Risk & Business Magazine Miller Insurance Fall 2015 | Page 25

R
&
Evolution of Farm Insurance
B The
Improvements Made to Insuring Exposures Associated with Farming
BY: DOUG STORREY AND DAVE McCLORY, FARM SPECIALISTS, MILLER INSURANCE BROKERS

T

he insurance industry as a whole
has evolved significantly since the
1970’s but one area that has improved
immensely is how they are insuring the
exposures associated with farming. Farm
insurance began as a basic policy with
limited coverage provided on one policy
to cover the buildings, equipment and
livestock, another policy for your liability
coverage, a third policy for any wind
driven losses and, if requested, a fourth
policy would be purchased to expand the
types of losses that would be covered.
Over the years the insurance industry
began to realize that this was not the
most efficient way to conduct business, so
they began combining multiple policies
into one and expanding the standard
coverage to include more perils. At
the turn of the century coverage was
further expanded from the standard
Named Perils policy which covers losses
caused by fire, lightning, explosion,
smoke, wind, vandalism and riot to a
comprehensive policy which provides
an All Risk coverage that is limited only
by its exclusions. They also expanded
the way in which they settled losses and
introduced a replacement cost coverage
to go along with the standard Actual
Cash Value settlement.

As the average size of a farming
operation began to grow so
did the probability of loss and
in turn the amount of the
claim settlements began to
rise exponentially. With the
increased settlement costs the
insurance companies began
to take a strong stance on
loss prevention. Insurance
companies now have their own
loss prevention department that
visits each location insured to
complete an inspection, identify
any hazards on the premises,
and make recommendations
to improve safety and reduce losses.
They also offer services such as thermoimaging in barns to identify any hot
spots in the electrical wire so they can be
repaired prior to a loss occurring .
The standard farm policy today now
typically contains the dwellings,
outbuildings, machinery, livestock,
produce, liability and loss of income. A
large majority of the policies include a
replacement cost coverage in some form
or another depending on the condition
of the items being insured. The evolution
of the coverages and policy wordings
have expanded so greatly that specific
types of farming operations can qualify
for master programs that offer broader
coverage that is prudent to that specific
operation.

These programs include diary, dairy
goat, beef feeder and feather operations,
whether broiler or layer, with a cash crop
program coming in the not so distant
future.
There are specific qualifications for these
programs such as the age and condition
of the buildings, qu []Hو