Are You Covered?

With today’s competitive agribusiness environment, increasing pressure on production, efficiency and margins can easily push insurance considerations to the background.

Many in leadership and management assume their agent has all the information needed to develop a policy that will adequately cover their business and assets, but unfortunately, any shortcomings won’t become apparent until it’s too late.

To avoid a devastating financial burden as a result of being underinsured, risk management and property/casualty experts advise managers not to reserve the annual policy renewal procedure as the only time a year to evaluate your coverage. Just as your business is changing and expanding over time, so are your insurance needs.

Additionally, new insurance products developed to reduce exposure to modern threats, such as cyber crime and terrorism, are available that you may not even be aware of. Use the following tips to guide the next conversation with your agent and gain peace of mind that your company is fully covered in case of an accident or emergency.

Beyond basics

According to Steven Simmons, risk management manager for Nationwide Agribusiness of Columbus, OH, there are up to five policies essential to any agribusiness, including:

• Comprehensive Agribusiness Property Policy: Covers real property (e.g. buildings, structures), business personal property, mobile equipment (forklifts), stock, earnings and extra expenses
• General liability: Defends and/or indemnifies for your negligence in which property of others or injuries sustained by people for events occurring from your premises, your operation or your product.
• Workers’ compensation: Covers your employees’, medical bills, disabilities and wages if they get injured in the scope of their employment
• Auto Policy: Covers you for your liability which caused bodily injury to someone and/or damaged property of others. You may purchase additional insurance for physical damages to your vehicles.
• Umbrella Policy: One policy which provides additional liability coverage for your auto, general and employers liability policies.

Nationwide’s Chuck Hammond also notes the importance of a good contingency plan, especially with feed companies that may have one main customer.

“In case of a recall, a natural disaster or an accident, the facility may be unable to operate and fulfill their customer’s needs,” says Hammond. “A contingency plan could include paying for another company to make the feed and address other expenses that could help retain major customers .”

One newer coverage option that is often overlooked is cyber liability, according to Dick Anderson, property/casualty products and client service manager for Ag States Group, Inver Grove Heights, MN.

“It covers if someone hacks into a computer system and accesses personal or financial records, which is getting to be a concern for industry and the government,” says Anderson. “We hear about cyber attacks daily.”

Anderson notes that general liability coverage usually excludes losses from cyber crime, so if this is a concern, it must be covered separately.

Examples of other exposures that may be excluded from other policies are foreign liability for companies that export products overseas and species mortality for firms involved in livestock.

Finally, product recall insurance is another policy that feed companies should consider. Recalls can take a devastating toll on any company and are usually excluded under the essential insurance policies listed above. Since the Food Safety Modernization Act now gives the FDA the power to mandate feed recalls due to adulterated or misbranded product, Anderson predicts this type of coverage will increase in popularity and usefulness.

“Product recall insurance might be a good idea for a client who has product that could be contaminated and would be forced to be recalled due to a government or regulatory ruling,” states Anderson. “It’s also getting more expensive because of the peanut butter, pet food and other recalls due to salmonella, but the value is high for companies that need it.”