Farm Insurance

[sumdumguy]

We are revisiting our farm/vehicle insurance coverage as we have been getting blanket invoices that continuously escalate. So we had our insurance agent stop out at the farm first week in January, we asked for a listing of policies and charges, still have not gotten a break-out. Farm house apparently costs 4x what city house costs/approximately same value and coverage. Do others get individual policies for each building? For years now, we just pay the big bill but really haven’t gotten an itemized break out. It’s just called farm package, is this normal?

[rumrocks]

I've found over the years the only time they bring out a detailed document is when they are explaining why you are in a non claim position.

[blackpowder]

Seems one has always been responsible for his own annual reviews.
Local agency bought last by a large one.
Staff know zip re ag. Agency is multi company broker. Underwriter getting increasingly remote and petty. Multi page report to add a driver just for a few days. Constant mistakes with machinery additions and deletions.
After 2 generations am switching underwriters. Agency is a one company only dealer. Staff know a bushel from a peck. New drivers just text a photo of license. More options with buildings.
Time will tell as far as service and annual reviews. For today, vehicle coverage half. Dunno. But I had enough of the hassle at the old agency.
One thing, with the increase in replacement cost of buildings. Make sure the premium your paying is doing anything. $50k coverage with $5k deductible on a 50 year old building worth $150k to replace will get you a net check of ~$10k under total loss.
I suspect many farms have underinsured items lately and thats paying premium for a value % that will be deducted from your payout.
Increasing the can't farm without buildings and dropping some others. Older, smaller hopper bins off.
House coverage a little better too.

[Taiga]

The only insurance I have is on vehicles as required to legally be on the road, otherwise self insured, always seemed like a waste of money. The insurance industry is massive and bloated.

[blackpowder]

Interesting. Taiga owns no modern machinery or is independently wealthy.
Wiseguy is a bachelor with no family or capital gains concerns.
Farmers always fascinate me with how quickly they disclose their financial status.

[jamesb]

We seem to go over the farm insurance pretty well every year now in detail. Insurance is very expensive and getting worse. A good agent is imperative. Its been said lots of farms have there deductible way too low, those lower cost loses we need to eat and be ready for the large hits. I have been looking at the different companies too and it seems that its not always greener on the other side of the fence. For every guy happy with their company its easy to find ones feeling wronged. I will keep looking over the fence for somebody better

[shtferbrains]

Long ago read something that said 65% of insurance money was spent on selling policies and administration and 35% goes into the mutual pool to pay claims. May be off slightly on those numbers but the point is the insurance industry in not at all efficient.
Suggested at that chance for ROE only insure what you cant afford to replace if you have a disaster like James says above.
Not saying don't buy insurance but don't try insuring everything you own.
I cant afford to replace my house but if my barn burnt down I would only be slightly inconvenienced as I don't really use it anymore.
I can buy my own eyeglasses out of pocket.

[fjlip]

Quonset 42 years old, insured all the time. Collapsed under snow load Feb 4.

SGI Premium Z4, coverage, paid maybe $12,000 in total premiums, $56,000 paid out last week.

Plus cleanup cost, estimated $5000.

$500 was deductible. Yes Check to be 80% plus on depreciated value on all items listed.

[AlbertaFarmer5]

Quonset 42 years old, insured all the time. Collapsed under snow load Feb 4.

SGI Premium Z4, coverage, paid maybe $12,000 in total premiums, $56,000 paid out last week.

Plus cleanup cost, estimated $5000.

$500 was deductible. Yes Check to be 80% plus on depreciated value on all items listed.

Yes, but would losing this quonset have been an economic setback that your farm could not have recovered from without insurance? If you had invested the cumulative $12,000 over 42 years into your own operation, would you be any further ahead?

I understand many are in a position where the loss of their fully financed house, car, boat, combine, shop etc. without insurance would be a disaster leading to bankruptcy. And the burden of insurance costs is a necessity. I doubt you are in that position.

I'm with Taiga, we insure exactly those items that are required by law, motor vehicles.
And for the last 2 years we did join crop insurance, lured in by the drop in rates. After arguing with the bank (successfully)for years that we wouldn't do it due to the pitiful beginning yield rates for our area. Will have to decide if this is still a paying proposition with the increase this year.

