Uncategorized Archives | Agripro Insurance Brokers

Broadacre Crop Insurance

Broadacre Crop Insurance cover is vital for any cropping operation. In 2021-2022 the crop season experienced higher yields and increased market values. This resulted in insurance capacity shortages within some regional shires.

With the 2021-2022 winter crop the highest yield on record, this placed pressure on crop insurer capacity. This has highlighted the need for farms to place crop insurance cover early.

90% of broadacre crop insurance claims are due to hail and with the increase in weather volatility and input prices, these risk factors need to be considered when reviewing the need for crop insurance for your farm.

Crop insurance statistics provided by state within Australia — *https://www.awe.gov.au/abares/research-topics/agricultural-outlook/australian-crop-report/overview*

When Should You Purchase Crop Insurance

We would encourage our customers not to rely on Automatic Temporary Cover from last seasons policy. It is important to arrange a new policy early in the season for your crop insurance program. Insurance cover placed early will ensure you take advantage of competitive crop insurance rates before the insurer capacity runs out within respective shires. Once the insurer shire capacity is reached, you are likely to incur higher premium rates difficulty in placing cover.

Arranging cover early in the season will ensure a competitive rate with no premium cost due until after harvest.

We are able to provide “Pre- Harvest” and “Post-Harvest” schemes and our dedicated crop insurance specialists will provide you with a full comprehensive market review from all major crop insurers.

We can also offer ways you can reduce your rate by considering different excess amounts, fixing values or combinations of options.

What is Broadacre Crop Insurance

Broadacre Crop Insurance is designed to cover crops from emergence through to harvest, including grain in storage and during transit. The policy will provide cover for a loss of potential yield due to hail or fire. Weather Index Crop Insurance can also be utilised to cover against extreme weather events such as adverse temperature and rainfall.

What types of crops can be insured

Crop insurance cover is available for all cereal, pulse and legume crops. The most common crops insured include wheat, barley, chickpeas, canola, sorghum and sunflowers.

Pre Harvest Crop Cover

What is Pre Harvest Crop Insurance

A Pre Harvest crop insurance policy is finalised at the insurers set Final Revision Date (FRD). The sum insured and premium are calculated based on your estimate of the crop yield and your nominated insured value per tonne at this time.

Advantages of Pre Harvest Crop Insurance

A Pre Harvest policy is a good options if you want to finalise your crop cover at the Final Revision Date. The downside of a Pre Harvest policy is that the final premium is calculated on the estimated yield and may not reflect your actual harvested yield. This option could be more likely to leave you over or underinsured which will impact the final premium.

Post Harvest Crop Cover

What is Post Harvest Crop Insurance

A Post Harvest crop insurance policy is finalised after harvest based on a yield declaration and your nominated insured value per tonne.

Advantages of Post Harvest Crop Insurance

A Post Harvest policy is a good option if you are worried about the accuracy of your revised insured yield at the Final Revision Date. Crop an be impacted by a variety of perils after that time which will impact on the harvested yield. You will also be required to complete an after harvest yield declaration and pay a premium that may be better reflect the harvested yield.

Tractors farm contracting wheat with blue sky

Post Harvest vs Pre Harvest Crop Insurance

The Post-Harvest policy responds better to yield variation incurred after the Final Revision Date, automatically adjusting the sum insured and providing a more accurate claim payment.

A Post-Harvest policy can be more expensive than a Pre-Harvest policy. It also usually requires some additional paperwork, however it does provide better coverage as it more accurately reflects the season you had, not the potential season.

Crop Insurance Additional Benefits

Most crop insurers will provide additional policy benefits, however these can vary between insurers and it’s important to deal with a farm insurance broker who understands your cropping insurance requirements.

These additional benefits can include;

Chemical overspray
Livestock intrusion
Transit cover for grain/baled hay -fire, impact, collision and overturning of vehicle
Harvested crops (grain) stored in a silo or enclosed building – fire & perils
Harvested crops (grain) stored in silo bags or temporary field bins – fire only
Baled hay from harvested crops – fire only
Claim mitigation expenses (Inc. costs of replanting)
Fire-fighting expenses

Crop Insurance Proposal

Agripro Insurance Brokers have access to Australia’s largest crop insurers and industry leading expertise

To arrange cover for your Crop Insurance requirements, simply complete and return our Crop Insurance Proposal.

