Estimated reading time: 4 minutes
Farming is risky. While most of us accept this as part of the profession, it doesn’t have to be. When we look at any industry, especially farming enterprises, there are numerous ways to reduce, prevent, and manage risk effectively. With the right approach, it is possible to protect both your livelihood and your operation without excessive cost.
No one-size-fits-all approach
So where do you start? No two farms, or producers, are the same. Each operation faces unique risks and circumstances, which means a one-size-fits-all solution does not work. That said, there are a few foundational principles and concepts you can apply and adapt to your specific situation. This is where professional guidance becomes essential. A qualified and experienced broker can help structure an insurance solution tailored to your needs and give you the ability to compare available options.
The first step is understanding your own environment – what you own, how it is used, and where the risks lie. A well-structured agricultural policy distinguishes between your personal life, your farming operation, and any additional business interests. These may include properties, town-based businesses, holiday rentals, and so forth. The legal structure of these assets matters, as ownership and liability play a crucial role in determining appropriate cover.
Your personal assets and liabilities are unique to you and your family. These include household contents, personal vehicles, sporting equipment, and even items like your child’s belongings at university. Risks such as damage to your home’s water supply system or personal liability – like a guest being injured on your property – also fall into this category.
Next is your farming operation. Here, it’s important to identify the core components that keep your business running. Consider what you cannot operate without. A maize producer, for example, relies on machinery like tractors, while a sheep producer depends on livestock, shearing facilities, and related equipment. Understanding these dependencies helps prioritise what needs the most protection.
The third category comprises assets not directly tied to your farming activities or personal life. These could be investment properties or assets in other locations. While they may not impact your day-to-day operations, they represent substantial financial value and should be adequately insured.
Assess your risk
Once you’ve categorised your assets, the next step is to assess your risks. What are your biggest concerns? What events are most likely to occur? Insurers tend to evaluate risk by considering the type of asset and the type of peril. For instance, assets can be grouped into categories such as livestock, machinery, buildings, and contents. From there, you can determine which perils, such as fire consuming your hay shed, theft of your vehicle, or flooding of your house, are most relevant to each category.
Given the many possible scenarios, it is easy to overlook critical details. This reinforces the importance of working with a professional who can guide you through the process.
Many insurance policies may appear generic, but the details matter. Pay close attention to aspects such as excess amounts (the portion you’ll need to pay in the event of a claim) and any limitations on cover for certain items. This can affect your financial exposure if something goes wrong.
It is also worth exploring alternatives to traditional insurance cover. A notable example is the National Wool Growers’ Association’s disaster cover for small stock, in which the commodity organisation helped develop a tailored, purpose-built solution for small-stock producers.
Ultimately, insurance is a vital tool for managing loss and damage. Like any tool, its effectiveness depends on how it is used. Work with a knowledgeable broker and an insurer who understands agriculture. Most importantly, ensure they take the time to understand your unique circumstances so they can help you build a solution that truly fits your farm. – Andries Wiese, head of agriculture, Hollard
Unique cover structures are available for members of the National Wool Growers’ Association. Learn more at www.nwga.co.za/hollard-insurance-risk-cover/ or email andriesw@hollard.co.za
