Farming is a big industry in the UK, and as such, there are multiple perils to contend with. 70% of the land in England is used for agriculture purposes, such as arable and vegetable production, poultry farming and fruit farms to name a few. It takes farmers and landowners a lot of hard work and commitment to keep on top of a working farm, let alone cope with unexpected problems such as floods, fire and vandalism.
Imagine you’ve spent months tending to a crop, and then it’s all wiped out by floods. Or what if an employee falls from a ladder whilst working on your farm, breaks a leg, and decides to make a compensation claim?
Nobody likes to think of things going wrong, but it’s a necessity when you and your employees’ livelihoods depend on it. It can only take a matter of moments for something to happen, but it can take months or even years to recover if you haven’t properly protected yourself.
Keep reading to find out why you should have farm insurance, the eventualities that will be covered and what can happen if you don’t get insured.
What are the risks of not having farm insurance?
Running a farm comes with a variety of everyday risks, such as those associated with heavy machinery or livestock. Whilst you can take precautions, there will always be certain events that you have no control over, and which may result in serious financial repercussions.
Your crops might get destroyed by fire or an employee may get injured whilst manning machinery. These types of issues result in serious financial problems if you can’t carry out your usual duties because of damage or if you are faced with a large compensation claim. The losses could be so great that you lose your farm because of the interruption to your revenue or if you aren’t able to recover financially.
Buying farm insurance means that you will be covered should you have to make a big payout due to unforeseen circumstances. Without insurance, it can be difficult to prepare for all eventualities and have enough money on hand to replace or repair the property at short notice.
What does farm insurance cover?
Farm insurance can cover farm buildings, machinery, livestock and grounds. However, you can buy an insurance package that is tailored to your needs. The policies listed below are the types of cover that you can find in your insurance package.
Employer’s Liability
As an employer, you are responsible to make sure that all of your employees are safe and healthy when working on your farm.
Employer’s Liability insurance will cover you if an employee is seriously injured or falls ill as a result of working on your farm. The worker may decide to make a compensation claim against you if they feel their injury or illness was a direct result of your negligence.
Such a situation would be even more serious if an employee were to die because of an issue on your farm. The family members of the deceased could file a claim that might hit seven digits, should they have enough evidence that you were a negligent employer.
Aside from protecting you against such events, Employer’s Liability insurance is also a legal requirement. It is compulsory insurance that everyone must have if they employ more than one person. You can be fined up to £2,500 per day if you are found not to have it.
Environmental Liability
This is an unusual cover that not many insurance companies offer. It covers the cost of legal fees and reparation costs if the environment is damaged due to the activities on your farm. This could include dust from construction work, fires due to the disposal of green waste or leaks of harmful substances such as pesticides.
In fact, environmental damage from farms is a serious problem in the UK, where 40% of rivers and groundwater is of a poor standard largely due to agricultural activity. Farms can pose an environmental risk to the surrounding area through the unsafe disposal of slurry or silage. You could face a fine if an investigation finds that your farm is the cause of pollutants in local waterworks or for other illegal disposals of materials.
Without insurance, you could face large penalties that have a devastating impact on your ability to run your farm.
Goods in Transit
It can be very expensive if the goods you transport are damaged, lost or stolen. It can also have negative consequences for the parties receiving the products. Goods in Transit insurance will cover the costs of your products and will help you replace them.
Without this insurance, you could lose your products and would likely have to compensate the party receiving the goods too. Insurance is a good safety net to have as it will help you recover the costs of the stolen or damaged goods.
Agricultural Vehicle cover
Tractors and other farm vehicles are expensive to buy and just as expensive to repair or replace. Without insurance, you would have to shoulder the financial burden yourself.
Functioning farm vehicles can be the difference between getting your work done or not. If anything were to happen to your tractor or combine harvester, it could halt the production of work on your land and result in lost revenue.
Agricultural vehicle insurance will cover most vehicles, such as tractors, quad bikes or balers. You can also buy Vintage Agricultural Vehicle insurance if your vehicle is 25 years old or over. You can easily include additional drivers onto vehicle insurance if you aren’t planning to be the sole driver.
Tractor insurance can include trailers and accessories, as well as add-ons such as horseboxes and livestock trailers. There is no legal compulsion to insure your tractor if you only use it on your land, but you must insure it if you drive it on public roads or land other than your own. We also offer equine insurance to cover for all your horse and equipment needs.