Agripro Crop Insurance Proposal Download

Farm Insurance Brokers

Why should I use farm insurance brokers and what value can they provide to my farm insurance program?

Over the past 20 years, Australian agriculture has grown by over 19%, with 58% of Australian land now being used for agriculture. Agriculture within Australia, accounts for 11% of the total goods and services exported.

The increase of farm sizes and corporate operations continue to change the risk profile for many farms. Larger farms continue to diversify with multi-faceted operations that no longer suit an “off the shelf” farm insurance policy.

It is important that larger farm operations work with a farm insurance broker who specialises in agricultural risk and has the ability to source and implement market leading farm insurance solutions.

Should I Use Farm Insurance Brokers?

Farm insurance brokers work on your behalf, not the insurers. They will provide advice to better manage your farm risk, as well as source and implement the most appropriate insurance products based on the needs of your farm operation.

Unlike an insurance broker, a direct insurer may have limited market access in terms of products and pricing. It is vital that larger farms have the ability to be provided with access to many different insurance products both locally and overseas.

What Do Farm Insurance Brokers Do?

Review and assess potential farm risks
Work on behalf of your farm business, not on behalf of the insurer
Source multiple insurance products and pricing within the market
Have a thorough understanding of the insurance market and the ability to negotiate premiums on your behalf
Manage claims on your behalf including lodgment and negotiation with the insurer to provide the best possible outcome
Remain up to date with policy wordings, industry changes and emerging farm insurance risks

aerial view of fruit orchard in Australia

Emerging Risks For Agriculture

Farm Liability Insurance

Farm Labour Hire

As farms have grown, so too has the use of contractors and labour hire personnel. The use of labour on farms has changed significantly over the past decade.

It is important that a farm insurance broker is utilised to ensure the most appropriate farm liability insurance is sourced for your farm business, taking into consideration the use of labour hire and contractors engaged.

Farm Export Insurance

Australia exports 70% of the total value of agriculture, fisheries, and forestry production.

Fruit and vegetable exports have increased by 69% and this sector continues to be the most reliant on labour hire, casual labour and contractors.

Many larger farms within the horticultural and beef sector are now exporting directly overseas and it is important that these risks are considered not only for liability but also for marine and trade credit insurance for farms.

Graph chart showing Agriculture, fisheries and forestry exports by destination — **Agriculture, fisheries and forestry exports by destination**
Source: www.agriculture.gov.au/abares

Farm Liability Insurance Policy Coverage

There are significant differences in farm liability policy wordings including claims made vs claims occurrence and geographic restrictions. A farm insurance broker will have the ability to advise on the most appropriate liability cover for your farm.

Product Recall Insurance For Agriculture

With many larger farms now supplying retail supermarkets directly, the costs associated with product recall due to contamination and maintaining brand reputation can be significant. On average, nearly 10 product recal ls occur every week within Australia, with food and beverage being the most commonly recalled products.

Product Recall Liability Insurance For Farms Can Provide Cover For:

Accidental contamination
Product tampering
Product extortion
Alleged contamination
Government recall
Adverse publicity
Reworking costs
Business interruption

Graph chart showing the number a food recalls within Australia — **Number of food recalls coordinated by FSANZ each year, shown by recall classification**
Source: www.foodstandards.gov.au/industry/foodrecalls

Farm Livestock Insurance

Australia is regarded as having one of the best bio-security programs in the world. We have seen the devastating impacts on overseas agricultural economies from disease outbreaks, such as African Swine Fever and Foot and Mouth Disease. Farms within Australia are now more intensive with larger livestock numbers which can pose a greater financial risk for farms.

With the increase in free range farming operations such as egg and poultry farms, this can also increase the risk of illness and disease being introduced into farm from wildlife, such as migratory birds.

The risk exposure for many of these intensive and free range farming operations is not only the financial loss of livestock, but also the interruption to the farm business and supply chain, should a government quarantine restriction be placed on a farm. This was seen recently in Victoria where a number of farms were quarantined due to an outbreak of highly pathogenic H7N7 avian influenza.

At Agripro Insurance Brokers, we can tailor dedicated livestock insurance programs for poultry farm operations, poultry processors, piggeries, and beef feedlot s to include farm business interruption insurance in the event of government quarantine and or slaughter.

