Concerns have been raised that many farmers could be at risk of inadequate insurance cover unless policies are carefully reviewed. With the cost of repairs increasing due to the escalating price and availability of materials and the continued rise in the value of farm equipment, machinery and buildings, farmers must verify that their policies are not leaving them under-insured.
Nigel Wellings, director of independent agricultural insurance brokers, Acres, said that repair costs for everything from farm equipment to vehicles and buildings are ‘facing rises of between 20-25%’. Additional difficulties in sourcing available parts are leading to vehicles being written off and scrapped rather than being able to be repaired.
Mr Wellings said that by combining these challenges with the rising cost of farm machinery, farmers could find that their replacement products are underinsured: “The value of new and second-hand tractors has gone up massively, in some cases appreciating by as much as 30-40%. A second-hand tractor insured at £35,000, could easily be valued at closer to £50,000 plus for a like-for-like replacement, with the same hours.”
Uncertainty in the arable crop market over the last 12 months, despite a calmer few weeks recently, has led to the majority of insurers increasing premiums accordingly, which many haven’t done over the last few years. Mr Welling said: “For example, a farm building valued at £100,000 three or four years ago would likely be closer to £150,000 today. To cover for this it would probably cost an extra £50 on top of the premium previously paid. With the premium rate increase, this would also add around a further £15 on top of that.”
Mr Welling has urged farmers to make revisions to budgets and policies to ensure replacement values are accurately reflected. He advised: “Individual farming practices and operations quickly evolve. Take off what you no longer need or use, but ensure you revise values to ensure sums insured cover for replacement or reinstatement costs.”