[Partners]

Insurance is a tax deduction.
What's the actual cost?
His shed might have collapsed 41 yrs ago.

[fjlip]

Assumed 5% and $300 premium over 42 years.



41 years ago insured for $10000 max.

Rarely pays much if any. Every situation is different.

If house and contents goes up in smoke, SGI says $911,000. $2124 premium last year.

That seems no brainer.

[blackpowder]

$35/sq ft to rebuild cold storage.
Or do as if you had never built it if lost.
If you have a shop, would you do without it?
Individual decision sure.
I learned a long time ago if you can't afford the big hit every x years, you better pay the little one.
I've seen operations flushed over the wrong decision for the right reasons.
Catch 22 if you're poor. Most here aren't.

[foragefarmer]

Yes, but would losing this quonset have been an economic setback that your farm could not have recovered from without insurance? If you had invested the cumulative $12,000 over 42 years into your own operation, would you be any further ahead?

I understand many are in a position where the loss of their fully financed house, car, boat, combine, shop etc. without insurance would be a disaster leading to bankruptcy. And the burden of insurance costs is a necessity. I doubt you are in that position.

I'm with Taiga, we insure exactly those items that are required by law, motor vehicles.
And for the last 2 years we did join crop insurance, lured in by the drop in rates. After arguing with the bank (successfully)for years that we wouldn't do it due to the pitiful beginning yield rates for our area. Will have to decide if this is still a paying proposition with the increase this year.

The reinvestment question you asked isn't the same answer you gave Tweety regarding time value of money you've lost storing grain for years upon years and then not selling last spring when there were record prices.

With the price of new and good used equipment, insurance is a must. Balers and tractors along with combines burn down every season.

The cost of building any type of storage shed or shop is through the roof.

AB5, is the condition of your machinery and out building not worth having insurance on?

Your coming across as being penny wise and dollar foolish way to often.

[TOM4CWB]

Insurance is the cost of doing business.

We may be ‘over insured’…. But

Only claim if a major issue… problems under $10K are ours to fix ourselves.

Total loss claims are when insurance is required.

Otherwise suck it up and fix it like any other breakdowns.

Cheers

[AlbertaFarmer5]

The reinvestment question you asked isn't the same answer you gave Tweety regarding time value of money you've lost storing grain for years upon years and then not selling last spring when there were record prices.

With the price of new and good used equipment, insurance is a must. Balers and tractors along with combines burn down every season.

The cost of building any type of storage shed or shop is through the roof.

AB5, is the condition of your machinery and out building not worth having insurance on?

Your coming across as being penny wise and dollar foolish way to often.

I do appreciate you looking out for my well being. But I might point out the irony of offering financial advice to someone who is in a position to self insure, and store grain for multiple years.

Do you believe that after all overhead and administration costs, the insurance company can invest your premiums and make a better return than you yourself could do by investing it in your own business?

We had an MFWD tractor burn during seeding a few years ago. Found the nearest comparable tractor for sale and bought it outright, was back in the field within half a day. After seeding I bought a used cab and cosmetic parts, replaced a lot of hydraulic hoses and wiring. Have put out multiple small combine fires( and even started one as a last resort to unplug a combine, it worked), and one baler fire.
We have 3 residences, none have ever had mortgages, so if one burns down, we won't be homeless, or destitute.
And yes, most of our equipment and buildings are not worth having insurance on. The only modern major equipment are the combines at 11 and 17 years old. The 4wd seeding tractor is 45 yrs old. I'm currently repairing the tractor that we put the most hours on every year. I paid $1000 for it in "inoperable" state ~10 years ago. Does all the spraying ( 130 foot), does most of the swing auger and grain vac work, all the baling, fertilizer spreading, some harrowing etc. And I have two more identical tractors as back up. I think we will recover from the financial hit if it falls off a cliff tomorrow uninsured.

You never did respond to the thread about storing grain, yet you brought it up again. And neither did tweety when I asked what investment he/she found that did better than double in value in that time? As I said, I messed up, and I regret not selling even more when the price was 2.5 times what it was worth when it went in the bins(the price which was available for only a few days). but in the end, the stored grain all sold for at least double what it was worth when it went in the bins. So I'll ask again, what did you invest in that had a better return than that? If you had an ROI of better than that, you most definitely beat the insurance companies returns on your premiums, and should consider self insuring for yourself.