Farm Management Liability Insurance

Management liability insurance is not new to the insurance industry, however, it often a cover that is overlooked within the agricultural sector.

Agriculture in Australia directly employs over 300,000 workers. With the increase in labour and corporate responsibility the risk on agricultural operations is now greater than ever. There has been significant changes to OH&S laws within Australia over the past decade and more recently within Victoria in July 2020.

Changes in legislation continue to increase the risk profile for agricultural operations and it is vital that any farm business or partnership considers farm management liability insurance.

Farm Management Liability Insurance Can Provide Cover For:

Directors & officers liability insurance
Statutory liability insurance for fines or penalties such as
- EPA
- Occupational Health and Safety
Employment practices liability
- Unfair dismissal
- Workplace harassment
- Failure to employ or promote

sheep in yards with two farmers and a dog

Drought Insurance for Farms

Index insurance is based on an agreed predetermined index that will pay out in the event of weather related or catastrophic events. As Index insurance does not generally require the use of claims assessors, it will allow the claims process to be much quicker and more factual for farms.

Weather index insurance is already being used by many cropping farms where the predetermined index is developed prior to the commencement of the policy.

Weather Index Perils That Can Be Insured:

Insufficient or excessive rainfall
Extreme temperatures such as
- frost
- humidity
- windspeed
Seasonal rainfall

How Farm Weather Index Insurance Is Used:

Insufficient rainfall that results in a reduced crop yield
Excessive rainfall and wet harvest cover resulting in reduced yield or downgrade
Frost that results in a reduction of yield
Reduction in seasonal rainfall

Weather Index Insurance For Agriculture

Weather index insurance can also be considered for agricultural suppliers or processors who may be indirectly impacted by weather related events.

Examples Of Weather Index Insurance Applications:

Fertiliser Suppliers
Farms within the specified region receive below average rainfall which results in a reduced volume of fertiliser being used. The reduced volume used on farm impacts the financial income of the fertiliser business.

Meat Processors
A reduced seasonal rainfall results in lower processing numbers for a meat processing facility which financially impacts the business.

Milk and Cheese Processors
Farms that supply the dairy company received below average rainfall within the region, which reduces the milk yield and financial income of the milk processing company

Agricultural Investment
A portfolio of agricultural operations managed by an investment fund receive below average rainfall for the season which impacts the investment return for the company and shareholders.

Agripro Insurance Brokers have access to over 150 global insurance products we can provide customised agricultural insurance solutions for any large or corporate farm. Australian farms are highly diversified and our experts have global market access and knowledge to help manage your risk.

Livestock Insurance For Disease Outbreaks

Livestock Insurance for disease is an important aspect of any poultry, egg, pork, beef and dairy farm insurance program. In this article, we discuss how insuring livestock for disease outbreaks can be structured for each farm operation.

Full Mortality Livestock Insurance

Over the past 12 months there has been an increase in notifiable livestock diseases both locally and internationally. Outbreaks of African Swine Fever, Avian Influenza, Lumpy Skin Disease and Foot and Mouth have caused global concern for farms who are now looking for ways to manage this risk.

White chickens with red crests at indoor chicken farm

Packaged farm insurance policies can provide limited cover for livestock insurance under a defined/listed events policy. This cover may include fire, lightning strike, impact damage and malicious damage.

However, it is important to note that there are additional risks in terms of livestock and business interruption losses that may not be covered under a packaged farm insurance policy.

Poultry Farm Livestock Insurance

Poultry Insurance For Meat Growers

In most poultry growing contracts, birds are placed and owned by the processor, however the farm can still be liable under the contract for livestock losses. Poultry farm liability insurance may cover losses where the farm has been negligent, however cover can be limited and will not cover any direct financial loss for the grower.

Should a disease outbreak occur on farm, not only would the grower lose the profits from the batch associated with the disease, but they may be further exposed to a loss of gross profits, should the farm be placed into quarantine and unable to process batches.

Although the birds are owned by the poultry processor, policies can still be structured to cover the loss of these birds on behalf of the processor and include loss of income cover for the grower including cleaning and disinfection costs.

On a larger scale, full mortality livestock insurance can also be facilitated for poultry processors providing protection for their supply chain and security for their contracted growers.

Egg Farm Insurance

Livestock insurance for egg farms needs to be structured differently to meat operations for two main reasons.

