What's in Your Insurance Policy?

Check it now, not after disaster strikes.

Published on: Nov 7, 2007

A popular commercial these days for a credit card company uses the line "What's in your wallet?" Obviously, they want to leave you with the message that if it's not their card, you might be at risk for some calamity, or at least not be in position to reap the best deal. After storms ripped through northern Indiana a couple weeks ago, hitting numerous farms, perhaps the line in rural Indiana this week ought to be "What's in your insurance policy?" If you don't know, maybe you should find out.

Jon Rettinger definitely had insurance questions on his mind after high winds, likely a weak tornado, ripped apart his dad's farmstead on October 18. Herm and Evelyn Rettinger's house was protected for full replacement. What would happen outside the house around the devastated farmstead was less clear, Jon noted. Typically, farm buildings aren't insured for total replacement in case a disaster strikes.

The Rettingers case is still unfolding as damage is assessed. However, out of their experience comes a strong plea for you to review your policy now. Sit down with your insurance agent and do a thorough review of your farm coverage, especially if you haven't done so for a while. Make sure you understand each clause, and potential options for coverage. If you weigh coverage and decide the premium is too high, and that you would rather take the risk, that's one thing. But if you don't have the coverage you thought you did because you never asked the questions, that's quite another thing.

Here are some questions you may want to ask, working with your insurance agent.

  • How much coverage do you have on outbuildings? Would you be able to replace a farm shop, for example, for the amount of money you would receive from an insurance settlement if it is totally destroyed? If insurance payment wouldn't totally cover rebuilding it, would it provide enough money so that you could use other funds to finish the job?
  • Are your grain bins covered? Coverage here is not automatic. Some farmers in the past elected not to cover grain storage to hold down cost of the policy. With bigger bin sizes today, cost of replacing them goes up. Could you stand the hit if one of your bigger bins was destroyed over night?
  • What about grain inside the bin- is it covered? And what about your loss of potential profit from using the storage that you can no longer use? Are such things addressed specifically in your policy?
  • How about clean-up of damage? Cost can add up quickly, even if neighbors pitch in to get you started. You may have to bring in a crane to lift a down grain leg or bin, and you may need to contract for dumpsters to be brought to your farm to clean up the debris. Considerable time and labor also goes into clean-up. Homeowner policies typically address clean-up, and often cover it. The same may not be true in farm coverage.
  • Is equipment stored inside the barn covered if it's damaged by debris? What about equipment stored outside that might be damaged by flying debris?
  • Does your coverage affect crops blown flat by winds or damaged by hail right before harvest? Considerable yield losses may accumulate in fields knocked down anytime during the season.
    How about liability? If well-meaning neighbors running equipment, or even just picking up debris by hand, become injured on your property in the aftermath of such a disaster, do you have protection under your policy?
  • Suppose you have an older building you no longer use for its intended purpose, say a hog building. Do you have to erect a new one like it to obtain payment for it, or do you have flexibility?
  • Do new implements have to be recorded for you to have coverage? Or do you have a blanket policy that covers them as long as your total coverage is within a set percent of the total value of your implement inventory?
  • What if electricity is knocked out, and will be out for awhile? Does your policy provide for paying for temporary setups to get you up and going again?

If you can't fully answer even one of these 10 questions, perhaps a face-to-face review with your insurance agent is long overdue.