Make sure your insurance policy covers the higher value of stored feeds.
“This year it’s especially important for farm operators to have an insurance review,” according to Gary Douglas, president of Nationwide Agribusiness Insurance Co. “Unprecedented grain price fluctuations and much higher values are having a significant impact on insurance coverage needs.”
In January 2006, No. 2 yellow corn was averaging about $2/bushel. Today, corn prices are more than $5/bushel. If you haven’t adjusted your insurance values to reflect these differences, you could face a significant financial loss. A farmer with two, 10,000-bushel bins of stored grain, valued at a 2006 level, could be underinsured by as much as $60,000 if the bins were destroyed in a covered loss today.
Farm policies have a provision called “coinsurance.” It requires that property be insured to a minimum value (typically 80% of its actual value). If the coinsurance requirement has not been met, the insurance policy provides for only partial payment on the amount of a loss.
In today’s volatile markets, ask your insurance agent to review the insurance values on your inventory to be sure they are accurate and adequate.