Farm
Farming today is a complex business, with significant differences in methodology, equipment and systems, depending on what type of farm you have and the region in which you farm. From this diverse need has arisen a combined farm policy that covers most of the farmer’s insurable risks under the one policy. Every farm policy on the market is different. Below is a brief description of the classes of insurance that are commonly available to the farmer.
Domestic House and Contents –
Choice of covers available
DEFINED EVENTS COVER –
These policies are generally cheaper (as they provide less cover). The cover is usually restricted to the insured situation (no cover away from the premises) and covers for events such as:
• Fire or Explosion
• Storm, Lightning or Thunderbolt
• Earthquake
• Malicious Acts
• Riot or Civil Commotion
• Bursting, Leaking, Discharging or Overflowing of basins, tanks pipes etc
• Impact (by car, tree etc)
• Breakage of Glass
• Fusion of Electric Motors
• Spoilage of Food (due to breakdown of fridge or feeezer)
ACCIDENTAL LOSS OR DAMAGE COVER -
This cover provides all of the cover noted in the defined events policy PLUS cover for ACCIDENTAL DAMAGE or LOSS of items that cannot be found. This cover will generally provide an automatic cover for items taken away from the premises (within Australia)
Personal Liability Insurance -
Most contents insurance policies automatically include personal liability insurance. This covers you should you be responsible for another person being injured or if they have any of their property damaged while on your property.
It does NOT cover other people -
Who work in or on your home, such as cleaners, gardeners, builders or plumbers. These people should have their own business liability insurance policy to protect them for the damage they may do to you or your property.
Valuables / Personal Property Cover -
Covers items being taken away from the insured property (within Australia). This cover is not provided by all policies automatically and will have a limit even if it is an automatic inclusion, the items requiring cover can be insured by specifying them and paying an additional premium.
If you’re intending travelling overseas check with your broker, as most house and contents policies will not cover outside of Australia and New Zealand (travel insurance is usually the best cover option).
Landlords
There are six sections to a landlord’s policy
Building cover -
Most policies cover the main dwelling plus any other domestic use garage, outbuildings, walls, gates, fences, driveways, verandas, patios, in-ground swimming pools and any landlords fixtures and fittings such as stoves, built in air conditioning, kitchens, stoves etc..
Ensure that your sum insured covers the cost of the current rebuilding value plus costs associated with removal and dumping of the damaged property and any other professional costs associated with rebuilding (such as architects, soil tests, application fees etc..)
Contents cover -
Covering the cost of replacing furniture, carpets, curtains, internal blinds etc. Note that the definition contents will change from policy to policy and some items may or may not be covered by the building section.
Damage or theft caused by tenants –
Cover for your loss or damage to building and / or contents at the situation caused by a deliberate or intentional act by a tenant. This will generally include larceny, theft, malicious damage or vandalism.
Tenants rent default –
If a tenant defaults on the payment of their rent, vacates the premises - leaving them unfit for occupation, vacates without notice prior to their lease expiry date or is legally evicted from the situation, then cover is generally available under this type of extension.
Loss of rent –
When a building, insured under a landlord’s policy, is damaged and cannot be inhabited then this extension to cover will pay the amount insured for the weekly rent that cannot be charged on the property.
Legal Liability -
This covers you should you be responsible for another person being injured or if they have any of their property damaged while on your property.
It does NOT cover other people
Who work in or on your home, such as cleaners, gardeners, builders or plumbers. These people should have their own business liability insurance policy to protect them for the damage they may do to your tenant or your property.
Farm Property
Cover is available for any or all of the following for the risks of ‘fire and perils’, including theft, with some policies also providing an extension for accidental damage claims.
Farm buildings –
Including sheds, tanks, windmills, silos, fixed plant, irrigators and other structures.
Farm contents –
Including tools and equipment. Cover may be restricted under some policies to a particular shed or property, others will allow Australia wide coverage. Farm machinery- items such as tractors, implements, field bins, farm motorbikes etc..
Fencing –
Cover for the replacement cost of materials and labour to replace or repair farm fencing.
Stored produce –
Consisting of hay, grain, wool or other rural commodities that are stored on the farm.
Livestock
Cover for insured livestock against the risks of fire, lightning, explosion, earthquake, impact and theft. Some policies will also allow for the extension of cover to insure working dogs for death following accident, illness or disease, as well as proven theft.
