire. Fire could be caused by spontaneous combustion of hay stacks, external fire such a bushfires or fire caused by malicious damage. Other risks can include water damage to stored hay due to storm damaged sheds or impact damage to gain silos.
Key Considerations For Farm Hay Insurance
Location
Reviewing the location of the fodder and implementing farm procedures can help to minimise the risk internally and furthermore minimise insurance premiums when sourcing insurance cover. These procedures may include, minimising the size, separating and not allowing any farm machinery to be stored with any fodder.
Underinsurance
It can be common for farms to insure fodder based on the largest stack or stored fodder. It’s important that the farm reviews their policy wording, as underinsurance clauses can pose a problem if insured in this manner.
Sum Insured
The sum insured needs to be reflect the cost to replace the fodder that is of similar feed value. Sometimes it can be hard for farms to find a replacement fodder and it is important that the sum insured is based on the cost to replace the feed value (dry matter, energy and protein). For example, a loss to silage may require replacement with a similar feed value such as vetch hay.
Removal Of Debris
There is usually a cost to remove any damaged hay, silage or grain and it’s important that this cost is included when reviewing the sum insured. Some farm policies will include removal of debris cover within the sum insured, or provide an additional percentage of the sum insured. Should the farm have considerable values of hay, silage or grain, it is important that removal of debris cover is insured separately as part of the overall farm asset schedule.
Claim Preparation Costs
Farm business interruption cover can be used for loss or damage to insured fodder. Claims preparation costs or increased cost of working cover can be used to pay farm consultants or animal nutritionists to source and implement alternative feed programs.
Farm Policy Coverage
Most general farm insurance policies will provide cover for spontaneous combustion to specified hay insurance. However, it is important that an ISR policy is adjusted to include cover for spontaneous combustion ,as it is excluded within the policy wording;
Mark IV ISR
The Insurer(s) shall not be liable under Sections 1 and/or 2 in respect of:
6. physical loss, destruction or damage occasioned by or happening through:-
(c) (i) spontaneous combustion
Farm Fodder Insurance Claim Examples
Example Claim 1
A farm suffered a loss to 3 silage stacks due to embers from a bushfire that burnt the silage plastic and tyres on the pit. Although there was surface damage to the pits, the CFA used a foam compound to extinguish the fire and this resulted in contamination of the stock feed- unfit for animal consumption. The farm suffered a loss of $250,000 and removal of debris costs of $10,000.
Example Claim 2
A dairy farm purchased square bales of canola hay from a cropping farm. The hay was baled and immediately transported to the farm and stacked within a large hay shed. 5 weeks after the hay was purchased a fire started from spontaneous combustion and destroyed the hay and shed. The farm incurred a loss of fodder of $120,000, hay shed of $160,000 and removal of debris costs of $25,000.
In relation to claim 1, although it would be assumed the moisture content would be too high for silage to burn, the farm still suffered loss to the stacks due to external bushfires and contamination to the fodder.
How To Reduce The Risk Of Farm Hay Insurance
- Monitor moisture levels for hay for up to six weeks
- Ensure moisture content level is below 20% when bailed
- Move hay to allow better airflow if over 60 degrees
- Check the history of hay before purchasing
- Keep haystacks to a limited size and store in separate stacks if possible
- Remove any machinery stored within the same shed as hay
- Bollards around fixed silos to prevent impact damage (where appropriate)
- Maintain adequate water supply and ensure clear access for emergency vehicles
With any farm fodder insurance program, it’s important that this is combined with farm business interruption insurance, as they can work in conjunction to minimise any loss of production for the farm.
Insurance for farm fodder requires specialist advice and it’s important that a farm deals with a farm insurance broker who is highly experienced in agricultural risk management.