Know Risk is a community education program designed by the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) to improve our understanding of insurance and how it relates to managing the many risks we all face in life.
Guest Blog: Taming the beast: getting rural insurance right
Farming is the lifeblood of New Zealand’s economy which is why it’s so important that farmers get the right insurance cover that protects both them and their businesss. But with so much media focus on the insurance industry, the average Kiwi farmer could be forgiven for thinking that choosing the right policy is a tough and daunting task. Here to help is IAG’s Rural Underwriting Manager Jane Marsick who boasts 17 years’ experience in the insurance industry and says the process of choosing the right rural cover can be broken down into three easy steps.
1. Identify your rural insurance needs
While it’s true that insurance contracts are technical and detailed, there are some very simple principles behind identifying commercial insurance needs. Too begin with, a farmer, like any other insurance consumer, needs to address some basic questions, namely: what do I have to insure? Are these physical assets that exist on the farm; for example, a house, a barn, a building or a tractor? Next, think about what could happen to these assets. Could they burn? Could there be a flood? Or could something else happen to them? Challenge yourself as to whether you can protect your assets with your own actions; for example, carrying a fire extinguisher in the cab of the tractor. Lastly, consider where the assets are valuable enough that the best way to protect them would be to transfer the financial risk to an insurance company. If your answer is yes, then these are the assets you need to buy insurance for.
2. Choose the right product
Having decided you need insurance, the next question to answer is which kind. There are many products in the market for the farmer. The majority of farmers most commonly purchase the following cover:
- Material Damage – this covers physical assets. For example, your barn, dairy shed, tools and equipment. This policy might also be called a Business Assets policy.
- Commercial Motor Vehicle – this covers working vehicles. For your average farmer this means tractors, quad bikes and the farm ute.
- Legal Liability – this covers the farmer for property damage or personal injury arising from their day to day farm work.
There are a number of other policies available to cover agricultural needs. Some farmers will need machinery breakdown cover, others will need to protect their livestock. Some will need income protection insurance, others won’t. Deciding what to buy and what not to buy is up to individual farmers, but advice from insurance professionals will help.
3. Buy your insurance
Once you know what your insurance needs are, your next step is to purchase cover. It’s important to find an insurance company with the versatility to be able to meet your needs. For large commercial farming ventures with potentially millions of dollars worth of assets, detailed advice from a specialist insurance broker is probably the best option. For smaller farms and those with insurance needs that are more akin to lifestyle farming, a general broker may well be your best option.
Regardless of the size of your farm, getting good advice is vital to helping you find insurance that meets your needs. Whether its figuring out how to insure a pedigree bull, or what cover is best for a quad bike, make sure that the insurance advice you are given is in plain English and answers the questions you have about a product.
Jane Marsick is an ANZIIF Fellow and has worked in the insurance industry for 17 years. She is currently NZI’s Rural Insurance Manager.