Insurance for dairy farm sheds can be complex to arrange, so it’s important that each dairy farm is reviewed on an individual basis. Dairy milking sheds will differ from farm to farm and your farm insurance program needs to be tailored for your own farm insurance requirements.
A dairy shed is the key working asset for any dairy farm so it is vital that any farm insurance program is covering both the building and internal plant to it’s full replacement value.
What Are The Insurance Risks Of Dairy Farm Sheds
Dairy Shed
The cost to build a dairy can now exceed $2M depending on the size of the shed and milking plant.
When considering the sum insured of a dairy, it’s important to include;
- Shed structure including any internal office/staff lunchroom fit out
- Yard structure
- Internal plant including any electronics, cup removers, milk meters etc.
- Vats and compressor units
- Silos and any feed crushing plants attached to the dairy
- Removal of debris
Policy Wording
It’s important for farms to review how their dairy farm shed is insured within policy. Some farm insurance companies require the dairy shed and plant to be insured separately. For example, the shed to be insured as a “building” and plant to be insured as “contents or other property”. This can cause a problem as the reinstatement method may differ and leave the building insured for full replacement and the plant insured for indemnity cover. An indemnity payment on a claim would take into consideration the age of the plant and provide payment on the depreciated value rather than the full replacement cost.
Dairy Electronic Equipment Breakdown
Breakdown cover for electronic equipment should be considered under a dairy farm insurance policy. Computer ID systems, electronic cup removers and milk meters can be a significant cost to repair in the event of breakdown.
Dairy Farm Loss of Data
A number of larger dairy farms now rely on computer ID feeding, drafting and herd health systems. It’s important to consider how the farm is storing data and ensure that there is appropriate insurance in place to cover any restoration costs in the event of a claim.
Machinery Breakdown
Vat compressors, milk pumps and washdown pumps are common areas of breakdown for dairy farms and it’s important that these items are reviewed and cover is provided within a farm insurance policy.
Dairy Farm Business Interruption
A dairy is the key income generator for a dairy farm and it is important that any dairy farm insurance policy includes business interruption cover. A dairy farm cannot simply close, as there is a continued need for cows to be milked and continuation of the farm operation.
Milk Cover
There are many risk exposures that can cause a loss of milk to a farm. It’s important that there is cover in the policy for loss of milk due to machinery breakdown, accidental damage and antibiotic contamination.
Dairy Farm Insurance Claim Examples
Claim Example 1:
A contractor was engaged to undertake some welding repair activities on a rotary dairy. The welding on the dairy platform caused a power surge to the dairy cup removers. The damage and resulted in the replacement of 50 electronic cup removers at $1,500 per unit.
Total Claim Cost: $75,000
Farm Policy Section: Farm Property- Accidental Damage Cover
Claim Example 2:
A dairy farm incurred an unidentified power surge to the dairy shed which resulted in electronic breakdown to the dairy ID computer. The breakdown to the computer system also resulted in a loss of cow ID data and required re-entry and scanning of the herd into the new computer system.
Total Claim Cost: $25,000 for the ID system and computers & $5,000 for data restoration
Farm Policy Section: Electronic Equipment including restoration of data
Claim Example 3:
A farm dairy vat split and glycol leaked into the farm milk. The dairy vat had to be repaired and the farm also incurred a loss of the milk due to contamination.
Total Claim Cost $10,000 for the vat repair and $9,000 for the loss of milk
Farm Policy Section: Machinery breakdown including loss of milk
How To Reduce The Risk of Dairy Sheds:
- Standby back up power sources- fixed or tractor driven generators
- Install power surge protectors to sensitive electronic equipment
- Audible alarm systems for plate cooler and vat connections to prevent loss of milk
- Install fire extinguishers and appropriate signage
- Maintain cloud based backups of all cow record data
- Implement hot works permits for any welding, cutting or grinding activities
- Maintenance agreement for servicing the dairy plant
- Development of a tailored Workplace Health and Safety Management System.
There are many risk considerations for dairy shed insurance. It’s important that the farm deals with an experienced farm insurance broker who has an in-depth knowledge of dairy farm operations.