There are a few areas of insurance that I believe are especially important. Hands-on experience is a great teacher, and prior to my career in the insurance industry, I had the privilege of working on a farm for three years and I rather innocently learned the fine art of causing farm machinery insurance claims.
Please allow me to pass on my first-hand experience and wisdom – it is important to review your loss of use for farm machinery coverage prior to the growing season. This coverage provides a limit of insurance which pays for the additional expense of renting a replacement unit for machinery damaged by an insured peril.
A quick refresher on the basics of this coverage: Loss of use coverage can be purchased to a level that you select, often in increments of $10,000 in value. We used to see many farms buying $10,000 or $20,000 of coverage. Now as machinery costs rise, the rental costs per hour, or the cost to hire a custom operator to complete the same work is increasing as well. We now see many farms carrying between $30,000 to $50,000 of coverage.
Just like the quality of hired labour on the farm, insurance policies are not all the same and it is important to understand the coverage you are getting from your farm insurer.
While the differences are minor, they are important. Some insurers apply a deductible not only to the damaged machinery, but also to your daily rental costs. Other insurers do not apply a deductible to the loss of use coverage (you’ve already paid a deductible on the damaged machinery), but they will limit the coverage to 10% daily of the total maximum amount of loss of use coverage that you purchased.
While there is a need for this coverage throughout your seeding and spraying seasons, this coverage is most valuable during harvest. Whether it is an auger, conveyor, tractor, grain cart, swather, combine or even a header, there are multiple pieces of machinery required to keep your operations moving during harvest. We have seen claims where the loss of use payment is larger than the repair or replacement of the piece of machinery.
I encourage you to spend a few minutes reviewing your coverage or call your broker to review. Not sure who to call? Why not work with an insurance broker who innocently learned the fine art of farm machinery claims.
For some additional reading, follow this link to some of the real-life stories: https://rempelinsurance.com/agri-post-articles/the-benefits-of-dual-valuation/
Be sure to seek advice and purchase insurance from those who understand your business!
David Schmidt is an Account Executive and Rempel Insurance Brokers in Morris, MB, specializing in insuring farms and businesses across Manitoba and Saskatchewan.
David is a member of the Canadian Association of Farm Advisors, Winnipeg Chapter.
Office (204) 746-2320 Text (204) 712-6618 Email firstname.lastname@example.org Web www.rempelinsurance.com