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Seven key issues farmers need to know about insurance

20 March, 2019
The farming industry has undergone significant change in the past decade, with the increasing pace of technology combined with regulatory changes revolutionising the way that many farms operate. Society has moved on too, shifting the risks facing farmers. Here, in partnership with independent broker Alan Boswell Group, AF Insurance explores seven key issues farmers need to be aware of right now.
1. Technology
Technology has always been at the heart of changes in agricultural practices, and those transforming the industry today will prove every bit as significant as when the tractor took over from the horse-drawn plough. Increasing automation and robotics are providing production efficiencies and, potentially, better yields, and keeping pace with these changes can be an expensive business, but an important investment in the future. Just as important is to ensure that insurance cover is kept as up to date as the equipment. Loss or damage to any new equipment by, for example, fire or theft, could be catastrophic if your cover fails to keep up with the pace of change.
2. Dissolution of the Agricultural Wages Board (AWB)
Until a few years ago, anybody who was employed to work on a farm was protected by the AWB Act. Benefits included minimum rates of pay, overtime during harvests and generous sickness allowances.

Despite the AWB being abolished in 2013, a number of farm employees believe they are still protected by the same legislation as they were previously. Importantly, the absence of new employment contracts drawn up since 2013 means that farm employers frequently find themselves at risk of having to pay employees for extended periods of sickness or personal accidents for which they have no insurance protection - unless they purchased additional insurance under their farm policy.

3. Power of the Environment Agency
The increasing power of the Environment Agency is one of the biggest challenges facing farmers today, with heavier fines for pollution being levied than ever before. If the Agency is alerted to contamination, they will identify who is responsible and charge them for clearing it up, before issuing a fine. As a result, there’s now an insurance product available called Environment Impairment Liability (EIL) insurance, which provides specific cover that will not usually be included under standard public liability insurance. The policy covers the cost of the clean-up and the legal defence costs.
4. Farm theft
Thefts from farms and other rural properties are on the rise, with organised gangs blamed for the increase. While theft of diesel is still an issue, the bulk of the increase is accounted for by quad bikes and other farm machinery, including tractors. More recently, thieves have targeted stock-piled chemicals and fertiliser. This makes it imperative that all agricultural machinery and stocks are adequately insured, and inventory schedules are kept up to date.

5. No-deal Brexit
At the time of writing with no-deal Brexit still a possibility, the potential impacts are many and varied, and far too complex to go into in detail here. But it’s been long mooted that input requirements may be affected, and farmers have been advised to speak to suppliers to ensure adequate stocks of things like animal feed, seeds, fertiliser etc if imported from the EU. If farmers are stock-piling additional supplies, then sums insured also need to be adjusted to reflect the increased value.
6. Financial Loss
Financial Loss insurance is often overlooked or confused with Public Liability. Public Liability only covers damage to third party property or third party death / personal injury, whereas Financial Loss covers circumstances where money is lost but no property is damaged or individual injured.

For example - a delivery of potatoes reaches the warehouse processing factory and sets off metal detectors, because of small amounts of metal being picked up in transit. It’s not a simple case of removing the contaminated delivery; the warehouse will be thoroughly cleaned and any affected deliveries destroyed. No property was damaged and no employees were injured, so a Public Liability product would not pay – but Financial Loss would. Financial Loss is an essential consideration of any agricultural insurance package.

7. Risk management and assessment
More and more attention is being paid to risk management, and for good reason, a good risk management assessment can save money for your business.

For example, Alan Boswell’s risk management team was called in to audit a farm, and looked at the rebuilding costs of every building on the site. It was assessed that a brick building that would cost £200,000 to rebuild as it was, could be replaced by a breezeblock building costing only £50,000. As a result, AF Insurance negotiated amended rebuild rates with insurers, based on a modern replacement basis of settlement for some of the buildings.

Insurance has to evolve and sometimes the insurance you’ve always had is no longer suitable.

If you’d like to talk to an expert about your farm insurance, get in touch with AF Insurance on 01603 881881 or email
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