CARTHAGE, MO. (RFD-TV) — Rising prices for agricultural equipment, buildings, and cattle are making it increasingly important for farmers and ranchers to review their insurance coverage and ensure their assets are adequately protected.
Jacob Steph with Specialty Risk Insurance joined Market Day Report to discuss common coverage concerns, the difference between equipment insurance options, and why rebuilding costs should guide property coverage.
Underinsurance Is a Major Risk
In his interview with RFD-TV, Steph said one of the biggest risks facing producers today is being underinsured as the value of farm assets continues to increase.
Agriculture is a thin-margin business, he said, making it important for producers to work with their risk management teams to keep coverage aligned with the value of their operations.
“It’s really important to make sure that we have those assets valued where they need to be,” Steph said.
He encouraged farmers and ranchers to review their policies rather than assume existing coverage will be sufficient if equipment or property needs to be replaced.
Review Equipment Coverage Options
As farm equipment becomes more expensive, Steph said producers should understand the differences between replacement cost and actual cash value coverage, as well as the distinction between scheduling individual pieces of equipment and insuring equipment under a blanket policy.
Those options provide different types of coverage, and the appropriate choice depends on the equipment and the producer’s needs.
Steph said some equipment may be suitable for less expensive coverage, while other assets may warrant additional protection.
He recommended working closely with an insurance or risk management professional to determine which coverage best fits the operation.
Building Coverage Should Reflect Today’s Costs
Barns, shops and other outbuildings are another area where insurance coverage can fall behind rising costs.
Steph said producers should consider what it would cost to rebuild a structure today, rather than basing coverage solely on its original construction cost.
He offered the example of a barn that cost $30,000 to build in the 1990s but could cost approximately $120,000 to replace today.
“It’s important to think about not insuring for what you have in it, but insuring for what it would cost to replace today,” Steph said.
He also encouraged landowners to consider how they would rebuild if multiple structures were damaged or destroyed. An operation might choose to replace several smaller buildings with one larger structure, which can affect its rebuilding needs.
Regularly reviewing property values can help reduce the risk of an unexpected shortfall when filing a claim.
Higher Cattle Values Change Livestock Coverage
Rising cattle values are also affecting insurance decisions for livestock producers.
Steph said his company has increased insured values on pasture-related policies and has seen greater interest in full mortality insurance for bulls.
That coverage was more commonly associated with high-value show livestock in the past, he said, but higher bull prices have prompted more producers to insure their animals against mortality.
Steph said keeping coverage aligned with current livestock values is an important part of protecting producers’ investments.
LEARN MORE: specialtyrisk.ag
