Resource: Insurance Journal “What’s Inflating Agribusiness Insurance Costs” By: Joe Dunn, Angel Mendez & Scott W. Dunn
After reading the above cited article, it seems like the agribusiness industry is seeing increasing auto losses, along with increasing auto insurance premiums. In this article, it lists two scenarios for the causes of these increases and I will also use these scenarios for explanation.
Scenario 1: “As he does every day, a Californian farm labor contractor transports employees to and from job sites. One evening, while driving six workers home, the contractor drifts off the highway. He overcorrects, causing the van to flip several times. All six passengers, including 2 underage girls are ejected from the vehicle. Three men are pronounced dead at the scene and one of the underage girls later dies from her injuries.”
Scenario 2: “After inspecting a field to be harvested, a farm labor contractor employee stops at a bar and consumes five shots of whiskey and two 22-ounce beers in a three-hour period. He subsequently climbs into his truck and while texting, rear-ends a car stopped at a red light. A 4-year-old boy in the rear-ended car is killed instantly, while his mother and sister are injured.”
I know you are reading these scenarios and thinking these accidents could occur in any business, and this is true, but agribusiness uses “carpooling” frequently. Agribusiness also tends to be more connected to the community, so people may meet at local restaurants or bars to talk during or after the workday. In some cases it is hard to say when the workday officially ended, and when a claim goes to court, the judge could decide that since it was assumed the employee was still on the clock, the employer’s policy is responsible for any damages.
These types of losses are becoming far more common, but for businesses these losses have other consequences. Possible consequences include a higher annual premium, a company’s refusal to write the coverage, and other companies excluding drivers from the policy (leaving experienced workers unavailable). And if one company refusing to the write the coverage isn’t bad enough, depending on the severity of the losses, no company will offer to write the coverage at all. Luckily there are ways to help mediate these auto losses to show companies that you are willing to make sure it doesn’t happen again.
*Good driver selection
*Drug and alcohol testing
*Vehicle inspection and maintenance
*Accident response and investigation procedures
*Post-loss claim mitigation strategies
*Driver-incentive and discipline programs
*Mock DOT and OSHA audits
By beginning or continuing to follow these steps, you can help to prevent these losses and keep your rates low. You will also contribute to reducing the high premium increases the insurance industry is implementing to cover these large and frequent losses.
Returning to the scenarios detailed above, here are the outcomes:
Scenario 1: The farm labor contractor was found to not have a driver’s license and was sued by multiple parties. He ended up filing for bankruptcy and closed his business. The U.S. Department of Labor also sued the grower who hired him for violating worker safety and transportation laws.
Scenario 2: This driver was sentenced to 16 years in prison for gross vehicular homicide. The employer’s insurance ended up settling a multi-million dollar settlement.
Please do not think to yourself “this will never happen to me,” because it could, and it could potentially shut down your business. Accidents happen, I know it and the insurance companies know it too (it’s why they exist!) but they also know that there are ways you can work together to reduce the likelihood that they will occur. The more you can do for the safety of yourself, your employees, and other drivers, the less likely a claim could happen to your business.
By: Samantha Brensinger
American farming has come a long way in our short life compared to Europe, Egypt, and China. Our history as an independent country is very young. But in this time we have gone from using a plow, which in its day was quite the invention, to using seeders, choppers, and manure spreaders. Big equipment continues to evolve to the point where it doesn’t even need a driver because it is controlled by GPS!
Amazing advancements, right? But with this ever changing industry we also have to change how we write insurance for it. Equipment that has a driver to control it has different risks than equipment that is using GPS and technology to run it. While they are being operated differently, there are ways they still carry the same risks.
Similar risks, let’s say for a chopper, driven by a person vs. GPS:
*Equipment Breakdown- The equipment can get something jammed into the system that would cause it to break and require repair.
*Collision- You can still run into something, either another piece of equipment in the field or a person. What caused the collision is different (driver error vs. computer error) but the resulting collision damage to the chopper is still the same.
Different risks for a chopper driven by a person vs GPS:
*Hacking- A system ran by a computer, an i-Pad, or a mobile device that is connected to wireless internet or a server can be hacked. Having coverage for this risk cannot always be found on your standard Farm owner's policy.
*Driver Injury- If the chopper would happen to collide with another object, you have the potential of injury to the driver.
