While underinsurance might be better than no insurance, it could mean a big difference between what you expect to get in the event of a claim and what it costs you to replace the farm building, tractor etc. As FBD announced this week, most insurers have the condition of ‘average’ clause in their policies, so if you are underinsured by 50%, then any subsequent claim for a loss will be discounted 50%.
It’s up to you, the farmer taking out the insurance, to ask the question and it’s up to the insurance company to advise you correctly – in fact, they are obliged to comply with the consumer protection code as well as Central Bank regulations. They must explain to you what your policy covers. To do this properly takes time and research. However, for many farm businesses, all too often the call to the insurance company happens weeks after the cover term for insurance has expired.
Some farm businesses have out-farms and numerous tractors and people working on the farm, some risky buildings, some not-so-risky buildings with risky materials, farm vehicles and often other family members involved in the farm business. Keeping track of all the insurance requirements can be a minefield. As Mike O’Sullivan outlines on pages 50-51, unless you have these details covered on your insurance, then you might not be insured at all – or at the very least, you could be hopelessly underinsured.
Mike suggests asking the insurer how much you should insure your building for. Enquire about a rate per square foot or metre. Ask them if that is for buildings above ground or if it is the same rate for slatted tanks below ground – this is critical. He also recommends taking photos.
Use this article and the focus content from contributors Davy Wright and Margaret Nolan as the motivation needed to sort out your insurance affairs. The day you need to make a claim is often too late.