How farmers can transfer some financial risk to the insurance company instead of assuming all risks themselves
By Reuben Dourte
Ruhl Insurance
If your farming enterprise involves animal husbandry, it doesn’t take long to establish considerable value and monetary investment in your livestock. Some farmers may choose to self-insure their herds, assuming all risk of loss. Others may simply be unaware of the insurance products available to help transfer some of the financial uncertainty associated with livestock losses. For those individuals who are aware of the coverages available, and who wish to transfer some of their financial risk to the insurance company, they can choose from a couple of product options:
1. Livestock mortality policy
A livestock mortality policy provides the broadest and most comprehensive coverage for livestock. In some cases, major medical coverages may be purchased in conjunction with a mortality policy. This policy pays in the event of the animal’s death, often with no deductible, and the major medical can cover veterinarian costs that exceed the policy deductible.
Since it is the broadest form of coverage, livestock mortality coverage is usually the most expensive as well. The premium is calculated by multiplying the value of the animal by the applicable rate, which is determined by the age, use, and species/breed of the livestock. It is advisable to purchase mortality policies for individual animals of high value, such as embryo donor cows, proven bulls, or higher value show horses.
2. Farm Personal Property Coverage
If you have a farming operation, chances are you have a farmowners insurance policy. This policy is designed to provide you with coverage for virtually every aspect of your farming operations – including your herd of livestock.
If you have a line of credit secured with your farm property, or you took out a loan to buy your herd, the bank might require you to have insurance coverage on your animals. The bank's requirements can typically be met by purchasing coverage for your whole herd on your farm personal property coverage. This is the same policy through which you would insure tractors and other farm supplies. The coverage is much cheaper than a mortality policy, but it is also much more limited.
Speak with an agent to determine which option is right for you and your operation. Remember, each farming situation is unique and insurance needs vary from farm to farm!
Reuben Dourte is an account executive at Ruhl Insurance in Manheim, PA where he specializes in farm and agribusiness insurance risks. He received his Accredited Advisor in Insurance designation in 2015.
Disclaimer: Information and claims presented in this content are meant for informative and illustrative purposes, and should not be considered legally binding.