Firstly, there can be longer term financial exposure based on the ability to replace the flock.

Secondly, once birds are sourced and replaced, it can take a considerable period of time for the farm to reach the level of production prior to the loss.

eggs being packed into trays on a conveyor belt on an egg farm

Free range operations can also pose an increased risk due the potential of bird wildlife contaminating the farm location and this also highlights the importance of establishing improved approaches for managing bio-security.

Insurance For Poultry and Egg Farms

Important features of full mortality bird insurance for poultry and egg farms can include:

Machinery breakdown (cooling, heating, feed and water)
Heat stress due to external temperatures exceeding normal conditions
Illness/disease such as Avian Influenza and Newcastle Disease
Cover for gross profits (farm income)
Removal of debris
Cleaning and disinfection costs

Piggery Livestock Insurance

African Swine Fever (ASF) has caused significant disruption to the pork industry throughout Europe, Africa, China and more recently, outbreaks in PNG.

Depending on the size and production of the farm, there are many options when looking to structure insurance for pork producers. For example, some farms may only wish to cover their sows which can help reduce the cost but still provide protection in terms of loss of continued income.

There is a specific insurance policy wording available for ASF and FMD (Foot and Mouth Disease). The trigger for a claim is usually based on government order for slaughter of an infected premise. A livestock insurance policy can also be extended for losses resulting from named diseases before a government slaughter order is given.

Insurance For Pig Farms

Important features of a full mortality livestock insurance policy for pork producers can include:

Loss of animals due to fire
Disease such as African Swine Fever and Foot and Mouth Disease
Cover for loss of gross profits (farm income)
Removal of debris
Cleaning and disinfection costs

Beef Feedlot Insurance

Full mortality livestock insurance for beef feedlots is important to consider for several reasons. The introduction of external cattle for finishing purposes can increase the risk of disease being introduced within the feedlot.

black Angus cattle eating hay in a feedlot

The 2001 Foot and Mouth Disease outbreak in the UK cost more than 8 billion pounds with over 6 million cattle and sheep destroyed.

The 2010-2011 outbreak in Korea cost more than $2.7B USD. According to the Australian Department of Agriculture, an outbreak would cost the industry over $16B AUD.

Cover for feedlots can be structured for each individual operation with various covers, excess levels and loss of income protection.

Full mortality livestock insurance for beef producers can provide greater financial security for feedlot operators, its lenders and stakeholders. The increased security can provide comfort for banks or agricultural investment funds and the ability for greater lending capacity for future expansion.

Insurance for Beef Farms

Important features of full mortality livestock insurance for feedlots can include:

Loss of animals due to fire and lightning strike
Disease such as Lumpy Skin, Foot and Mouth, Anthrax, Bluetongue and Brucellosis
Cover for loss of gross profits (farm income)
Removal of debris
Cleaning and disinfection costs

Emergency Animal Disease Response Agreement

The Emergency Animal Disease Response Agreement (EADRA) is a formal agreement between the government and industry bodies on how to manage cost and reasonability in the event of a livestock disease outbreak.

EADRA is a legal agreement that provides compensation to growers in the event of government directed slaughter due to specified disease outbreaks. These specific diseases are categorsed and the share from government and industry bodies is determined based on the disease category within the cost sharing agreement.

What Does Emergency Animal Disease Response Agreement Cover

EADRA provides growers compensation for slaughter of animals directed by government and can include:

Salaries and wages for staff engaged by a Party to assist with EADRP
Essential equipment required for the immediate servicing needs of the EADRP
Livestock destroyed for the purpose of eradication or prevention of spread

Valuation of Livestock

The valuation of livestock is determined “upon the basis of a sale at the place where the stock or property was when it was destroyed of where the stock was when it died of the disease, that is, farm gate value“

EADRA provides an allowance for a second valuation as a top up payment should the total value of livestock be greater on the restocking date. The request for a second valuation must be notified within 30 days of the property being eligible to be restocked.

How Can Livestock Insurance Help?

Although EADRA provides compensation in the event of a named disease outbreak, there are risk exposures for both growers and processors. Cover for farm loss of income is excluded within the cost sharing agreement.