There are three types of insurance for farm vehicles: Third-party Only, Third-party, Fire and Theft, and Comprehensive cover. You can also get fleet insurance, which allows you to insure multiple vehicles on the same policy.
Crop insurance
It’s every farmer’s worst nightmare that their crop is wiped out or severely damaged due to fire, floods or other disasters. Without crop insurance, you would lose any money that would have come from the sale of your damaged or lost crops. This extreme financial burden, which comes on top of your increased workload, can be greatly reduced if you have insurance that aids you in the cleanup and replacement of your crops.
Product Liability
This type of insurance is only necessary if you run a commercial farm. Anyone who is injured or has their property damaged by something you sold can make a compensation claim. This can be an expensive process, especially as more and more law firms are offering “no win, no fee” policies.
The products don’t have to be directly manufactured by your farm for you to be found liable. Products that bear your farm’s name or were enhanced or repaired on your farm mean that they are still your responsibility should anything go wrong.
Product Liability can help you with the legal fees that accompany any compensation claim.
Public Liability
Many farmers let out their land to holidaymakers or for open day events such as petting zoos or pick-your-own fruit and vegetable. In either case, if you have members of the public on your farm, you legally have to have Public Liability insurance. This will cover you against compensation claims should someone get injured on your land.
You won’t be able to hold such events if you don’t have suitable insurance. This could mean a loss of revenue if you were planning to make additional money from hosting an event.
To prevent unnecessary risk, you should make sure that all machinery is secure and locked. You should also clear walkways so that there are no tripping hazards. Supervise or cordon off ponds and any other kind of open water (such as lakes and rivers).
Which situations will be covered by my farm insurance?
Farm insurance will compensate you if your machinery, livestock, or property is damaged due to natural events such as storms, floods, or fire. You will also be covered against vandalism if the situation is properly reported to the police and you provide sufficient evidence.
Livestock can be vulnerable to thieves, but you can achieve peace of mind knowing that you will be compensated should you lose animals. Of course, any theft should be reported to the police so that you can provide evidence when you make a claim on your insurance.
You can also be found liable if a trespasser is injured whilst on your land, so it’s good practice to buy insurance to protect you and your business. As trespassing isn’t considered a criminal offence, you may still have to pay out for a compensation claim should it be found that your negligence was the cause of injury.
Why should I get farm insurance?
Running a farm without insurance is very risky. There are many perils that could result in injury or damage to your livestock or machinery. If you haven’t got the money to pay for compensation claims or legal fees, you could find yourself seriously out of pocket or even potentially lose your farm and business.
Claims and legal fees can soon add up to thousands, sometimes millions of pounds. Therefore it’s wise to have a plan in place to prepare for the worst-case scenario.
Some insurance is mandatory if you’re running a rural business, such as Employers Liability, whilst other policies are optional but no less important when it comes to mitigating risk.
Farm insurance isn’t necessarily the right option for you if you run a non-commercial farm as a hobby. When running such a farm, you may be covered by your standard home insurance. You should ask your insurance broker whether this is a possible option for you.
Circumstances change, which is why it’s a good idea to make sure your insurance is regularly updated. New risks could form if you undertake new activities, but your insurance will be void if you haven’t updated your policies correctly to account for the changes.
What’s the difference between commercial insurance and farm insurance?
Farms are different to most other businesses because they have a mixture of domestic and commercial purposes. Some of the different types of farms include pastoral farming such as animals and animal products, along with arable farming that deals with the production of crops such as wheat and barley.
Although commercial insurance offers similar policies, such as Public Liability and Employer Liability, a working farm isn’t the same as a commercial company. They have different risks and therefore need different policies.
When running any kind of business it’s a good idea to make sure that you have the right kind of insurance and that your activities have been listed correctly. Should the worst happen, you’ll want to know that you can make a claim that falls within the terms of your insurance policy.
An insurance broker will be able to advise you on any additional policies that you may need to cover the commercial aspects of your farm.
How can I manage legal and environmental risks?
The best way to avoid legal risks is to make sure that you are taking the necessary safety precautions to prevent any injuries or damage. Your employees need proper health and safety training and understand how to operate any farm equipment safely.
Unfortunately, there is no way of controlling natural disasters or adverse weather conditions, but there are ways that you can make it easier for yourself if you do have to make a claim. One simple way is to keep accurate records of your farm machinery and tools, note down serial numbers, and any extra information, such as how old they are.
Speak with an insurance broker to find the best insurance policy for your farm. They can talk you through your options and make sure that all your activities and property are covered and that you have suitable insurance premiums to manage risk to your farm.