Insuring large items of farm machinery / equipment
Over the last year new combine and tractor sales have been at record levels as farmers took the opportunity to re-equip following better crop prices in 2007/08. Sadly such prices are now a distant memory but there is plenty of optimism for the better prices from 2009 onwards.
Investing in large tractors, self propelled sprayers and combines is an increasingly costly business with many machines now arriving on farms at values between £100,000 and £250,000. The cost of comprehensive insurance on such items can be quite high. A combine valued at £250,000 will carry a premium of between £2500 and £3000 per year with many insurers. This will be insured on a tractor policy that often stands alone from the rest of the farm insurance and little notice of the degree of risk is taken by the insurer. The price comes out of a book and that is it!
We, at Farmers & Mercantile, have worked with a number of major insurers to convince them that the risk on a £250,000 combine is little different to that of an £80,000 combine. Both machines probably do similar hours per season and the more expensive one will certainly be driven by a trained and experienced operator. Therefore we will insure the combine as part of a package covering the whole farm business - cars, commercial vehicles, other agriculture vehicles and even houses. If the level of claims over the previous few years has been low relative to premiums we will probably be charging around £1400 - £1750 per year for the £250,000 combine. The premium is not taken straight out of a book; it is based on a number of factors, one of which is the standard of management on a farm and its previous claims history.
Insurance is not a cheap fixed cost for large self propelled machines but it is one that needs some scrutiny. We will not insure such machines in isolation but only as an overall package to ensure the best cover at the most economic level of premium for the whole business.
Tractor insurance example:
We were recently contacted by a farmer who had purchased a new John Deere 7530 (190HP) tractor at a value of £60,000. He was insured via a non specialist farm broker who quoted him an annual premium for comprehensive cover of £900. Alarmed by this figure he rang a major farming insurer who insured the reactor in isolation for £600. The farmer mentioned this to a neighbour who referred him to Farmers & Mercantile. When his insurances were due for renewal F&M provided a quote for all of his insurances as a package on one policy. This gave him a saving of around 16% against his current insurers but with wider cover. Our premium for the John Deere 7530 tractor was £365. This saving was possible because we insured all items on one policy and the fact that the client had only had one claim for £4,000 within the last 3 years.
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Farm Insurance: Arable Farming, Farm Diversification, Livestock Farming, Mixed Farm