Farming Talk: Farmers urged to check over insurance deals

Farmers and landowners should review their insurance policies and consider cover which provides alternative livestock housing or commodity storage in the event of a loss of building.

After two awful winters which saw the destruction of countless buildings and subsequent rising insurance premiums, it is more important than ever for landowners to ensure they have appropriate coverage.

The atrocious winters of 2009/10 and 2010/11 continue to hurt estate owners and farmers where it hurts the most: the wallet. Rural insurers said 2010 would go down in history as the worst year on record for cold weather claims and it is more than likely that the insurance premiums of those who claimed in the last two years will have risen substantially.

It is essential to review your current insurance policy and make sure you are getting the best deal. Landowners and farmers should consider whether to 'go out to tender' for insurance needs, particularly sensible if the policy has not been reviewed for more than five years. The tendering process can take two to three months so it is important to think ahead.

Additionally, landowners should consider business interruption insurance, or business income insurance, which provides alternative livestock housing or commodity storage in the event of building loss.

This is not provided for in most standard insurance policies and, should a building be destroyed or damaged, farmers and landowners may have to pay for hired storage or production facilities which could quickly become very expensive.

In contrast, business interruption insurance can keep sufficient income flowing into the farm to enable it to survive while the building is out of action. It is designed to put the business in the same financial position that it would have been, had no loss occurred.

It can be difficult to decide on the best course of action so it is worth taking advice.

Catherine Addison is Land Agent with land agency Strutt & Parker LLP of Shrewsbury