An All Risks Mortality Insurance Program can be structured to include the following items which are not generally considered within the EADRA cost sharing agreement

Business interruption for loss of gross profits (due to quarantine of farm locations/ability to restock)
An insured agreed value of livestock in the event of a reduced “farm gate” value due to disease outbreak
Diseases not included within the EADRA
Death of livestock due to feed and or water contamination
Fire, lightning and flood
Heat stress
Feed or water mechanical breakdown

As dedicated Agri Insurance Brokers, we have access to overseas livestock insurance markets with significant capacity within the Australian market. We specialise in providing complex livestock insurance solutions for large farms, chicken processors, banks and agri investment funds.

Insurance For Dairy Farm Sheds

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.

Couple milking dairy cows on rotary milking shed

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

dairy cows walking to dairy shed for milking

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.

Dairy Farm Insurance For Milk

Dairy Farm Insurance for milk is rarely reviewed or implemented in many dairy farm insurance programs. It’s important to consider how insurance relates to milk on your property, including the associated risks and the ways in which an insurance policy can provide cover for your farm.

It may seem to be a simple process to insure milk. Many farms may believe that their current farm insurance policy provides adequate cover. There are in fact multiple areas throughout a policy where milk can be insured for various events.

It is important that your insurer not only knows about the structural risks on the property, but also understands the operational risks of your dairy farm business.

See our article for dairy farm business interruption insurance

Dairy cows grazing on green grass in regional Australia ready for milking

Dairy Farm Insurance For Milk- Insurance Checklist

Milk contamination
Deterioration of milk in cold storage
Contamination to milk tankers or factory silos

Loss Of Farm Milk Due To Contamination

Loss of farm milk due to contamination is intended to cover the financial impact of a farm having to dispose of their milk due to contamination caused by antibiotics or chemicals. Insurers in the market provide a mixed variation of cover for contamination of milk. It should be noted that some insurers will not provide any cover at all. It would be recommended confirming f your current insurer provides cover for contamination of milk caused by antibiotics or chemicals.

Couple milking dairy cows on rotary dairy during early morning milking

Insurance For Deterioration of Milk in Dairy Vats

Deterioration of milk in cold storage is generally provided within a machinery breakdown cover. This is usually an optional extension which would provide cover for loss of milk in the event of breakdown. Cover is provided for loss of milk due to breakdown of plant, sudden or unforseen failure to the public power supply or contamination caused by accidental escape of refrigerant into the vat. Should these events occur, cover can be provided for loss of milk due to it being unsuitable for factory pick up. The limit of cover under the policy needs to be sufficient to cover the maximum value of milk in the vat at any one time- taking into account ‘skip a day pick-ups’ and seasonal pricing variations.

Dairy Farm Insurance Cover- Contamination To Milk Factory Tankers or Silos

Within a farm liability cover, some insurers will provide cover for the farm in the event of contamination to factory milk tankers or silos caused by milk contamination. This may be caused by the farms produce (milk) contaminating a factory milk tanker or silo from antibiotics or chemicals. Should a tanker pick up milk from your property and your milk contaminates the existing milk within the tanker or factory silo, this can lead to a potential liability claim, as your farm business has caused property damage to third party produce- being the factory owned milk.

Large Bega Milk Factory with milk tankers and factory silos storing and processing milk

Farm liability cover is not designed to provide cover for loss of earnings to the farm business. It is intended to provide cover if milk processor attempts to recover costs due to the loss of their milk/products. Not all farm insurers will provide this cover and some will have a limit on cover provided. It would be advisable to contact your insurer or farm insurance broker to confirm your level of cover.

As you can see, milk can be a complex risk to insure. However, with the correct insurance advice and adequate policy coverage, you can rest assured that you won’t be left crying over spilt milk.

Farm Hay Insurance

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.

Farm Contracting Liability Insurance

It's important that farms consider their farm contracting liability insurance policy, before undertaking any incidental contracting activities. Farm machinery is a large capital cost for any farming operation. To help offset this cost, a number of farms are now looking to produce external income through farm contracting.

It’s important that farms consider their farm contracting liability insurance policy, before undertaking any incidental contracting activities. Farm machinery is a large capital cost for any farming operation. To help offset this cost, a number of farms are now looking to produce external income through farm contracting.

It’s important that farms are aware of liability limitations within general farm insurance policies and how these can impact their farm insurance cover.

