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Types of insurance that farmers should have

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Types of insurance that farmers should have

There are different insurance policies and types of agricultural insurance options out there for farmers to invest in for the wellbeing of their agribusiness. We’ll be looking at the different coverage options under four different categories of agricultural insurance that are relevant to farmers.

Agricultural insurance is an important safety net for farmers who are constantly working against the natural elements and, in some places, for their physical safety. There is a lot of money that goes into running a farm and equally as much risk in attempting to profit and meet demands. Agricultural finance solutions can do more than set up a farm with equipment and infrastructure, it can help secure the agricultural insurance that a farmer needs.

 

Personal insurance

Just as every person should invest in certain insurance policies, farmers should also invest in life insurance, health insurance and vehicle insurance.

Having these personal insurance policies will be valuable in the event that a farmer passes and the cost of maintaining a farm falls on the family left behind. If they don’t have to worry about taking money out of the business to cater for a funeral, or worry about income during the period they’re making the necessary arrangements, they can keep the business going while they take time to mourn over the loss.

 

Business property insurance

Then we move onto insurance regarding the wellbeing of the farm itself. Business property insurance insures the building structures on the farm. Including, in most cases, the farmer’s house on the property.

  • Homeowners insurance: This policy will protect the family home and its belongings under a business property insurance policy instead of a personal property policy, which means the farmer can save money when it comes to insuring all the buildings on the property.  
  • Farm structure insurance: As a farmer, you know how much money has gone into building your barns, silos, stables, fencing, coops, dairy parlours and other farm structures. And to imagine having to rebuild from scratch, with money you don’t have, is a daunting thought. Farm structure insurance may not physically protect your structures from the storm, but it will cover the cost to rebuild them in the event they are destroyed.

 

Asset insurance

A farm is nothing without its assets – the equipment and machinery that maintain and keep the farm running. And after spending hundreds of thousands of rands on buying those pieces of equipment, it would be devastating to have something happen to them. Not only will farmers then have to spend money on buying replacements, but production lines and farming processes (ultimately their business) will be disrupted, which will also cost them in the long run. No discussion necessary – asset insurance for farmers is definitely needed.

  • Farm equipment insurance: Tractors, spreaders, tillage equipment, road graders and rotary cutters need to be insured in case of a natural disaster or accident.
  • Livestock insurance: This is important for farmers in the livestock business. There are different scenarios where livestock can be killed or damaged, so with livestock insurance, it’s simply a matter of replacing those that are lost and carrying on with business as soon as possible. Coverage options for this type of policy include individual, blanket and herd coverage.
  • Crop insurance: Farmers with crop insurance in the Western Cape at the moment are likely very grateful to have bought it. With the extremity of the drought as it is and the need to keep crops viable, there are large portions of crop that don’t make it through. In these circumstances, along with other extreme and unforeseen conditions, crop insurance reimburses farmers for the loss. Types of crop insurance policies include multi-peril, crop-hail and specialised peril crop insurance policies.  

 

Liability insurance

The last type of insurance that farmers should have is liability insurance. Liability charges in the agricultural industry can lead to huge amounts of money being compensated, so it’s in farmers’ best interest to take out liability insurance.

The more common liability insurance policies include general and product liability insurance, but there are a few others that could prove handy for farmers.

  • Workers compensation insurance: This is will cover farm workers’ medical expenses for any injuries incurred on the farm and is a necessity for many farms.
  • Commercial vehicle liability insurance:  Should one of a farmer’s vehicles be involved in an accident that damages another person or property, this policy will cover any liability risks.

The agriculture business is an important industry for anyone who eats food. We can’t afford having farms go out of business as a result of unfair bankruptcy as it will affect the supply and demand dynamics and we’ll all be affected. So it’s crucial that farmers do everything possible to protect themselves and their farms and that's where farm insurance comes in.

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