Farm Liability:
• Public Liability - this cover is very important and usually is packaged in
with the products liability cover. It covers you against claims by people
who may suffer injury or damage to property while on your premises,
while you are working at their premises, or anywhere in Australia (or
the world, if the cover permits) whilst conducting farming activities
• Products Liability - if you sell, supply or deliver goods, even in the form
or repair or service, you may need cover against claims of goods
causing injury or damage
A policy sub limit is generally provided for ‘goods in your physical or legal control’, this includes items such as machinery that have been left in your care that have been damaged by your negligence.
The liability section can also generally be extended to cover for some on farm tourism activities (eg: host farm or B ‘n’ B type accommodation) as well as for any farm based contracting work that you may undertake, such as fencing or machinery operation etc.. (limits may apply and acceptance is not guaranteed).
Machinery Breakdown
Covers equipment, such as pumps and motors (not vehicle motors), against such risks as fusion, breakdown and explosion and can be extended for deterioration of stock.
Choice of covers:
• Blanket machinery cover
• Selected machinery cover
Extension option –
Deterioration of stock in cold storage.
Electronic Equipment -
Cover for breakdown of electronic equipment specified on the policy. Insured damage generally means sudden and unforseen physical loss or damage to the insured item which requires immediate repair or replacement to allow continuation of use, caused by malicious or accidental damage, vibration, power surge, low voltage, mechanical, electrical and electronic breakdown
Extension option –
Increased costs of working.
Costs incurred as a result of insured damage to the insured electronic equipment. This may include hire of substitute equipment and / or the cost of additional personnel incurred with the use of the substitute equipment.
Transit -
The cover offered by the farm policies is generally of a basic nature, in that the cover may only be for ‘fire, flood, collision or overturning of the conveying vehicle’. If you require a full accidental damage policy please advise your broker who will source cover outside of the farm policy. Some policies will also restrict the cover to goods being transported by the farmer, or his / her employees in a vehicle that they own.
Motor Vehicles -
Compulsory third party (bodily injury) cover is compulsory in Australia if you own a car but additional motor vehicle covers can prove invaluable if you are involved in an accident. All vehicles including sedans, wagons, utilities, caravans, motorbikes, trucks, trailers, tractors and other registrable machinery can be insured under this section.
There are four basic cover options available:
Compulsory Third Party (injury) –
Insures you for costs arising out of the use of your car in claims made against you for personal injuries. Commonly referred to as CTP, you must obtain this insurance to register your car (included in the registration costs in some states).
Third Party Property Damage –
Insures you against liability claims for damages to another vehicle or to the property of others (such as a telephone pole, fence or building). It covers both the cost of the damage and your legal defence. It does NOT include repair costs for your own vehicle. This type of cover is the cheapest available and it is our recommendation that, as a minimum, this cover is purchased before venturing onto the road.
Third Party, Fire & Theft -
Insures you for the same third party property damage cover show above, as well as fire and theft cover to your own vehicle. It also covers your liability for damage caused while the car is stolen.
Comprehensive –
Insures against third party property damage claims as well as damage caused to your own car in the event of an accident. If you have finance on your car it will usually be a requirement of the financier that you take out comprehensive insurance.
Additional things you should know when purchasing motor vehicle insurance;
Excess or Deductible –
These things mean the same thing. In the event of a claim you will be asked to pay a pre-determined amount either to the repairer or the insurer. The standard excess may be increased on your policy due to your age (eg. under 25 years old) or the driver being fully licenced less than two years. If the claim was not your fault and you can satisfy the insurers requirements of identifying the third party responsible, the insurer may waive your contribution or refund it to you once they make a recovery of damaged from the other party.
No claim bonus rating –
A feature of comprehensive insurance polices, this means that you are rewarded on an ascending scale for each successive year without a claim (up to a maximum of 6 years). If you do claim, your bonus rating is reduced, although if the claim was not your fault most insurers will leave your bonus rating the same. Once you’ve reached the best rating (rating 1), some insurers will allow you the option of paying an extra premium to ‘protect’ your rating for one at fault claim. A rating can only start to commence when you are noted on an insurance policy as a driver or take out a policy in your own name. Therefore the minimum age for any driver to obtain a rating 1 is 22 years old.
Extended third party property damage –
This option is not provided on all policies and is generally limited to a few thousand dollars. It covers you in the event of an accident that’s not your fault, where the other person who caused the accident has no insurance cover. This is quite handy, as you would generally be seeking the other parties insurer to pay for your damages.
Market value or Agreed value -
Most policies provide settlement of a total loss claim (vehicle write off) on a ‘market value’ basis. This means you are entitled to an amount representing the cost of a vehicle of similar make, model, age and condition. Or, if the vehicle is less than one or two years old, many insurers will replace it with a new vehicle of the same make and model that you lost.
