Insurance can keep your farm working - even if you can’t
What role does insurance play in the operation of your farm business?
Your barn, house and car are likely protected against fire or accidents, but are your crops protected against severe weather events or disease?
Crop insurance can add some predictability to a farmer’s unpredictable life. Adverse weather, disease, and insect infestation – all can have a serious impact on production and income.
Health and disability insurance are essential tools to help protect you and your farm business.
And what about you? You may have personal health insurance, but are you protected against extreme circumstances like serious accidents or health events?
The jobs that need to be done daily on the farm don’t stop, even if you are injured or critically ill. According to the OmbudService for Life and Health Insurance, a national independent alternative dispute resolution public service, an average of one in three people will be disabled for 90 days or more at least once before they reach age 65. Disability and critical illness insurance ensure the farm keeps operating even if you’ve had a serious accident or health event.
Different types of insurance on the farm, for your crops and you, are essential tools to help protect your business and keep the operation running, even when a crisis hits.
Crop insurance
Hail: One of the leading risks to crops on the Canadian Prairies, no other kind of crop disaster produces such a sudden and devastating impact, says the Canadian Crop Hail Association.
It’s also an insurance that’s highly tempting to opt out of since being hit by hail is purely by chance. However, purchasing enough coverage to cover costs and take a deductible to maximize dollars is possible. CCHA recommends producers purchase coverage early since, like many insurance policies, coverage may not be possible after the storm has hit.
Be prepared: The field data required for crop insurance can be time-consuming, but computer programs like AgExpert Field Premium record data and can generate reports for seeded areas, harvest production and stored inventory, which can greatly ease the bookkeeping and paperwork involved with purchasing insurance.
Health insurance
Personal insurance: Scott Moffatt is the chief business development officer for the Edge Benefits and a member of the Co-operators Group. He says a personal disability policy can replace as much as 85% of earnings from all sources.
While there are options for short-term coverage, he recommends a long-term policy since it provides coverage until after age 70.
Across the country, a doctor’s assessment and a note stating an inability to work are required to qualify for a payout. You must also remain off work for the duration of the payout.
Corporate insurance: When the farm corporation is insured in Canada, the door opens to more coverage options, such as business overhead disability insurance that covers employee wages, land rent, utilities, equipment lease payments, scheduled loan payments and interest on a line of credit (premiums might be tax-deductible as a business expense).
Moffatt says corporate policies typically last for two years, at which point the farmer will need to purchase again.
Critical illness protection: These policies payout in a lump sum and have several conditions around them. They cover the most common types of serious illnesses: cancer, heart attack and stroke.
Managing risk
Moffatt points out that, generally, farmers are risk-takers and confident around the farm. Farmers also tend to keep a close eye on expenses. Those factors combine to make crop and health insurance policies an expense that may be easy to overlook. However, the expenses arising from an uninsured crisis could quickly outspend the cost of basic insurance coverage.
A licensed advisor can consult and help find the best plan for your farm and personal situation, answering questions before you purchase the policy. The advisor should understand your farm operation so they can properly assess your needs.
Additional resources
Business Insurance
Insurance basics (change to your province at the top right corner of the screen)
Policy checklist (change to your province at the top right corner of the screen)
Disability insurance
Article by: Craig Lester
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