The Farmers Mart Oct/Nov 2014 - Issue 36 | Page 18

farm news

BROKERS URGE FARMERS TO
CHECK INSURANCE COVER
New planning regulations mean previous
policies may provide inadequate cover.
Farmers are being
urged to check that their
buildings are properly
insured after changes
to planning regulations,
which mean their
current policies may
be inadequate to cover
possible losses.
Buildings previously
considered to be redundant
now have the potential for
other uses thanks to the
introduction of the Prior
Notification process – known
as ‘planning permission lite’
– which makes it easier to
convert old and under-used
farm buildings into housing.

Ripon, North Yorkshire

Since the changes were
introduced in April, H&H
Insurance Brokers who
operate across Scotland and
the North of England, has
dealt with a number of clients
whose old farm buildings are
no longer properly insured to
take their new potential value
into account.
Ryan Roberts of H&H
Insurance Brokers said: “It’s
important that farmers check
their insurance policies and are
clear about what they cover.
“For example, many policies
only allow for the repair of
damage with modern materials,
rather than like-for-like

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18

Oct/Nov 2014 FarmersMart

replacement which can impact
on the value of your building.”
Redundant stone buildings
with the potential for
conversion should be itemised
and their insurance needs
assessed. In some cases,
farmers will have stand-alone
structures such as barns,
former farm cottages or
buildings that were once part
of a traditional farm yard. The
planning changes mean that
the potential value of these
types of structures has soared
but inadequate insurance will
wipe out the possible profit
if they are damaged and
not repaired with the same
materials.
“In many cases, a first loss
insurance is inadequate, you
need reinstatement insurance,”
said Ryan.
“This ensures any damage is
reinstated with the traditional
materials that were used in the
original building.
“It’s important to discuss this
with your insurance broker.
Most insurances offer a ‘global
sum insured’, which means
you choose the sum insured
to cover all the buildings if
they were destroyed in a
catastrophe. It’s vital that
this overall sum is enough to
replace the buildings like-for
like.”
If you decide to convert an
existing building yourself, you
need to look at the rebuild
costs when assessing how
much to insure it for. The
age, listed status, location,
construction and existing
state need to be considered.
H&H’s partner surveyors can
provide an accurate rebuilding

valuation to cover potential
losses.
Ryan said: “Making sure an
existing structure is valued
accurately will avoid underinsurance at the point at which
a claim is paid.
“If the rebuild cost of your
existing structure is £500,000,
and you have only insured it
for £350,000 you will only
be paid 70% of any loss that
occurs, so it’s absolutely vital
to have the structure valued
correctly.”
In addition to maximising
income by converting
redundant buildings, increasing
numbers of farms now rent
out unused buildings for nonagricultural purposes. This
also requires a reassessment
of insurance to ensure the
building is now adequately
covered for its new use. For
example, it may be necessary
to increase the public liability
cover if the building is used
as a shop, or if it is used by
tradesmen to store hazardous
materials. It is important to
speak to the person renting
the building to ensure they
have both their own contents
and public liability policies.
hhinsurancebrokers.co.uk

To read more, visit www.farmers-mart.co.uk