One change that has occurred no matter what piece of equipment a farmer is buying is the cost. Something that once cost $50,000 now can cost well above $300,000. These changes in value and how the equipment are operated need to be understood and properly insured. As an agent specializing in agribusiness and farming, it is my job to know and understand how your insurance needs to cover you as your farm evolves and the equipment you have varies.
It’s amazing to see how the agriculture industry/community adapt and overcome some of the toughest situations, and in doing so they become inventive. As we grow our history every day, I have no doubt we will continue to evolve and with it, the insurance industry also needs to evolve.
By Samantha Brensinger / Lead Farm Agent, AFIS
This may not be specifically Agribusiness or farm but I wanted do something for the season and holiday. A holiday where we should be saying Thank You for all the things we have been given through the year and throughout our lives. We sometimes get stuck looking at the items that fustrate us or have been taken away and we forget to be thankful for what we still have and the good things that continue to grow.
I love Thanksgiving Day! A time when family, and sometimes friends, get together to eat a big meal, and enjoy Grandma’s amazing deserts. Thanksgiving in the past few years has been a shared holiday, one year my mom hosts it and another year my sister-in-law hosts it. No matter where the feast takes place, you find family coming together to celebrate. As I sit at the dining table and look down the long table, that can sometimes sit 10-20 family members big and small, I see smiling faces and lots of conversation.
We say a prayer before we eat, saying thank you for family that could be there and those that couldn’t make it, saying thanks for the food sitting before us and the health we all have. These are all things we should try to remember to be thankful for everyday. But we get lost in our chores, frustrations, worry, and stresses that we forget they are blessings. There are bright parts to our days, weeks, months, years and life and we should remember to say thank you and appreciate those things everyday!
So to all of you, thank you, for taking the time to visit my blog, asking me about insurance, getting a quote, and working in an industry that pushes those involved in it to their maxes sometimes, but you still do it! Thank you for providing us with food, drink, work, passion, and understanding that though the world may look down on you at times, you know you provide for others day in and day out.
The saying, “hard times” is not new to farmers or the agribusiness world in general and when hard times come, farmers have a lot of hard choices to make. Animals, employees, family, neighboring farmers, and the community are all aspects they must consider when making the choice to pay one bill or another, to continue operations or to sell. Farmers feel a lot of responsibility when each decision is considered and made.
There is one bill in my opinion (and I may be biased) that should always be paid, and that is the insurance bill. Most people will decide it’s a risk they are willing to take to not have the coverage, but from an insurance agent’s standpoint, it’s not worth it. Farms have too many risks to consider from a business perspective and a personal one to go without insurance.
Hard times can become even harder if a dairy farm accidentally contaminates a truck load of milk and it must be dumped. The farmer isn’t just on the hook for his own milk (losing his revenue), but if other farms had milk in that tanker, that farmer is also responsible for making sure those other farms are compensated. Insurance will cover the payments to the other farms, and if you have a good policy it will cover yours too. Without insurance, this situation could result in a large bill or a paycheck to go without, especially if you are already living pay-to-pay. Another situation a dairy farm might face is loss of electricity due to lightning or a storm. If the farm doesn’t have a generator, they may have to dump a full milk tank. A good insurance policy will cover the loss of milk, so the farmer doesn’t go without a paycheck.
Fire is always a good example (even though most farmers think “the chance of that is small”) of a loss that poses a risk to everyone. If you’re facing an already tight budget, you likely do not have the funds up front to cover fire expenses. Fires can be devastating, destroying full buildings, livestock, equipment, or crops stored inside, and flames may even jump to other buildings if they are close enough.
Farms face risks on the personal side of the farm as well. Farm insurance covers the farm operations and personal happenings, similar to what a homeowner’s policy covers. If someone comes onto the property and is injured, you as the property owner could be responsible for their medical care. Medical bills are not cheap, and costs are not getting any less. This type of loss is one that your policy will most likely cover.
As an insurance agent, we see claims constantly and with the costs that they incur, please consider what we tell you as experience and not just our way of selling you more insurance, or to get you to pay your insurance. It’s not the case, we see so much and hear even more from other agents. We explain the coverages and give you examples so you can see that the $500 coverage is worth it compared to the $500,000 loss that could happen and leave you on the hook. Even in “hard times” your insurance, though you may see it as another bill, is a bill that costs you far less than if you didn’t have it at all and could be forced to pay for large damages out of pocket. Insurance can be the difference between making it through the hard times or having to close your doors.
By: Samantha Brensinger
Equipment Breakdown – What is it? Do you have it? Is it worth adding?
