Risk Management: Property and Civil Liability Insurance

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Over the past month, I’ve had many conversations about property insurance with our customers. Although this is the time of year to finalize business plans and forecasts for the future, the discussions focused on coverage, premiums and deductibles. I wanted to offer some thoughts and at least encourage producers to review their policies to ensure they are getting the coverage they expect.

It’s no news to anyone that installation costs are much higher, but has that been factored into your coverage? The cost of replacement and major repairs resulting from damage are significantly higher in the past year.

Everything from lumber, equipment and labor has increased by around 30% (or more). New sow farms cost well over $3,000 per sow, and finished weaner barns cost over $400 per space. This indicates the cost of repairing or replacing plant and equipment following a disaster.

Insurance premiums have also increased. The recent storm loss issues of the past two years have added to our industry’s risk profile. Add to that greater hedging value on existing installations, and the cost of hedging contributed to a higher cost of production. A common response has been an increase in the deductible to help control costs, and factoring that into budgets is a bit tricky.

Loss prevention is an important part of the process. Prevention is most likely to reduce the risk of fire loss and there are mitigation tools you can use. The biggest tool here is a strong maintenance and prevention program on a regular basis. Perform regular inspections of temperature sensors, electrical connections, switches, fans, motors, lighting, heaters, and gas lines. This should also include sensors in the rooms to identify issues. Some — maybe all — insurers can help you establish loss prevention plans.

Finally, talk to your insurer about coverage levels, loss prevention, premiums and deductibles at least once a year. Make sure you understand what losses are covered and what business interruption levels you should use if a facility is lost for a period of time. As part of your overall risk management program, consider the higher costs of repairing or replacing installations. With higher costs, this has become more important than ever.

Source: Kent Bang, who is solely responsible for the information provided and fully owns it. Informa Business Media and all of its affiliates are not responsible for any content contained in this information asset. The opinions of this author are not necessarily those of Farm Progress/Informa.

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