Farm Machinery Insurance & Pricing

Key Coverages for Your Farm Machinery Insurance Policy

Your farm’s machinery and equipment are a significant investment, and protecting them requires more than a simple, broad-stroke policy. A comprehensive farm machinery insurance plan is designed to shield these assets from a variety of unexpected perils. It’s crucial to understand what is typically covered, as well as important endorsements that can fill potential gaps.

What Perils are Covered?

A standard farm machinery policy typically provides protection against a wide range of common perils, including:

• Fire: Damage from a fire that starts in your barn, a workshop, or in the field.
• Theft: The complete theft of machinery (e.g. a tractor or combine) or valuable parts, such as GPS units and other precision technology.
• Windstorm & Hail: Damage caused by severe weather, which is a common risk in Ohio.
• Vandalism: Malicious damage to your equipment on your property.
• Collision: Damage to machinery while it’s being operated on your land.
• Overturn: Coverage for a tractor or other piece of equipment that tips over.

Actual Cash Value (ACV) vs. Replacement Cost (RC)

Another critical decision is how your losses will be paid out.

Actual Cash Value (ACV): This pays out based on the item’s depreciated value at the time of the loss. It is the more affordable option but may not provide enough to replace the equipment with a new model.

Replacement Cost (RC): This pays out the full cost to replace the item with a new one of similar kind and quality without subtracting for depreciation. It is a more expensive option but offers far greater financial protection, ensuring you can get back to business quickly after a loss.

Farm Machinery Insurance Pricing Examples

There is a lot of variety when it comes to farm machinery. There are so many important items. It can be difficult to gauge an average for pricing farm machinery insurance on a schedule basis simply because there are so many different variables. See below for some specific examples of pricing for farm equipment insurance coverage.

• For $1,500,000 blanket coverage for farm machinery, you might be paying $4,600 per year in premium. In this example, per every $1,000 of coverage, you pay $3.06.
• For additional, optional coverage like loss of use, you might expect an additional $250/year on top of your existing farm machinery insurance premiums.

It’s worth noting that the cost to insure your farm machinery and equipment is negligible next to the overall cost it would take to fully replace your farm machinery and equipment if something disastrous were to occur, such as a barn fire, lightning strike, or gas explosion. These items are invaluable to your farm’s operations, so it’s always better to have protection than not.

Understanding Coverage Options: Blanket vs. Scheduled

When you apply for a policy, you will need to determine how your equipment is insured. You have two primary options, which can often be used in combination:

• Blanket Coverage: Typically the most viable option for most of the machinery on your farm. Most insurers will recommend blanket coverage, which covers all items that are deemed insurable property. These items do not need to be listed on any kind of schedule to have coverage. All the items that are insurable under the blanket have up until a maximum amount of coverage, regardless of how many claims are made over the policy period.
• Scheduled Coverage: Covers items that are listed in a “schedule” on your policy or on file with your insurer. Anything that is not listed on this schedule will not be covered. In some cases, an insurer may recommend a combination of blanket and scheduled coverage. Specific items, such as combines, would have scheduled coverage and a reduced amount of blanket coverage for unscheduled items. This may be a more reasonable option for some farmers, as it reduces costs while ensuring that all your valuable farm equipment and machinery have insurance.

Like with any insurance policy, your farm equipment insurance coverage or farm machinery insurance will vary in price depending on several factors. You may not be paying the same amount as the next farmer for their machinery and tools. It all depends on the overall value for which you have your items insured. Note that while it isn’t mandatory for most machinery and equipment on your farm to carry insurance, you may want to discuss the benefits of this coverage with an agent. Keep in mind, if you are renting the equipment, the owner may require coverage. Here are examples of insurable farm machinery and equipment:

• Combines
• Plows
• Drills
• Cultipackers
• Applicators
• Planters
• Harrows
• Balers
• Wagons
• Carts
• Excavators
• Sprayers
• Mowers
• Seed tenders

Machinery on your farm may be insured in two different ways, or in a combination of the two: blanket coverage or scheduled coverage. Here are the differences between them:

Overall Value

When you apply for a policy, you will need to provide an accurate assessment of all the equipment, tools, and machinery you will want to have insured. You may wish to include the important details of each item, including the following:

• Age
• Make
• Model
• Serial number
• Coverage limit (based on the value of the piece)

Remember that the limit is the total amount that your insurance carrier will pay out if that item is damaged beyond repair or lost entirely. Your losses may be paid out either on a replacement cost basis (the better but more expensive coverage option, which subtracts the depreciation of the object) or actual cash value (which pays out for the item based on its current depreciated value.)

Proactive Risk Mitigation Strategies

While insurance provides a vital safety net, a strong risk mitigation plan is the best way to prevent claims and potentially lower your premiums.

• Implement a Rigorous Maintenance Schedule: Regularly service and inspect all your farm equipment. Well-maintained machinery is less likely to break down unexpectedly, causing a claim.
• Secure Your Assets: Store high-value equipment in a locked and secure barn or shed. This deters theft and protects against vandalism and damage from severe weather.
• Utilize Safety and Security Technology: Consider using GPS trackers on your most valuable equipment to aid in recovery in case of theft. Security cameras and motion-activated lighting in and around your storage areas can also deter criminals and provide valuable evidence.
• Enforce Safety Protocols: Ensure all operators are properly trained on the safe and proper operation of all machinery. Review best practices for loading, unloading, and working in the field.
• Manage Your Farm’s Environment: Proactively manage risks on your property. This includes maintaining fire suppression systems in barns, keeping flammable materials away from equipment, and ensuring clear access for emergency vehicles.
• Maintain Detailed Records: Keep meticulous records of all your equipment, including make, model, age, serial numbers, and maintenance history. This documentation is invaluable in the event of a claim and helps ensure a faster, more accurate payout.

By combining these proactive strategies with a comprehensive farm machinery insurance policy, you can protect your valuable assets and the future of your farming operation with confidence.

If you own any farm machinery and are looking for a comprehensive insurance policy, call Hitchings Insurance Agency at 419-423-9145 to discuss options. If it is easier, you can also complete this quick quote form to get the conversation started.