When is the last time you thought about insurance?

This story appeared in the DBA September newsletter. Click here to view the digital version of the newsletter.

By Kyle Lange, agent, American Family Insurance, Northeast Wisconsin

Let’s face it, insurance isn’t everyone’s favorite topic; it’s right up there with taxes! Not many people actually look forward to sitting down and reviewing insurance, except maybe us insurance agents. 

However, as a result of this, people avoid reviewing their coverage annually or when their circumstances change. Every day, insurance professionals talk with their clients about assessing risk. Many times, these quick check-ins can catch gaps in coverage. Good insurance agents will call or stop in often to make sure there aren’t any issues that need to be discussed. Here are some important things to consider when preparing for your insurance review. 

WHAT TO LOOK FOR 

Liability coverage: One of the biggest gaps I find in insurance policies is low liability limits. These limits should be adequate to your farm’s asset valuation or a percentage of your annual revenues. Too often, I see a farm with 1,000 or more acres and $5 million farm inventory with only $1 million in liability protection. Compared to property coverage, liability is a minimal cost but at times can be the most important.  

Consistent deductibles: This can be a surprise come claim time. Often, I see farm personal property will have a different deductible than outbuildings. Sometimes deductibles can also vary between homes and outbuildings. Some policies are per occurrence and others are per building. Make sure you’re aware of your policy. Per occurrence means if one windstorm comes through and damages four buildings, only one deductible applies. Whereas, if you have a per building deductible, that may be $2,500 per building. 

Important endorsements: Recently, many companies have added extra add-on coverage that can come in handy. Milk contamination and farm income are the two most significant ones related to dairy farm operations. Milk contamination coverage can help replace wasted milk due to a covered contamination loss. Farm income coverage can help replace the lost revenue due to a fire, tornado or snow collapse. This can help you recoup thousands, sometimes millions, in the event of a loss. Also, make sure your buildings have coverage for weight of sleet, snow and ice; some learned the hard way during the blizzard of April 2018.

5 WAYS TO CONTROL YOUR PREMIUM

1) Review deductible options. Some farms can handle larger deductibles than others. By using proper risk management strategies, you can take calculated risks to save money in the long run. 

2) Review building valuations occasionally. Each year, inflation protections will increase the building limits, which usually grow correctly. However, over time, these values can be checked to see if you are overinsured. It’s just as important, though, to make sure you are not underinsured on significant structures. Also, verify if you have replacement cost valuation or actual cash value.

3) Review farm personal property limits. Most of this coverage is written on an actual cash value basis, meaning you will only get paid on a market or depreciated value. If you have a tractor covered at $150,000 this year, but next year it depreciates to $138,000, you need to update that on your equipment blanket. You can control premium this way, and why pay for values of equipment if you wouldn’t get paid the same amount for it? 

4) Review a peak season type endorsement. This can help remove coverage during non-busy times. With spikes in grain, seed, feed or cattle, you can use these kinds of endorsements to purchase coverage while you have a higher need versus covering them all year long.

5) Review your coverage annually. Some-times, if you go claims free, there may be premium consideration underwriters can give based on your loss ratio.

Taking the time to review your coverage on a consistent basis could be the difference between a devastating financial loss and a minor bump in the road.