What are some liability risks associated with contracting;

Farm Property Damage
Farm Personal Injury

Farm Contracting Liability- Insurance Claim Examples

Farm Insurance Example Claim 1

A contractors bailer catches fire and the fire spreads into the customers and neighbouring properties causing damage to farm sheds, fencing and domestic homes.

Farm Insurance Example Claim 2

A farm employee from the customers farm assists with hay/silage on the farm and is injured from a piece of machinery owned by the contractor. The contractor receives a claim from the customers Workcover and furthermore a personal claim from the employee.

Farm Insurance Example Claim 3

Hay that is stored within a farm machinery/hay shed catches fire. The hay was bailed by the contractor too early and the high moisture content resulted in spontaneous combustion of the customers hay. The contractor receives a claim from the customers farm insurance company for the loss of the sheds and associated machinery lost in the fire.

Farm contracting servicing farm harvester

Farm Contracting Professional Indemnity Insurance

There are also other liability exposures such as errors in formulas or designs that need to be considered under a Farm Professional indemnity Insurance policy. An example of this particular risk would be where a contractor hasn’t used the correct seeding rate/depth that has resulted in failed strike resulting in financial loss to their customer.

See our article about farm contracting professional indemnity insurance

Farm Liability Insurance Policy Coverage

Most farm policies will provide a level of cover under a farm public/products liability cover, so long as the farm contracting activities are deemed to be “incidental” and that the activities relate to the “farm business”. Both of these terms are usually defined within the policy wording and it’s important that if your farm undertakes any farm contracting, that these activities fall within the policy definition.

Some policies will limit the cover based on a percentage of the whole farm income while other insurers will place a specific dollar amount on the farm contracting income the farm is able to receive.

It’s vital that if any farm exceeds the policy conditions that an alternative farm contracting insurance cover is sourced. On a number of occasions a policy can be extended with an additional premium to ensure appropriate cover. For large contracting operations a specific farm contracting business insurance policy would be required.

Farm contracting equipment planting on a farm with dust from tractor

Farm Insured Entity

Like any liability insurance policy, it’s important that the companies, trusts and associated entities are listed correctly on the policy to ensure cover in the event of an insured claim.

Should the farm undertake contracting activities under a separate company to the “farm business” this could void the farm insurance policy. A review of the insured entities on a farm policy is always recommended to ensure any company changes don’t impact the farm policy coverage.

It’s important that you deal with a farm insurance broker who is experienced in farm contracting insurance and who is able tailor an insurance policy specific to your farming and contracting requirements.

Farm Contracting Professional Indemnity Insurance

Farm contracting professional indemnity insurance is not often seen within most farm contractors insurance policies. However, it is a risk that should be considered for all farm contractors.

Farm contractor planting crop in the dust

Professional Indemnity Insurance is common within the agricultural sector for farm consultants and agronomists in terms of advice provided to farms. However, there is a significant gap in cover for most farm contractors and it is a risk that should be considered within their insurance program.

What Is Farm Professional Indemnity Insurance

Professional Indemnity insurance provides cover for claims that may arise from a third party in relation to a professional service where a fee is received. A farm consultant or agronomist would generally have professional indemnity insurance to cover claims that may arise from incorrect or negligent advice. A customer could look to recover financial loss in the event that there was incorrect or negligent advice provided by the farm consultant.

Although farm contractors would generally not provide advice, they do however make contracting decisions as part of their profession that could result in an error. While most contractors would have cover for public liability in terms of claims arising from personal injury or property damage, they also need to consider for these potential errors when undertaking their farm contracting.

Farm contracting professional with tractor and seed drill

Claim Examples- Farm Contracting Professional Indemnity Insurance

Claim Example 1

A contractor was employed by a farm to sow a maize crop. The contractor made an error in setting the seed depth and this resulted in a 30% crop strike. The farm lodged a claim against the contractor for the error, which resulted in a reduced crop yield of 5.4 tonne/ha vs the average crop yield of 18 tonne/ha. Based on 100ha, the loss was calculated at 12.6 tonne/ha @ $250 per tonne of dry matter- $315,000 claim.

Claim Example 2

A contractor was employed to spray a maize crop and the employee made an error in applying the spray rate. The error resulted in crop burn and a loss or yield by an average of 5t per ha. The farm lodged a claim against the contractor for the error which resulted in $250,000 claim – 200ha @ $250 per tonne of dry matter.

