Insuring a farm can be a complicated business. We asked someone with a foot in the worlds of both agribusiness and insurance to provide some insights.

In his early thirties, John Dunk stopped working on the farm that had been in his family for three generations and entered the insurance industry. He has now spent over three decades providing insurance advice to Australians in rural areas. Below, he shares his top insurance tips.

The basics

Farm-related insurance usually comes in the form of a ‘farm insurance pack’. This can include various combinations of the following policies:

• Farm property — including buildings and contents
• Hay, grain and livestock
• Farm machinery — including theft and breakdown
• Fire — for both inanimate objects, like fencing and machinery, and livestock
• Domestic property and contents
• Personal accident and sickness
• Motor — for farm and personal vehicles
• Farm working dogs
• Business interruption
• Business liability
• Road transit

Farm pack insurance can be purchased both from smaller insurers that specialise in offering farm-related insurance policies and larger, generalist insurers. While it might be assumed a smaller, specialist insurer would be able to provide a better farm insurance pack that’s not necessarily the case. Some insurers (small and large) provide excellent cover for hobby farms while others focus on larger, working farms. Some insurers (specialist and generalist) have a lot to offer wheat growers; others provide fantastic service to those running cattle.

That’s why it’s a good idea to discuss your farm’s insurance needs with a Steadfast insurance broker.

Dunk’s directives

Here are five tips award-winning insurance broker and long-time farmer John Dunk has for farm owners.

Avoid a scattergun approach to insurance.
“Like pretty much all Australian business owners, farmers are underinsured. Given that’s not likely to change soon, and most farmers have a set amount of money they can devote to insurance, my advice is to direct those funds to covering the most important things. What a lot of people do is try to cover everything – the hayshed, the house, the kids’ motorbikes, the dog. They end up not having enough cover for their most crucial assets. I’d suggest it’s wiser to properly insure the hayshed and house and take your chances with the motorbikes and dog.”

Beware online insurance. 
“Farmers often end up paying a steep price for the cheap, one-size-fits-all farm insurance packs they buy online. Someone in my line of work would be expected to say that. But plenty of others have pointed out many Australians feel let down after buying policies online. Or after talking to a call-centre worker who isn’t an expert and has only the most basic idea of their circumstances. If I’m providing insurance advice to a farmer, I’ll visit them and walk around their farm. If I see they’ve got a boat, I’ll make sure they understand their farm contents policy doesn’t cover it. I’ll explain what the difference is between something being insured for replacement and indemnity value. I’ll also run through the factors that go into calculating premiums and why, for example, more isolated farms cost a bit more to insure.”

Identify the less obvious threats.
“The two insurance policies that I regard as top priority are public liability and workers compensation. The likelihood of encountering a public liability claim is minimal. But if you do, it’s going to be a good ’un and the sky is the limit with the damages you could have to pay out. As I do, a lot of people have a manager running their family farm. Plus, with the pressure to get big or get out, lots of farmers now find themselves employing people. If you have workers, it’s a legal requirement to have workers compensation. It’s also a good idea to have management liability insurance, in case an employee decides to lodge an unfair dismissal case.”

Don’t assume old policies cover new technology.
“Like other industries, agriculture is being automated. If a farmer’s insurance doesn’t cover equipment such as drones – and there’s a good chance it doesn’t – he or she needs to consider taking out a standalone policy. Likewise, the modern farm is pretty dependent on computers, which means today’s farmers have to manage new risks. In the digital age, taking out cyber insurance is a smart move.”

Understand bad things still happen in good times.
“Farmers are more conscientious about being properly insured when times are tough. They realise a major expense could cost them their farm and probably have the bank on their back about buying the right cover. But when commodity prices are high they can get complacent even though they are often spending up big on things such as new tractors. I’ve always found that a strange mindset; even when you have a few bob in the bank, insurance is still important.”