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Farm Business Interruption Insurance

Farm business interruption insurance cover is a vital component for any farm operation. While the importance of business interruption insurance for commercial business is well documented, it's less well recognised in the farming sector. However, it is just as important, if not more so, that farms have adequate business insurance interruption cover due to their increased external risk exposure.

Farm business interruption insurance cover is a vital component for any farm operation. While the importance of business interruption insurance for commercial business is well documented, it’s less well recognised in the farming sector. However, it is just as important, if not more so, that farms have adequate business insurance interruption cover due to their increased external risk exposure.

This article reviews the different farm insurance options that are available for agricultural operations.

Insurance To Suit Your Farm Business

Like all insurance policies, business interruption cover needs to suit your individual requirements, in particular your farm occupation.

Intensive farming operations such as poultry, eggs and piggeries require key infrastructure to ensure that the business can operate and process batches throughout the year.  Most pastoral operations don’t rely on key infrastructure, and therefore, any loss of farm infrastructure may not have a significant financial impact on the business. In these cases, the business may require an alternative solution to a gross profits interruption cover.

Farm Business Interruption Insurance For Intensive Farming- Gross Profits Insurance

In terms of poultry farms, a gross profits business interruption insurance cover is vital to ensure that in the event of insured loss or damage to property, expenses can continued to be paid. Should there be a loss to a single shed or multiple sheds, it will ensure that there is minimal financial impact to the farm until property is reinstated and bird batches can continue to operate.

The calculation of insuring intensive farming operations is no different to commercial businesses in that uninsured working expenses would be deducted from the annual turnover in order to derive an insurable gross profits figure. It’s also vital that it is understood how the farm is being paid under a processor contract, as these can differ in the market.

Example – Poultry Farm (12 months indemnity period)

Calculation for gross profits value:

Annual turnover                                                                                      $1,000,000
Less uninsured working expenses (e.g. gas*, power* and litter)     $170,000
Insurable gross profits                                                                       $830,000

* Always ensure that the fixed connections charges within power and gas costs are not deducted as uninsured working expenses, as these costs will still remain in the event of loss or damage to farm infrastructure.

Key Considerations for Farm Gross Profits Insurance:

  • Suitable for farms that are reliant on key infrastructure
  • Will cover the farms loss of gross profits
  • Uninsured expenses will differ depending on the farm occupation and farm input costs
  • Labour should be included within insurable gross profits to ensure employment costs are covered in the event of an insured loss
  • Underinsurance clauses apply (check your policy)
  • Consider full mortality livestock insurance extending to cover business interruption cover
Front of two green poultry shed with three silver grain silos with blue sky

Business Interruption Insurance For Pastoral Operations

Pastoral operations can be a little more complex, however they are certainly no more difficult to insure under a farm insurance policy. For example, if a pastoral operation was to lose a hay shed, it is more than likely that the farm would not incur any financial interruption to their livestock sales or production. Pastoral operations are usually more exposed to the risk of increased costs that the farm may incur in order to continue to grow and sell livestock. Therefore, a cover such as ‘Increased Cost of Working’ can be better suited to these types of operations.

See our article on livestock insurance

Birdseye view of sheep in yards being sorted for shearing

Business Interruption Insurance For Dairy Farms

Dairy farms can effectively be insured for either gross profits cover and/or ‘Increased Cost of Working’ cover. ‘Increased Cost of Working’ cover is well suited to dairy farms as they must continue to milk cows and cannot simply close their doors and receive payments for loss of gross profits. A continuation cover, such as ‘Increased Cost of Working’, is well suited to dairy farms as it covers additional costs that the farm may incur in order to continue to milk cows without disruption to animal lactation and calving patterns, which would ultimately have a long term impact on the farms production.

See our article on insurance cover for loss of milk

Milking cows on a rotary dairy

What Is Farm Business Interruption “Increased Cost of Working” Cover

‘Increased Cost of Working’ cover can not only be used in the event of insured loss or damage to property, but under some farm insurance policies, cover can also be provided for costs such as re-sowing of pasture in the event of grass fire. Other additional costs that may be considered under the policy for business continuation purposes may include, purchasing additional fodder to keep cattle fed while pastures are reinstated, additional labour costs that the farm incurs, and even transport or lease costs should cattle need to be agisted or milked on another property. 

‘Increased Cost of Working’ is an elective sum insured and will not generally incur any underinsurance clauses.  As a result, it can be difficult to calculate the most appropriate sum insured for a farm.