An ‘agreed value’ cover -
Agrees the value of the vehicle with you at the commencement of the policy term, then if the vehicle is a total loss that agreed value will be paid to you. This type of cover is especially useful for vintage, classic and above average condition vehicles. The premium payable will generally be more than for the same vehicle covered for market value.
Excess free windscreen cover -
This option is generally available on comprehensive policies and allows the policyholder to pay an extra premium to allow for one windscreen claim that does not affect their no claim bonus or cost them an excess.
Hire car cover –
This option is generally available on comprehensive policies and allows the policyholder to pay an extra premium that will allow them to obtain a hire vehicle (up to a pre determined cost and number of days) in the event that their vehicle is stolen or damaged.
Restricted driver options –
Some policies will give the option for a premium reduction if you elect to specify one or two drivers, who will then be the only drivers allowed to drive the vehicle. Another option generally available is if you elect to restrict the age of the drivers to those only over 30 years old.
Premium rating –
Is based on such factors as the type of vehicle, age of the driver, driving experience, occupation, location and intended use of the vehicle. Modifications and accessories of the vehicle must be disclosed, as well as any driver, fines, penalties or convictions.
Personal accident and/or illness
Provides cover options for farming activities, it is not designed to cover for off farm occupations (cover for these other activities can be sourced separately by your broker). Covers against your inability to work and the resulting loss of income due to an accident, illness or death. Unless you operate as a propriety limited company, you personally will not be covered by workers compensation.
Cover can be extended (or may automatically be covered in some circumstances) for farm motorcycle riding, snow and water-skiing, pilot risk or playing football. Other higher risk activities are generally excluded from cover. If you partake in any such activity disclose it to your broker before cover is taken. The indemnity period, or the maximum number of weeks that a claim will be paid is generally 104 weeks and excesses will vary from between NIL and 30 days. Premium reductions can be obtained by electing to shorten your indemnity period and taking longer excess.
Claims arising out of pre existing injuries or illnesses will almost certainly be excluded from cover, it is extremely important that you disclose all matters relating to your health to the insurer on an annual basis (prior to entering into a new contract and at renewal).
Boat / Pleasure craft
There are two sections to a standard boat policy
Your property;
• Boat
• Motors
• Trailer
• Sails, masts, spars, standing & running rigging
• Listed boat accessories and safety gear
• Personal effects (limited cover generally provided)
Details of each of these will need to be provided to your broker, with registration numbers, serial numbers, values etc.. all listed individually. Cover will be for accidental damage, theft, malicious damage, transit damage, recovery of wreck etc..
Third Party Property Damage -
Insures you and any person allowed by you to control your boat against liability claims for;
• Accidental death or bodily injury to other people
• Accidental damage to other peoples property
• Accidental death or injury of an aqua planer or water skier being towed
by your boat (optional cover)
• Accidental death or injury to any person caued by aqua planer or water
skier being towed by your boat (optional cover)
Cover option -
On some polices the option is available to reduce your premium by electing ‘lay up’ cover. This means that during the selected months your boat will only be covered whilst it is at a designated location (in storage), no on road or on water cover is given during this period.
Additional things you should tell your broker -
You should always let your broker know if your boat will be involved in any form of racing or operating in waters beyond 100 nautical miles from mainland Australia. If your boat is beyond an age threshold set by the insurer you may be asked to take your boat to an inspection point for a report to be completed prior to acceptance of cover.
General Property
This section will cover specified items requiring cover away from the farm. Cover can generally be selected from the following
Defined events cover –
Fire, lightning, explosion, malicious damage or vandalism, theft following forcible and violent entry which causes visible damage to a locked vehicle or premises, theft of equipment that is securely attached to a vehicle through the use of locks or padlocks which result in visible damage to the securing devices, collision or overturning of the conveying vehicle.
Accidental damage –
Cover as above, plus accidental loss or damage.
Business Interruption -
Provides cover if business is interrupted through damage to property by fire or other insured peril. Cover ensures ongoing expenses are met and anticipated net profit is maintained through a provision of cash flow.
Cover options available
• Loss of weekly income (suitable for intensive farming operations)
• Additional cost of working - expenses
• Agistment and fodder replacement costs
• Tax audit costs
• Legal expenses
• Wet sheep expenses - e.g. shearing contractor costs
Contact your nearest broker to enquire further about farm insurance or to obtain a quote for your property.