Insurance: Know your risks to know your options
After a summer of bushfires, cyclones, and flooding, many horticultural growers are no doubt taking a closer look at their insurance renewals.
As such a significant business expense, it’s important to ensure your level of insurance matches your business risks.
Growcom’s Farm Business Resilience Program was recently joined by WFI Insurance and the Queensland Farmers’ Federation (QFF) to talk ‘insurance’ and understanding this significant tool growers use to protect their livelihoods.
The key messages for growers:
Regularly reviewing your business, assets, and cover is vital to minimise the risk of underinsurance. Underinsurance is when your sum insured is less than the actual cost of rebuilding, repairing, or replacing the items you have insured. There are a couple of angles from which you may approach this. You may choose a particular time to regularly review your property, assets, and cover. For example, annually in line with your insurance renewal. You may also review your cover when you purchase a new asset or expand your business. Keeping your sum insured up-to-date means there is less chance of a financial shortfall should it come time to claim.
Approach discussions with your existing or new insurance provider with as much information about what you’re looking to insure, and don’t be afraid to ask questions. As a result of the Financial Services Royal Commission, general insurers need clients to raise the types of assets they’re looking to cover. So, growers should keep a comprehensive list of everything they may want covered, and if it’s not possible to be covered in a particular instance, bodies like the Insurance Council of Australia or the National Insurance Brokers of Australia may be able to point you in the right direction.
Sometimes, the types of risk you face mean other insurance products may better suit your needs than traditional insurance products. QFF introduced us to parametric insurance, which may be useful in horticulture for growers who face specific risk of cyclones, flooding and inundation, drought, or frost, for example. A payout would be triggered through the occurrence of a specific weather event, like a Category Three Cyclone, or a particular temperature threshold being reached at your property. A verified third party, like the Bureau of Meteorology, determines if the parameter has been reached.
In short, to minimise the risks to your businesses from an insurance perspective, it’s important to look closely at your renewal notice, keep tabs on how the value of your property and assets have changed, and incorporate new assets or business expansion into conversations with your provider.
Depending on your circumstances and the weather-related risks you face, other types of insurance products—like parametric insurance—may be worth considering.
Start a conversation with one of our Farm Business Resilience Facilitators to find out how to build a more resilient future for your agribusiness today: www.growcom.com.au/fbrp
Disclaimer: The information provided in this article is general advice only and does not take into account your individual objectives, financial situation, or needs. You should consider your personal circumstances and review Product Disclosure Statements before purchasing a product.