Considerations for calculating the sum insured should include:

  • Costs of re-sowing fire damaged pastures (including seed & labour)
  • Farm consultancy fees
  • Additional labour costs to feed or milk cattle
  • Fodder costs to feed livestock while pastures are reinstated and back in rotation
  • Any livestock transport or lease costs should cattle be required to be moved to an alternative farm or dairy

Feed costs can represent a large portion of the required sum insured for ‘Increased Cost of Working’ cover. This can be due to the timing of the loss and various seasonal conditions that may increase the length of time required to have pastures back in working rotation

Key Considerations of Farm Increased Cost of Working Insurance:

  • Elective sum insured without any underinsurance clauses
  • Used to cover costs the farm incurs to continue the farming business- not loss of income
  • Insurance cover for fire damaged pasture can be covered by some insurers
  • No economic limit in terms of dollars spent versus income returned
  • Can be a more cost effective premium than gross profits insurance

Business interruption insurance for agricultural risks can be complex to insure and will vary depending on the occupation and the individual farm activities. It is important that your insurance broker is experienced in agricultural risks and has an in-depth understanding of the farm to ensure adquite protection

How To Insure Farm Solar Panels

Farm Insurance for solar panels is an important risk to consider within any farm insurance program. With the increasing cost of power and reliability during peak periods, farmers are looking for energy alternatives to better manage their power requirements.

Farm Insurance for solar panels is an important risk to consider within any farm insurance program. With the increasing cost of power and reliability during peak periods, farmers are looking for energy alternatives to better manage their power requirements.

Solar is fast becoming a standard energy alternative for farms, as it suits the peak demand of a number of farming operations. It is also popular for running water pumps  where the distance and locations of pumps can difficult and expensive for the connection of mains power.

Sheep grazing on grass in front of farm solar panels

From an insurance perspective it’s important to consider;

  • How the solar panels are installed on the farm
  • How the solar panels are being used on the farm and;
  • The financial impact to the farm in the event of insured loss or damage

The Sum Insured Of Farm Solar Panels

The first consideration is the sum insured for the panels and associated equipment. Many farms have had access to government grants which may not be available should replacement be required. The full replacement cost of the panels, freight and installation should always be included within the sum insured.

The Location Of Farm Solar Panels

The location of the panels is important, as panels could either be

  • Fixed to existing farm sheds
  • Free standing supplying power for water pump systems
  • Ground mounted as part of a whole farm power supply system.

The location will determine the best method to insure the panels within an insurance policy.  They could be considered as part of the overall building sum insured which can include fixed power, water and gas within some policy wordings. Alternatively, they could be insured as part of the water pumping system which includes the power supply or more commonly insured as a separate listed item.

The Use Of Farm Solar Panels

It’s important to understand the use of the panels and how they being used to supply power to the farm. Is the unit completely off the grid, dual switching set up or used for individual water pumps/irrigation equipment. The use helps determine what the potential financial impact could be in the event of insured loss or damage to the solar system.

Farm solar panels in rural Australia

Farm Financial Impact

Farm Business interruption insurance cover may not be considered when discussing the use of solar panels but the conversation should not be any different than any other essential services that the farm utilises.

The financial impact can vary depending on the use of the panels on the farm. Some panels could be used to supply stock water to locations that aren’t always used throughout the year, whereas some panels could be used to supply power to a 60 unit rotary dairy with battery storage.

In the event of loss or damage, not only could a farm incur financial impact from a reduction in production but it could also incur additional power and generator costs to maintain the farm operation while the panels are reinstated.

Power supply is always something that should be discussed as part of the farms business interruption cover as their use, ability and timing to replace is an important factor to consider.

Farm Insurance Policy Wordings

Coverage in the market varies with a number of farm insurers . Some insurers include cover for solar panels within the building sum insured as part of fixed services while others require solar systems to be specified under specific policy sections.  

How they are insured under the policy can also effect the cover provided, as some farm insurers will provide Accidental Damage cover while others limit the cover to Defined Events only.

An ISR farm insurance policy can include cover, so long as it is listed within the declared asset schedule.  It’s important that the Accidental Damage sub-limit is adequate within the policy and that the business interruption cover is tailored to cover such financial risk exposures.

Farm Insurance for solar panels can be quite complex and it’s important that you deal with farm insurance broker who is highly experienced in agricultural operations.