In relation to claim 2, it’s important to note that property damage claims that are a result of an error, when providing a professional service for fee are generally excluded under most public liability insurance policies. This highlights the importance of a professional indemnity insurance policy for farm contractors.

It’s also important that the farm involves an agronomist when reviewing crop strategies such as sowing rates, depth and spraying programs, as this can also help to minimise the risk to the farm and farm contractor.

Insurance Checklist For Farm Contractors

Public liability insurance
Professional Indemnity Insurance
Management Liability insurance including Statutory Liability cover
Workcover insurance
Comprehensive insurance for machinery, trucks and implements
Transit cover for any transported goods such as fodder
Property insurance for any sheds/stock and tools
General property cover for mobile tools, generators and air compressors

There are many risks associated with farm contracting and it’s important that you deal with an insurance broker who is not only experienced in farm insurance but also have a full understanding on contracting equipment and the associated risks with farm contracting.

Farm Livestock Insurance

Farm livestock insurance is often a cover that is either overlooked or not correctly set up in many farm insurance programs. Although it may seem like a simple cover to arrange, it can be far more complex and just as important to get right than any other fixed asset insurance.

Hereford livestock grazing on dry grass in rural Australia

Livestock Insurance Options

Options for livestock insurance include;

Farm Property Insurance- Defined Events such as fire, lightning strike, malicious damage etc. to livestock
Full Mortality Livestock Insurance– Defined Events plus illness/disease and accidental damage
Stud Stock Insurance- Individual insured animals for Defined Events, illness/disease and full loss of use

Unlike farm infrastructure, the problem with livestock is that potential market fluctuations need to be considered when reviewing the sum insured along with peak numbers during high risk periods.

Market Value Insurance

A “market value” livestock policy sounds like a good option as the basis of settlement is paid on the market value at the time of the loss, however there can be significant problems around this method of reinstatement. A “market value” policy will still require a total value to be declared at the commencement of the policy and it’s important the declared values factor in peak livestock numbers and values during the highest risk periods. Although a “market value” policy will provide cover for the value of the livestock immediately prior to the loss, the timing of the loss during the production cycle can impact the farms potential profit margin, for example;

Livestock Insured:

Insured value at policy renewal/inception in February

Insured Livestock- “Angus cows $1,000,000”
Total loss of livestock in December with an assessed market value of $1,500 per head= $750,000
Claim settlement based on market value at time of loss = $750,000
Estimated value of cattle at proposed sale date in January $2,000 per head= $1,000,000

Loss of livestock margin of $250,000

Birdseye view of Angus livestock feedlot

Agreed Value Insurance

An “agreed value” livestock cover can be provided by some farm insurers and on occasions has been seen to be written into some ISR policies. It can help to eliminate any potential market value disagreements, speed up the assessment and claim settlement. Another advantage of an agreed value policy is that profit margins can be protected should a loss occur 6 months prior to cattle being sold. The agreed value can be designed to provide protection of this profit gap, for example;

Insured value at policy renewal/inception in February

Insured Livestock- “500 head of Angus cows @ $2,000 per head” (budget price at time of sale)= $1,000,000
Total loss of livestock in December with an agreed value of $2,000 per head= $1,000,000
Estimated value of cattle at proposed sale date in January $2,000 per head= $1,000,000

Loss of livestock margin of $0

The risk of an agreed value policy would be that if there is any market increase after the policy inception the farm would potentially be at a financial loss vs the current market prices at the time of the loss.

Farm Business Interruption Insurance

With livestock insured, it is still vital for a farm to consider insuring Gross Profits insurance and Increased Cost of Working Cover for continuation expenses. Consider a fire loss to a high value Wagyu herd that has taken years to breed and build consumer demand. The “market value” on this herd could be hard to establish and there would be considerable costs and time involved until the herd could be rebuilt and the farm is back trading at the same level prior to the loss.

Some insurers may not provide an agreed value cover option on livestock and in these situations it is more important to consider a loss of gross profits cover to ensure livestock profit margins are protected along with continuation costs to help rebuild the herd.

With any agricultural business it’s important that you deal with an insurance broker who takes time to understand your farming business. Every farm will have a different livestock value chain and without knowledge on how each farm operates, the insurance policy will fail to provide adequate cover in the event of a loss.

