NAVIGATING THE CHALLENGES
Agricultural commodity prices are down and insurance rates are up . There have also been extreme increases in input costs like fertilizer , seeds , pesticides , insecticides , farm equipment , and land , which is putting further pressure on your ability to afford premiums while still remaining profitable .
Nesbit Agencies understands that farmers are struggling to manage costs while still affording premiums ; it ’ s a tough situation . While we can ’ t control external factors affecting the cost of your premiums , your insurance agent can help by reviewing your options for taking on more risk in exchange for lower premiums . Your agent can also review your claims history to help you better understand how this impacts the calculation of your annual agricultural insurance premium and give you insight into what puts upward and downward pressure on prices for insurance premiums in the insurance marketplace .
UNDERSTANDING THE INSURANCE MARKETPLACE
One of the most empowered moves you can make as an agricultural insurance policyholder is understanding the insurance marketplace . When you understand the environment you ’ re insuring in , you can make more informed decisions around your investments in safety and property maintenance .
12
Nesbit is invested in your success . Our team will always be here to help you assess the marketplace and advise you on how to respond in a way that will not only reduce your premiums in the short run but ultimately bring premiums down for everyone in the long run .
HOME INSURANCE : CHANGES TO REPLACEMENT COSTS AND COSMETIC DAMAGE EXCLUSIONS
Current issues to focus on in keeping costs down include high replacement costs and cosmetic damage exclusions on farm buildings . Traditionally , if a home is destroyed , insurance will pay to rebuild it under one of two methods : actual cash value and replacement cost . Both methods take into account the cost of repairing or replacing the home , which these days means higher replacement costs than usual as both the materials and labor to rebuild homes have increased in recent years .
Fortunately , Minnesota is considered a valued policy state , meaning the law requires the insurance company to pay out the coverage amount stated on the declaration if a building is deemed a total loss . So it would be wise to check with your Nesbit insurance advisor to make sure you have enough home insurance coverage in case of such a catastrophic loss .
The other change we ’ re seeing is a growing number of cosmetic damage exclusions on dwellings and farm buildings , which applies to damage that does not inhibit the function of the building . This means that if the appearance of your home or farm building is damaged but it can still serve the purpose it was built to serve without inhibition , it may not be covered under your new policy . In other words , small indents to roofs and siding caused by hail might not be covered . The purpose of these exclusions is to lower premiums and to increase the policy ’ s capacity to respond to functional damage — like a broken gutter — which inarguably inhibits the function of a building .
Some companies are allowing the policyholder to “ buy back ” this coverage so cosmetic damage can be covered . Please review your policy carefully and reach out to your agent for all your coverage options .
INSURING FARM VEHICLES
When it comes to insuring farm vehicles , the type of insurance is often related to the type of vehicle and how it is used . Consider which of these four policies best fits your situation :
PERSONAL AUTO INSURANCE
Is the farm vehicle , such as a pickup , also used as a personal vehicle and registered in the farmer ’ s name ? Check with your insurance advisor to see if a personal auto policy may work for you . And make sure to go over whether an umbrella policy is warranted to avoid high liability judgments should you get in an accident .
COMMERCIAL AUTO INSURANCE
The larger the farm vehicle , the more likely you ’ ll need a commercial auto policy . This goes for large pickups too . And whether the vehicle is titled to a farming entity will also come into play here . Check with your insurance advisor to see if a commercial policy is not only best but required .
FARM AUTO INSURANCE
Have a vehicle that is used only on the farm ? Can ’ t qualify for a personal or commercial auto policy on the vehicle ? Consider farm auto insurance . Ask your insurance advisor if this lower cost option may work for you .