The Risks of a Growing Farm Operation

Finance First

Would your farm insurance protect you if you needed it to?

Published on: September 16, 2013

Imagine: You’re building a new machine shed. It’s 10,000 square feet. It’s going to be so nice you could practically live inside of it. Construction is finished during harvest time – when you’re so busy you can hardly think of anything else.

You plan to call your insurance agent once harvest is over, but it ends up slipping your mind. Time passes. When your insurance bill arrives, you don’t think twice. Surely that new building must be included on the policy, you think…but it isn’t.

What happens if that building is destroyed by a fire or hit by a tornado? That’s not the time to discover that something wasn’t covered properly. It’s a time you need your insurance to kick into gear to protect you and your operation.

Our ag risk advisors have seen many growing farms that are underinsured – especially when there are more assets on the farm during the peak seasons of planting and harvest.

Farms that have grown in the past few years are at higher risk of being underinsured. Why? As the farm has grown, new buildings have been built, new machinery has been purchased, and there’s just more going on in general. The chance that something has slipped through the cracks is high.

Our advisors have seen outdated policies still listing buildings torn down years ago that the farm continues to pay premium on. On the flip side, they’ve seen beautiful, brand-new machine sheds that aren’t included on the policy at all!

This can happen if your insurance agent isn’t out on your farm, checking in with you regularly to find out what’s new in your growing operation. Being underinsured can mean you’d face coinsurance penalties if you have a claim. Or the check you receive might not be enough to cover the full cost to replace something.

When your insurance advisor regularly visits your farm, he or she can easily stay on top of changes as your farm grows. That’s their job. New buildings, updates to buildings, your crop inputs, and even a new or renovated house are items they should always be  checking on.

You have insurance in place on your farm because you expect it to make you whole if you suffer a loss. You don’t want to find out that your insurance isn’t set up correctly for the changes in your operation at the moment you need it the most.

The world of farming is changing – and so are growing, expanding farms. If your insurance agent isn’t helping you stay on top of the changes, speak with them or find a different agent.