Insurance Checkup Can Help Protect Against Higher Building Costs

Like many inputs for production, building material costs have also seen significant increases over the last few years. Dan Nyberg, sales trainer for Morton Buildings, recommends that farmers check their insurance coverage to make sure it will be adequate to repair or replace a damaged building.

“Farmers have a lot of things to manage on their operations throughout the season, and, as a result, many may not have kept track of the insured value of their farm buildings to determine if they will be sufficiently covered for a significant loss. One farmer I know recently lost the roof of his farm shop in a storm. The total, with today’s higher material costs to replace the trusses roof and ceiling, exceeded the total insurance assessment value of the entire building 15 years ago.”

Nyberg says farmers have several considerations they should discuss with their insurance agent.

“Ask your agent about the total construction cost of comparable farm buildings which they have recently insured. This will provide a good idea of what level of insurance you need. Now, if your insurance is for replacement costs, find out if there’s a deduction for depreciation. If so, a resulting settlement could be inadequate to replace a damaged or destroyed building. Be sure to include the value of any specialized equipment or finishes the building may include, such as a jib crane, special electric wiring for equipment, or a wash bay. And farmers take risks every day. Some may choose to under-insure to save on insurance premium costs, figuring they can apply those savings to help cover any future loss. But carefully consider whether your operation can absorb that potential cost.”

Farmers face many more insurance risks than a typical residential homeowner.

“Farmers not only have to protect their home but also other structures on the operation, including grain bins, farm shop, equipment storage, perhaps a separate office, as well as their equipment. So, we recommend they contact their insurance agent to determine if any policy adjustments are needed to make sure they are protected in case of a future loss.”

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