The farming industry has changed substantially in the last 10 years and, with the increasing pace of technology, the way that farms operate is sometimes unrecognisable compared to when they first started.
As experts in farm insurance, a common theme we encounter when meeting new clients is a startling gap in cover. Farmers can incorrectly assume they are covered for certain activity or equipment, or don’t appreciate their cover might not take into account recent growth, investment or diversification.
Below are the four most common gaps in cover.
Dissolution of Agricultural Wages Board (AWB)
Up 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.
Advances in technology extend into agricultural processes, with an increased amount of automation and robotics being tested in farm businesses. Common examples include driverless tractors and diggers, and drones designed for spraying crops. These developments often provide efficiencies for the Farmer, but are also often forgotten about when it comes to insurance. It’s essential any new equipment is covered as damage or theft can be incredibly expensive to the business if not insured.
This cover is often overlooked or confused with Public Liability.
Public Liability only covers damage to third party property or third party death / personal injury, where 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, due to 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 – Financial Loss would.
A real life example of this situation saw one client claim £160,000. Financial Loss is an essential element of any agricultural insurance package.
Additional Increased Cost of Working (AICOW)
This is a fundamental insurance for farms, due to the inherent seasonality of their business. Without it, Farmers are responsible for any increased costs during busy times, such as taking on contractors during harvests. These costs can be extraordinarily high, especially if a Farmer has to rent additional equipment. AICOW cover is free of charge with Business Interruption.
And what about Brexit?
Farmers are aware of the uncertain impact of Brexit on Single Farm Payment (SFP) – the income that so many farmers rely on which will end when Britain leaves the EU. While a comparable scheme is uncertain, Farmers should consider the opportunities for diversification as a potential new means of income.
If you’d like to talk to an expert about your farm insurance, get in touch with Alan Boswell Group on 01603 218000 or use the enquiry button to send us a message.