In a farm context, property insurance would include everything from the farmhouse to outbuildings and agricultural stock.

It is imperative that when you take out an insurance policy on your property that you insure for an adequate amount and that you are not underinsured. Property sums insured are not based on the market value of your property but, instead, on what it would cost to rebuild the property.

With the advent of new building regulations and in light of changing construction costs, property owners are advised to carefully assess property sums at each renewal. As an example, take a farmhouse that is insured by the owner for its market value of €270,000 but where the total reinstatement amounts to €360,000. In this case, the property is only insured for 75% of the cost of rebuilding so in the event of a total loss, the policy would only pay out €270,000 and the owner would be obliged to provide the balance of €90,000.

Similarly, if there was a partial loss on the same home, which cost €60,000 to repair, the insured party would only receive 75% of the cost of repair, €45,000, and would have to provide the balance of €15,000.

€270,000/€360,000 x €60,000 = €45,000 (75%).

This ‘‘condition of average’’ is common on most farm property insurance policies in the market. It should be borne in mind by all property owners when insuring both domestic dwellings and farm outbuildings – have you insured for the market value rather than the rebuild cost? Are you underinsured as a result?

Additional costs associated with property destruction or damage may also be covered by specific insurance policies, according to FBD’s agricultural product manager Stewart Gavin.

Under the FBD farm multi-peril policy, in the event of a valid claim against an insured property risk, customers are also insured for the agreed cost associated with:

Removal of debris cost.

Architect’s fees.

Surveyor’s fees.

Consulting engineers.

Legal and other fees necessary for reinstatement purposes.

“When a fire occurs in a farmyard, it is devastating,” says Stewart Gavin. “But at least with sufficient insurance and adequate sums insured on your farm property, the financial loss incurred will be covered.”

Gavin strongly advises farmers to review and discuss livestock and farm property sums insured on a regular basis with their farm insurance advisers. “In FBD, we provide an on-site farm review and recommendations of adequate sums insured as part of a full insurance review.’’.

He also advises farmers to ensure that appropriate fire brigade cover be put in place for a call or multiple call-outs in the event of a serious incident. Cover for fire brigade is included where there is a valid fire claim under your farmhouse or outbuildings.

Fire brigade charges could cost several thousand euro per call-out. “These charges can be very substantial, and the last thing anyone would want to deal with in the aftermath of a fire,” adds Gavin.

“Removal of debris and site clearance are other onerous costs in the event of a serious fire incident. These are protected as standard with FBD for insured buildings.”

FBD obtains and reviews the market rebuilding rates to which farm outbuilding claims are assessed regularly and the recommendations provided on farm buildings sums insured for farm outbuildings are detailed from the most up-to-date market information.

Assessing your exposure

Farmers should take time to properly assess how exposed they are to losses in the event of a fire in the farmyard.

Not only could the building be damaged or destroyed but the buildings could contain items of an even higher value such as:

Livestock.

Hay.

Straw.

Concentrate feed.

Tractors.

Farm equipment.

Tools.

Given that farm sheds will inevitably contain some or all of these items, it’s not difficult to see how large claims can accumulate.

So take time to assess what is stored in your outbuildings. Do you have fire cover on these items or stock? Is the sum insured declared enough to cover the loss?

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Special focus: farm insurance