By Aaron Bickle, CEO, Bickle Farm Solutions
If you’re sitting in your farm office, I want you to reach into the cabinet, pull your farm insurance policy out and dust it off! The fancy insurance jargon filled folder isn’t just some pile of paper, it’s your “security” to keep farming. If the goal is to pass the farm to the next generation, or keep the assets you have built so you can maintain your lifestyle, your farm insurance plan might as well be bullet proof, right?
Just like a house, a barn, or a grain complex, a good farm insurance plan starts with a good foundation by a “builder” not only with experience, but a builder who is a master of their craft. A master builder uses materials that are superior, top-notch vendors that are responsive, and a crew who cares and takes pride their work. As we dive into building a strong farm insurance plan, I want you to think of your agent as the builder, your insurance carrier as the vendor, and the agency team as the builder’s crew.
A strong farm insurance plan starts with an independent agent who gets agriculture, not an agent who just happens to sell farm insurance, but a farm insurance agent. Make sure the agent you choose has a relationship with at least two financially strong insurance carriers that are 100% committed to agriculture with years of experience taking care of farmers. The reason for this is simple — options. While it’s important and certainly recommended to build loyalty with an insurance carrier, it’s equally important that your agent has a plan “B” or even a plan “C” in case of a bad claims experience, product or coverage availability, or pricing that’s completely out in left field. Independent agents with more farm clients who represent multiple farm carriers have more pricing flexibility and coverage data; this means they are better equipped to navigate the farm insurance market for their clients.
As your agent works with you to gather information about your operation, your goals, your risks, and how to better manage those risks, it’s important that your insurance plan is designed to give you the best chance to WIN. But what does winning mean? It means that your policy needs to anticipate the “what-ifs” even if the probability of those “what-ifs” may be small. It means having the right coverage so your policy can respond, and you can keep farming. Every good farm insurance plan should be built on the following foundational coverages:
A farm umbrella
Simply put, a farm umbrella is an additional layer of protection for your farm operation and is without question the most cost-effective way and best money you can spend to protect your assets in the event of a lawsuit. If you don’t currently have a farm umbrella, please schedule a meeting with your agent to discuss how much coverage is suitable for your operation.
Blanket = better 99% of the time. It’s not quite the same as “set it and forget it” but it’s a close second that helps build a nice buffer into your farm insurance plan. Simplify your plan by adding blanket coverage for your farm ground, your equipment, and your grain complex. Here’s why…
Blanket acres – most insurance carriers require all the farm ground you own and lease to be listed on your farm insurance policy for liability to apply to that location. While ground picked up during the policy term is generally covered by most carriers, what about those locations you have been farming for years that still aren’t listed on your policy? It’s a good idea to remove the “gray” area and blanket your acres so you absolutely know that every farm field you farm is 100% covered.
After you’re done dusting off your policy, flip to the equipment page where all your equipment is scheduled. We’re going to assume your equipment is insured at actual cash value. You’ll most likely find equipment you sold years ago still listed, maybe something is missing, but pay special attention to the coverage amount on each piece of equipment. The amount you see is the max you would receive if that machine was destroyed. In this equipment market that is a problem, because you’re not going to receive the amount of money the machine is worth unless you have updated the amount in 2022. Conversely, in a normal or down equipment market you may not receive the insured amount even though you have been paying premium to insure the machine at that amount. This is a tough conversation at claim time not only for agents, but for the insurance carrier. Make it simple: lump all your equipment together into one amount and insure it on a blanket basis so each individual piece of equipment isn’t tied to a specific dollar amount. Unfortunately, some carriers won’t allow harvest equipment to be insured on a blanket basis. Do yourself a favor and at least insure the rest of your farm personal property on a blanket for greater flexibility and to avoid future headaches.
This is the most valuable investment for a grain farmer and should be insured as such. With steel continuing to rise it’s almost impossible to hit this moving correct coverage target if the components of your grain complex are individually insured. Unless your agent has extensive experience building grain systems there is absolutely no good reason to insure each bin, dryer, leg, cross auger, platform, catwalk, conveyor, and electrical housing separately. Why? Because just like equipment, it’s almost impossible to correctly put an exact value on each component of your grain setup. The best method is to insure the whole grain complex (everything that’s connected) under one amount. Think of it this way, does your insurance carrier insure your roof, garage door, siding, and fixtures separately or do they insure the total value of the house as one amount? Why treat your grain complex any differently?
Farm earnings and extra expense
Nothing like seeing a combine burn up in the field and having to rent one out of pocket or having the expense of trucking grain to a commercial dryer because your dryer caught fire. There are numerous scenarios that would create loss of income or an extra expense for the farm. The main thing is to be aware of what can happen, and how much of that risk you are comfortable with self-insuring.
Farm employers’ liability
I think we would all agree that farming is dangerous, and the safety of your employees are always top of mind, but sometimes we can do all the right things and accidents still happen. Employers’ liability could be considered a close sibling to workers compensation and is designed to protect the employer from injury, disease, and death claims made by employees caused by workplace practices or conditions that are not covered by workers compensation. In Ohio, it’s recommended that employers purchase employers’ liability to protect their company from the gap in coverage between the state fund and their general liability insurance. Also, it’s cheap!
Farm pollution and farm auto pollution
As a farmer, you deal with a lot of material and chemicals that can cause a pollution incident. Most carriers have a similar pollution endorsement, but the charge can vary quite a bit depending on the insurance carrier, especially when adding pollution to your farm auto policy. Every operation is different and has different pollution needs, work with your agent to assess your specific situation and needs.
ATV & UTV off premise coverage
Here’s the deal, if you have an ATV or UTV call your agent to verify you have off premise coverage. Everyone has heard a story about an accident in a recreational vehicle. The coverage is simple, easily overlooked, low cost, and really should be a standard for farm coverage.
A farm insurance policy should not be treated as a commodity that can just be bought off the shelf. Nor should it be treated as “pre-packaged” plan with a few options to add in. Skip the “model home” route and get with a master builder and lay that foundation. Farmers work way too hard to settle for anything less from his/her agent. And remember, just as you perform periodic maintenance on your home it is equally as important to conduct periodic reviews of your policy with your agent, so the dust doesn’t build up on your insurance file. If the goal is to keep farming for generations to come, insure your operation right, lock it down, make it bullet proof.