What to consider when insuring farm equipment

What You Need to Consider When Insuring Farm Equipment

Posted by on May 15, 2020 in Insurance Advice

Your farm is dependent on the equipment you use. Without it, you cannot work your land, care for your livestock, or make a living. However, many farmers are unaware that their farm equipment is not necessarily insured under the insurance policies they currently own.

As a farmer, it’s crucial to have the proper coverage for all aspects of your business, from the land you work to the outbuildings, your livestock and your equipment. If you’re looking for the best possible insurance coverage for your farm equipment, here’s what you need to consider.

Protection Against Loss of Equipment

Depending on the type of farm you operate, you may have a long list of equipment, or you might simply have a truck and a tractor. Regardless of whether you require multiple pieces of equipment or just the basics — when your equipment is out of commission, so is your ability to earn.

When you choose farm equipment insurance, you can include it as part of your overall farm insurance package and arrange to “bundle” it for the best coverage at the lowest rates. You will be covered for financial loss or damage, so should the worst happen, you can get back to work quickly.

Many farmers assume their equipment is covered under either their home, auto, or commercial insurance policies; however, this is often not the case. Farmers should always review their insurance policies thoroughly with their insurance provider to better understand what additional insurance is required.

Types of Farm Equipment Covered

When applying for insurance, be certain to list all the machinery you use. The basics might include:

  • Balers
  • Loaders
  • Tractors
  • Sprayers
  • Combines
  • Skid Steers
  • Combines
  • Planters
  • Field equipment
  • Hay-rakers

Don’t overlook other equipment that contributes to the operation of your farm and land, such as any portable irrigation equipment you might be using. This type of equipment should be discussed with your insurance broker, so they can make sure everything you require to remain operational is listed under your policy.

Types of Perils Covered

A lot of risks exist when operating a farm — ranging from accidents to treacherous weather. Understanding the perils covered by your insurance is always an important aspect to discuss with an insurance broker.

If a tornado or severe storm hits, even heavy equipment is at risk of damage. Your insurance is designed to protect you from such damage and provide the money required for repairs or replacements following disasters. Of course, many perils can lead to equipment issues, including:

  • Fire
  • Wind
  • Theft
  • Vandalism
  • Fuel Explosions
  • Storms/Lightning
  • Damage caused by foreign objects
  • Road hazards for equipment used on the roads

The key to getting the right coverage is to discuss not only your equipment but how your equipment is used, in order to look at all potential perils. It’s not uncommon for farmers to assume they have blanket coverage, only to find in certain cases they are not covered at all.

For example, if you are driving your equipment from one field to another on local roads and have an accident with another vehicle, are you covered?

Customized Equipment Policies

The best way to have proper coverage is to discuss custom policy options so you don’t find out the hard way your claim will be denied. No two farms are alike, with varying land sizes, operational requirements, equipment used, etc. All of these factors must be considered when choosing coverage.

An example of customization is considering if you want all-inclusive coverage based on a specified dollar amount, or having a policy that lists each individual piece of equipment and its replacement value.

Specific Policy Features

There are also policy features to consider that specify what is covered and how you will be compensated. Therefore, you should discuss the following:

  • Loss of use coverage due to accidents
  • The terms of replacement based on current prices vs. depreciated values
  • The types of deductible limits and how they will impact your premiums

The best way to handle your farm equipment insurance policy is to look at everything you use to operate your farm and include that in your discussions with an insurance broker. They will better understand how your equipment is used and recommend the type of coverage you will need to ensure damage to your equipment has as little impact on your farm as possible.

The goal of farm equipment insurance is to ensure you can remain operational or return to work as soon as possible after an incident. This keeps your farm productive and avoids delays that could mean costly losses for your business.

For more information on farm equipment insurance, call Oegema Nicholson at 613-704-7766 or contact us here.

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