Farm and Agribusiness Insurance — A Practical Checklist

Farm insurance is rarely one policy. A well-structured rural program typically draws on several covers — property, machinery, motor, liability, crop and sometimes income protection — assembled to reflect the specific operations and exposures of that property. The gaps that cause problems at claim time are usually the ones that were never discussed when the policy was arranged.

This checklist covers the areas most commonly underinsured or overlooked on Australian farm properties.

Property and buildings

• Homestead and residential buildings — Is the sum insured based on current rebuild costs, including demolition, debris removal and professional fees? Building costs have increased substantially — values set several years ago are likely to be inadequate.
• Farm buildings and structures — Sheds, silos, workshops, yards and fencing are often undervalued or excluded if not specifically listed. Check what structures are covered and whether the sums insured reflect replacement at current rates.
• Hay and fodder in storage — A fire loss of stored hay can be significant. Check whether stored fodder is included, what the limit is, and whether spontaneous combustion is a covered peril.
• Contents and household goods — Personal contents in the homestead are a separate insured item. Review the limit and check whether specific high-value items are adequately covered.

Machinery and plant

• Schedule of machinery — Is the machinery schedule current? New equipment purchased during the year may not be automatically covered, or may only be covered up to a limit. Notify your insurer or broker when significant equipment is acquired.
• Market value vs agreed value — Machinery policies may settle on a market value basis (accounting for depreciation) or agreed value. For critical or hard-to-replace equipment, agreed value may be worth pursuing.
• Hired-in and borrowed plant — If you hire in machinery during harvest or seeding, check whether you have any liability exposure for damage to equipment you don’t own.
• Machinery breakdown — Breakdown cover is separate from accidental damage cover. If machinery failure mid-harvest would create a significant financial loss, breakdown cover is worth considering.

Farm motor vehicles

• On-road and off-road use — Farm vehicles are often used both on public roads and across the property. Cover needs to reflect this — standard motor policies may not cover vehicles used extensively off-road.
• Unregistered vehicles — Quad bikes, tractors and utility vehicles operating solely on the property may be insured under a farm pack rather than a motor policy. Check that all vehicles are covered for their actual use.
• Trailers — Trailers are often insured separately from the towing vehicle. Check that all trailers are listed and that cover applies both on and off the road.

Liability

• Public and products liability — Does the limit reflect the scale of your operations and any contractual requirements from agronomy contracts, marketing boards or processing facilities?
• Visitor and agritourism exposure — If members of the public visit the property — whether for farm stays, cellar door, farm gate sales or school visits — this needs to be declared. A farm policy covering private operations may not extend to commercial visitor activities.
• Contractors and employees — The liability implications of engaging contractors or casual labour should be considered. Discuss with your broker how subcontractor activities affect your liability exposure.
• Livestock on roads — Liability arising from livestock straying onto public roads is a specific exposure for rural properties. Check how your policy treats this.

Livestock

• What perils are covered — Livestock policies typically cover fire, lightning and some accidental events. Extended cover for disease, injury and theft is available but usually requires specific inclusion.
• Species and categories — Coverage should match your actual livestock types. Mixed enterprises with cattle, sheep, pigs, poultry or horses may need different covers or specific schedules.
• Working dogs — Many farm policies include working dogs as a separate item. Check whether your dogs are listed and whether veterinary costs are covered.

Crop

• Hail cover — The most accessible crop cover for most grain and horticultural crops. Should be arranged before sowing and before any damage occurs.
• Perils covered — Does the policy cover hail only, or are fire, storm and frost also included?
• Sum insured per hectare — Does the insured value reflect expected yield at realistic prices? A value set two years ago may not reflect current commodity prices or input costs.

Income and personal

• Business interruption — If a major loss (fire, flood) prevented farming operations for an extended period, what would the financial impact be? Business interruption cover for farms typically responds to physical damage from an insured event.
• Income protection — For sole operators or working principals, injury or serious illness can stop the business. Personal income protection is separate from the farm policy and should be considered alongside it.

A note on underinsurance

The single most common issue in farm insurance claims is underinsurance — sums insured that were set some years ago and haven’t kept pace with replacement cost increases. A partial loss can be affected by averaging clauses that reduce the claim payout proportionally. A full reinstatement review every two to three years — or whenever significant new assets are acquired — is worth the time.

If you’d like to review your farm insurance program, contact WebInsure. We work with specialist rural underwriters and can help you identify gaps and ensure your cover reflects your current operations.

This post provides general information only and does not constitute personal advice. Cover availability, terms, exclusions and premiums vary by insurer, product and individual circumstance. Always review the Product Disclosure Statement and confirm suitability before making a decision.

WebInsure Pty Ltd ABN 32 054 247 666 is an Authorised Representative 000271148 of Community Broker Network Pty Ltd ABN 60 096 916 184 AFSL 233750.