Do you know what you should insure?
Have you got enough cover if you need to claim?
During the last few weeks, Belmont Regency Ltd reports an increasing number of claims which have been under insured, so the company offers farmers some extra advice and support to avoid this happening in the future.
As a result of the difficult Brexit negotiations and the strength of the pound falling, agricultural vehicle prices have increased, with some values even doubling. Second hand agricultural vehicles are becoming increasingly hard to get hold of and this has resulted in a price increase for these vehicles. We urge all of you who have agricultural vehicles to check your insurance documents and look at the values you have on these vehicles at the moment. Ring a dealer local to you and ask them for a current value on your vehicle and then adjust your insurance accordingly.
We know that times are hard for many farmers and you want to keep your costs down, but there is no point insuring a vehicle at a lower price and a lower premium, if when you claim you are unable to replace the vehicle for one of a similar value.
Bear in mind – how are you going to fund the deficit between your old vehicle and the price to purchase a new/second hand one?
Your insurance company will not pay out more than what you have insured the vehicle for, even if the current market value is more at the time of the claim.
The main short fall on farm cover is in respect of livestock. Your schedule of insurance should be reviewed at least once a year at renewal and values of livestock should be checked. If you purchase livestock throughout the year it is advisable to again check the total amount you have insured.
If on a claim you are under insured, the application of ‘Average’ could be applied to your claim. ‘Average’ is where a proportional reduction is applied in settlement of a claim.
For example, livestock insured for £750 but which actually costs £1000 to replace means that you have only insured for 75% of what it should be. Any claim pay-out would be settled on a 75% basis, which clearly could result in a financial loss for the farmer.
On a worst case scenario under insurance could be deemed as wilfull or deliberate to keep the insurance premium low and the policy may be considered ‘null and void’ and a claim could be refused.
Also we advise you to take a close look at your farm property, both farm buildings and domestic houses, check carefully what they are insured for and how much it would cost to repair or replace them, because again, under insurance could cause serious financial loss to you.
We have recently been advised of a case where a farmhouse that was insured for £265,000 suffered damage and it came to light that the rebuild cost was £900,000!!
Many insurance companies recommend that you have a sum insured of £10 million or a minimum of £5 million, to deal with any possible claims. Aviva has said that up to 90% of customers are under insured on their property insurance claims.
We know that you are very busy people and need to be working in your business – and for some this might be a minefield – but this is our business and we have a great deal of experience in this area so we are more than willing to help you.
If you would like further help on deciding whether you are under insured, please give our office a call on 01332 362367 and one of our qualified team will be more than willing to assist.