End of Year Renewal Checks
Factors from fluctuating trade, to the adoption of new technology and changing farming practices, can all leave farm businesses open to risk, by failing to align these adjustments with suitable insurance cover.
With many farm policies due for renewal at this time of the year, now is the time for a thorough review to make sure sums insured are accurate, and policies cover current and planned activities.
Defra figures from 2024 estimate that 71% of farming businesses in England operated some form of diversified activity in 2023/24, showing a gradual increase of 10 percentage points from 2014/15*. With no signs of that increase stalling, independent insurance brokers are stressing the importance of a full review of all activities before renewing farm and associated insurance policies.
“Across our own books, we know that around 75% of the farms we work with operate some form of diversification venture,” explains Georgie Spencer, director at Acres Insurance Brokers.
“As this mirrors that national picture, our concern is how many in the wider community are failing to fully review their insurance policies, leaving farmers open to the risk that the original purpose of their policy, no longer suits their business needs,” she adds.
“There is a very real risk of being under-insured, but conversely, paying premiums for activities or equipment no longer relevant to the farm business or diversification project.
“Ideally, we would say, speak to us first before embarking on any new project, and we can tell you what the insurers will need you to do,” she adds.
Aside from farm diversification, existing farm activities evolve, and values fluctuate across the year, so again Ms Spencer advises the policy holder to involve a broker, to ensure they understand their cover, and that sums insured are accurate.
“There are always changes in the market, for example recently we have seen good prices for cattle and sheep, while arable prices have been tight, and this is a standard trend for farming, and will impact on accurate sums insured.
“It should therefore be standard practice to review these figures, as well as incorporating any new activities, machinery and even buildings into policies, for example,” she says.
“All too often we hear of instances where farmers have resisted the opportunity of a review, insisting they have fully evaluated everything, and then when a review is finally undertaken, they find they are hugely under-insured, have gaps or simply don’t have cover for new buildings or activities.
“It can be catastrophic if that farm business is reliant on making a claim on that policy, before it is reviewed and updated,” she adds.
Ms Spencer therefore recommends that insurance brokers visit all holdings and relevant sites linked to the policy, so that a clear picture of the business can be drawn up.
“It is vital that the person dealing with your company’s insurance policy has a detailed understanding of your business and any potential changes that may have happened, or could happen over the next year,” she explains.
“Equally, the key is to never just accept a reviewed premium and policy. It is imperative that a thorough review of what is covered and, perhaps more importantly, what is not covered, is completed,” she adds.
While in many cases a simple amendment or extension to an existing policy may be sufficient, in some cases separate policies may be required. One area in particular Ms Spencer highlights, is the increasing trend towards higher court awards for personal injury cases, pertinent for both farm and diversification businesses and activities.
“Public liability cover is a key element of all farming and business insurance policies and should always meet or exceed £10m. Having received claims where court awards for personal injury reached almost £20m, farmers and rural business owners should always check this element of each update and renewal,” she says.
In an ever-challenging business environment, according to Ms Spencer, getting insurance right is one area the farmer can directly influence, protecting themselves against potential risks by working with an independent insurance broker to support their interests.
“Encouraging regular reviews and site visits, and speaking to an insurance adviser fully conversant with your individual business operation, will not only help identify potential risks, but also ensure you have the cover in place proportionate for your operation,” concludes Ms Spencer.