Farm Liability Insurance for Australian Agricultural Operations

Farm Liability Insurance can be complex for any farming operation. There are differing levels of cover provided within the Australian farm insurance market. It’s important that farms are made aware of these differences, as they can pose a significant risk for any farming operation.

Understanding Claims Occurring vs. Claims Made Policies

Farm liability insurance is a vital safeguard for agricultural businesses, protecting against legal liability for personal injury or property damage occurring on the farm. However, not all farm liability policies are created equal. One of the most critical differences in the Australian insurance market is whether your policy operates on a “claims occurring” or “claims made” basis.

At Agripro Insurance Brokers, with over 20 years of experience in agricultural risk management, we help you understand these issues so you can protect your operation with confidence.

Red farm tractor spraying crops

What Is Farm Liability Insurance?

Farm liability insurance provides coverage for legal costs and compensation claims if a third party- such as a contractor, supplier, or visitor- is injured or has their property damaged in connection with your farm operations. This could include incidents involving:

  • Contractors slipping or falling on-site
  • Livestock causing accidents on public roads
  • Damage to a neighbouring property from spraying or irrigation

It’s essential that your policy aligns with the way your business operates and accounts for how and when claims might arise.

Claims Occurring vs. Claims Made: What’s the Difference?

Claims Occurring Policies (Preferred for Farm Operations)

A “claims occurring” policy responds based on when the incident happened, not when the claim is lodged. If an incident occurs during the policy period- even if the claim is submitted years later- coverage is provided by the insurer in place at the time of the event.

Advantages:

  • You’re covered by the insurer who was on risk when the incident happened, even if you’ve since changed insurers.
  • No need for ongoing “run-off” cover if you change providers.
  • Greater certainty for long-term liabilities.

Disadvantages:

  • Claim payout is limited to the sum insured at the time of the incident, which may be outdated if costs have risen significantly.
Farm irrigator watering farm crops with bright blue sky

Claims Made Policies (Higher Risk for Farmers)

A “claims made” policy responds based on when the claim is made, not when the incident occurred. Coverage is only triggered if the claim (or a potential claim) is reported within the current policy period.

Advantages:

  • The liability limit is based on the current sum insured at the time of claim.
  • May offer lower upfront premiums.

Disadvantages:

  • All incidents must be reported during the policy period, even if they seem minor or unlikely to result in a claim.
  • High risk of claims being denied for non-disclosure.
  • Run-off cover is required if changing insurers to avoid gaps in coverage.
  • Difficult to manage across large operations with multiple managers and employees.

Real-Life Claim Scenario: Claims Occurring vs. Claims Made

Incident: A stockfeed delivery driver slips and falls on a farm. The farmer checks on him, and the driver continues working. Six months later, a $1 million claim is received from WorkCover for lost income and medical expenses.

Under a Claims Occurring Policy:

  • The incident occurred under the previous insurer, so that insurer responds- even though the claim was lodged in a new policy period.
  • The farm is covered based on the liability limit in place at the time of the incident.

Under a Claims Made Policy:

  • The incident was not reported during the original policy period.
  • The insurer declines the claim due to non-disclosure of a potential claim.
  • The farm is left exposed to a significant financial liability.
Farm sheep in cattle yards

Why Claims Occurring Policies Are Better Suited to Farms

For larger farm operations with multiple locations, vehicles, and employees, keeping track of every minor incident is challenging. Claims made policies require strict internal reporting procedures that are often difficult to implement in a practical, day-to-day farming environment.

At Agripro, we’ve seen that 25% of all denied claims under “claims made” liability policies are due to non-disclosure or reporting failures. That’s why we recommend “claims occurring” coverage for most agricultural clients.

Choosing the Right Farm Liability Insurance

When reviewing your insurance options, it’s critical to:

  • Understand how your policy responds to liability claims
  • Confirm whether you’re on a “claims occurring” or “claims made” basis
  • Ensure your liability limits are adequate
  • Work with a broker who specialises in agricultural insurance risks

At Agripro Insurance Brokers, we provide tailored liability insurance for farms across Australia- including cover for poultry farms, feedlots, cropping operations, and livestock transport.

Speak with a Specialist

If you’re unsure whether your current policy provides the right type of cover- or if you’d like a second opinion—our team is here to help. We specialise in building robust liability programs for farms of all sizes, with access to Australia’s leading insurers.

Contact us today for a tailored farm liability insurance quote or risk review.

Related Topics:

Poultry Farm Liability Insurance

Farm Management Liability Insurance