Poultry Farm Liability Insurance

Poultry Farm Liability Insurance is vital for any poultry farming operation. It's important that the cover suits the individual farm and that time is taken to review of the liability risks associated for the farm.

Poultry Farm Liability Insurance is vital for any poultry farming operation. It’s important that the cover suits the individual farm and that time is taken to review of the liability risks associated for the farm.

Chicken inside a poultry shed with one sitting up on a drinker

Poultry farming is unique in term of how the liability risk differs from other agricultural operations. There are a number of considerations that should be reviewed when sourcing the most appropriate liability cover for the farm.

Poultry farms will still have the same risks in terms of personal injury or property damage but the significant difference is the liability cover for animals in care custody and control.

What Are The Farm Liability Risks For Poultry Farms

Poultry Farm Processor Contracts

While a liability policy will not provide cover for contractual claims, there is still an onus on the farm that they are responsible for growing the birds within their care and control.

A trigger under a liability policy is negligence and should a processor be able to prove that the farm has been negligent in terms of the loss to birds- the farm is at risk of a claim, or at least the legal costs incurred to review a potential claim.

It’s important to distinguish the legal responsibility of the farm and ensure that the insurance policy is tailored to cover such risks. A farm may have risks within the processor contract that fall outside the triggers of a liability cover and these risks may need to be insured in an alternative manner such as a full mortality livestock insurance policy.

Poultry Farm Size & Layout

The size and layout of the farm is an important factor to consider under a liability policy. Larger farms can have more contractors, pick up crews and labour hire which all need to be considered as a risk. The layout of the farm is important as the risk can differ based on the number of sheds that are supported by the same services (gas, power and water).

The services on the farm should always be reviewed and it’s important that farm has contingency plans in place in the event of breakdown or failure to these services, as this can help to reduce the risk of a liability claim from processors.

Bird Numbers

The total bird numbers of the farm is relevant as this can help to determine the maximum loss exposure.

For example, an 8 shed farm that utilises the same power, gas and water supply is exposed to a loss of birds in all 8 sheds.

If the processor values these birds at $3 per head and there is a loss to the birds in all 8 sheds, this could result in a potential liability claim of upwards of $500K- depending on stocking density at the time of the loss.

This is an example of why a standard limit of liability for Goods In Care Custody and Control (animals) may not be sufficient for the farm.

Maximum Loss Exposure for Poultry Farms

A number of insurers will limit their farm insurance liability insurance cover for Goods In Care Custody and Control for animals. It’s important to understand that this limit may not be enough for a potential claim against the farm for a number of reasons;

The farm could experience a loss that impacts more than a single shed
Legal costs may not be in addition to the limit of liability
The processor values the birds more than the growing fee the farm receives

Poultry Farm Liability Insurance Claim Example

8 shed poultry farm with a capacity of 50,000 birds per shed- 400,000 birds in total. The farm has a standard poultry farm liability cover that has a policy limit of $100,000 for animals in care, custody and control – inclusive of legal fees.

The farm manager inputs the incorrect temperature settings for the poultry sheds and they fail to respond to the shed alarm systems- resulting in the loss of 300,000 birds.

The farm receives a liability claim from the processor for the loss of their birds due to the negligence of the farm manager. The processors claim is for $900,000 based on $3 per head.

The farm has a policy limit for $100,000 for liability claims arising from goods in care custody and control (animals);

Liability Claim $900,000
Legal Fees $20,000
Farm liability cover policy limit $100,000 inclusive of legal fees

The farm liability claim results in the farm being underinsured by $820,000 as the actual risk exposure wasn’t considered for the farm when the insurance was established.

The actual risk exposure for the farm based on 400,000 birds would be closer to $1.2M- based on $3 per head plus any legal fees incurred.

Poultry sheds with grain silos on a rural Australian farm

Poultry Farm Liability Cover- Labour Hire

It is a growing trend for poultry farms to utilise labour hire for bird mortality collections and any labour hire activities need to be declared to the insurance company. This may leave the farm exposed for potential liability claims from Workcover given the farm is not deemed to be an “employee” of the injured person- thus exposing the farm to any personal injury to labour hire personal.

There are a number of other liability risks that need to be considered within a poultry farm insurance policy and it’s important that a farm deals with a farm insurance broker who is highly experienced in poultry farm insurance.