The insurance implications of farm diversification

Diversification can be a powerful tool for unlocking additional income for farm businesses to help make them more sustainable and secure the future of the farm, while for some farmers it can lead to a complete change of career.

Successful diversifications can help provide employment in their local area and can create business options which take advantage of the entrepreneurial skills of other family members.

Across Northern Ireland farm diversification is becoming more common, from egg and milk vending machines at the farm gate to stand alone farm shops selling all manner of farm produce.

We’ve seen farms open private fishing lakes while others have diversified into offering outdoor pursuits.

The tourism market in Northern Ireland has been growing in recent years. According to the Northern Ireland Statistics & Research Agency (NISRA) there were 5.3million overnight trips taken in 2019.

With continuing restrictions on foreign travel, the staycation market is experiencing a massive demand for bed spaces and with the indications that overseas visitors will return in large numbers once restrictions are relaxed, this is a diversification which farmers are taking advantage of.

More farmers and landowners are now setting up tourism-related businesses on their land with glamping sites, camping pods and traditional camp sites becoming more commonplace.

But while diversification may be an attractive option, there are a number of things you may want to consider before making the leap.

One of the key considerations is insurance. It is very important that before starting a diversification project that consideration is given to the correct insurance cover required and professional advice should be sought in advance of starting a diversification so that accurate costs can be built into a business plan.

Most farm insurers can consider farm diversifications as part of the existing farm combined policy, depending on what the nature of the diversification is and the level of turnover generated, compared to the farm business as a whole. The diversification may need to be considered on a separate policy but again, it is important to have these discussions with your broker well in advance of starting the project.

There are a range of insurance covers which should be considered when starting a new business on the farm. It is essential that the business description on the policy accurately describes everything that is happening on the farm including the diversification project.

Public Liability is a must-have for any farm as it makes sure your business is covered if a member of the public is injured on your farm. It also covers you if you are responsible for damage to another person’s property. This needs to be extended to include the new activity.

Product Liability provides cover if your business has supplied or sold a product which has caused injury or damage to another person or property. If, for example, the new business includes selling food then this cover needs to apply.

Employers Liability provides cover if the business has caused injury or damage to an employee. You have a legal responsibility to buy Employers Liability. If there are additional employees required for the new venture, then again this needs to be considered on the insurance policy.

If your new business conducts sales online and holds transactional information and customer data, then Cyber Insurance should also be a consideration.

At AbbeyAutoline, our dedicated farm team can advise on the insurance requirements to help you embark on your diversification journey.

We are proud to protect our Northern Ireland farmers and at AbbeyAutoline, we can connect you with our panel of agricultural insurers from across the UK. As a broker, we are able to provide customers with choice and ensure you get the best deals from our panel of insurers.

Our farm team can tailor a policy to suit your needs and with branches across Northern Ireland our teams are never far away when you need us most.

To find out more about how the agricultural team at AbbeyAutoline can help you, visit https://www.abbeyautoline.co.uk/farm-insurance/