A survey conducted by Autoline Insurance has found that almost 20% of local farmers have never reviewed their insurance cover and that a further 7% haven’t reassessed their policies within the last three years.
Failure to do so is unnecessarily exposing farmers to the financial risk of being under-insured without adequate cover to meet the costs of a claim, or in, some instances, not being able to claim at all.
Best practice advice from the insurance industry is that policies should be fully reviewed at least annually and that policy holders should advise insurers immediately of changes to their business.
Richard Henderson, Autoline’s Head of Agriculture, said: “Given that farming is one of the riskiest sectors in the local economy, getting the right insurance cover in place and reviewing it every year should be a priority.
“Farming is a complex industry and the range of risks involved is challenging. It’s vital, therefore, that farmers review their policies annually to make sure that they’re fit for purpose. Otherwise they could find that their level of cover is completely inadequate in the event of a claim.”
Under-insurance is a long-standing problem in the agricultural sector due to changing valuations of farm buildings, livestock and other agri-related property. In practice insurers may only settle claims in proportion to the amount insured, meaning that if an asset is under-insured by half, only half of the claim amount may be paid.
Another common issue is only securing cover for the average amount of stock that is held throughout a year, rather than the maximum amount held at any one time.
Mr Henderson added: “Time pressures upon farmers are unique and intense, and it’s understandable that some might overlook insurance as just another piece of paperwork. It is, however, something which is absolutely business critical, particularly given the levels of risk farmers are exposed to.
“Under-insurance is a problem generally in business, but it is worryingly prevalent in the agri-sector. A good insurance broker, however, will be more than happy to visit premises, assess what levels of cover are required and work with farmers to help ease the administrative burden.”
Brian Clendinning, of Clendinning Claim Consultants, Autoline’s claims partner, said: “Under insurance within the farming world is so prevalent that loss adjusters expect to identify it in every claim they consider. Instead of focussing our efforts on securing full financial payment when there is adequate cover in place, too often we’re involved in the much more difficult task of mitigating the damage of under-insurance.
“Simply getting your insurance broker to review your requirements on an annual basis will save farmers a lot of financial heartache and stress. After 30-years in business I still can’t fathom why so many farmers take such needless risks in this area.”
The survey, which was conducted at the Balmoral Show, involved face-to-face interviews with almost 100 farmers.
It also found that 19% of respondents didn’t consider farming to be a dangerous occupation, despite it being ranked as the most dangerous industry in Northern Ireland. In 2015/16 there were six farm-related fatalities locally compared to two in the construction sector.