Farm insurance: How is farm machinery covered?

When it comes to farm machinery, there might be several different ways it can be covered under farm insurance. See what options are out there.

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THE recent bushfire season may have prompted many farmers to review insurance coverage, either because of a direct property loss or the experience of a friend or neighbour who lost sheds, buildings, fences or farm equipment.

When it comes to farm machinery, there might be several different ways it can be covered under farm insurance. Elders Insurance says road-registered farm vehicles, such as tractors, can be insured directly – the same as any other vehicle – for comprehensive or third-party coverage.

This covers the vehicle when travelling between farms or paddocks, as well as during on-farm work.

However, Elders says tractors can also be insured as part of a larger farm policy, either as defined event coverage in which an item of property is listed specifically in a policy, or it can be included under a structured miscellaneous clause where items do not have to be individually listed or named.

It is important for farmers to understand what their coverage includes. If a structure such as a farm shed is insured up to a certain value in the event of storm or fire damage, the contents of the shed might not always be automatically covered or the value might be inadequate to repair or replace the machinery.

And while a tractor might be covered for general farm work, it might not be covered in some harvesting work or what could be deemed high-risk farm activities such as when burning stubble, unless the insurer has been notified in advance.

Transit insurance might also need to be specified in advance, even when transport is arranged through a specialist operator.

Equally, the coverage of non-standard accessories or features of the tractor might need to be listed in a policy to ensure it is properly covered and an implement or accessory can be restored fully in the event of a crash or breakage. If a low-hanging branch knocks off a precision navigation beacon or smashes the tinted glass in the cabin, the farmer will want to know it can be quickly replaced and fully covered.

Separately, Lori Vamvas, southern Australian regional manager for the Dutch insurer Achmea, reckons farmers should also perform annual insurance reviews to make sure there are no gaps in coverage and to prevent a farm operation from being exposed to too much risk.

Achmea says the bushfires have reinforced the importance of adequate and up-to-date insurance.

One thing Achmea recommends is that a review should take into account all new plant and machinery, as well as building upgrades and modifications.

Insurers also recommend machinery paperwork be kept up to date and accessible, including service history, registration, purchase history and warranty information.