Let’s start with the first question. What is equipment breakdown for a farm? Basic farm policies do not provide proper coverage for those who own, rent, borrow, or operate machinery or equipment that is under pressure or is at risk of mechanical breakdown. Equipment breakdown coverage is tailored to cover losses on insured property. Four major exposures to loss that equipment breakdown covers (that your basic policy will not) is mechanical breakdown, electrical breakdown, steam explosion, and spoilage. Equipment breakdown will not cover wear and tear to equipment or machinery, but may cover the resulting damage. In most cases, farmers have this type of equipment/machinery and have an exposure to the losses equipment breakdown offers.
Do you have it?
That depends. Some companies will automatically add this coverage to your farm policy and some won’t. Your policy will always have a list of forms it carries. If the form is not on that list, you do not have the coverage. There are two parts to this coverage- the physical damage and the loss to income. Some forms will cover both, but make sure you read the form included to verify what the equipment breakdown coverage is providing in your specific policy.
Is it worth adding?
YES!!! As a farmer, you are constantly working with equipment and machinery that is vulnerable to the four major exposures. As a dairy farmer, you have milk tanks that need to stay cold. If your electric is interrupted due to fire or lightening, not only does it ruin the coolers on the tank, but you also lose the milk. Equipment break down will cover the physical loss to the cooler and the spoilage of the milk. As a crop farmer, your harvester could take in a rock or piece of metal that could tear up the mechanicals. This damage is covered under equipment breakdown. No matter where you have your insurance, this coverage should always be talked about and included in your coverage!
By Samantha Brensinger
Resources: IRMI Risk & Insurance AFIS, ISO
I believe Pollution coverage may be missed in most cases when discussing coverages that farms should have, and also from what I have learned from anyone in the industry! As a farmowner, you spread, store, and apply substances regularly that are considered a pollution. But what is the definition of pollution, or a pollution incident? Well, that depends on who you are asking. One state defines a pollution incident on a public road to include any substance that is accidentally spilled except for water and bird feathers. That leaves a lot of substances that could be considered a pollutant, but more importantly is how does your insurance define pollution?
*Commercial General Liability and Farm Liability define it as:
The emissions, discharge, release, or escape of pollutants into or upon land, the atmosphere, or any watercourse or body of water. “Pollutant” is defined as any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, and waste. “Waste” includes materials to be recycled, reconditioned, or reclaimed.
*Environmental Liability define it as:
The discharge, dispersal, release, escape, or illicit abandonment of any solid, liquid, gaseous or thermal irritant or containment, including, but not limited to, smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, hazardous substances, low-level radioactive material, electromagnetic fields, medical waste and waste materials.
*Note- these are standard definitions for insurance written by ISO. Some insurance companies can and will alter the definitions to either broaden or limit insurance coverage further.
These definitions include substances such as pesticides, herbicides, animal waste (manure), gas, oil (bulk storage), and even dust from tractors and livestock. It’s important to review what your policy is or, in most cases, is not providing coverage for when it comes to pollution. Without any endorsements, a standard farmowner’s policy is offering very little coverage for your property, or anyone else’s.
There are two endorsements that can be added to a policy that would allow for some extra coverage, but once again it is still limited- Amendatory Endorsement and Crop Dusting Limited Pollution Endorsement. These endorsements provide pollution coverage for very specific events that could cause a pollution incident. Amendatory Endorsement buys back coverage for bodily injury or property damage caused by heat, smoke, or fumes from a fire set by the insured on an insured’s location for purposes of burning off crop stubble or other vegetation. The Crop Dusting Endorsement will cover damages to another party’s crops or animals when applied from ground or aircraft using a licensed contractor.
Your auto insurance limits coverage for pollutants as well. The Auto Liability will only cover a pollutant that the vehicle is using to operate, such as antifreeze, gas, and oil. It does not cover pollutants you are transporting. It’s important to review wording and possible endorsements on this policy with your agent.
Since pollutants and pollution incidents have very limited coverage, what can you do to make sure you are covered? The answer is a Pollution and Environmental Liability Policy. The thing to remember about this type of policy is it needs to be reviewed closely because there is no standard for these coverages. When presented with many proposals, it’s essential to read and compare them. The lowest premium may be giving you the better coverage, or it may not be. Insurance companies have a little more leeway with the ability to word the policies to cover or not cover a certain risk.
If you are looking for pollution coverage, make sure you are getting covered for damage to your property, to someone else’s property, and the cleanup of the pollutant. Cleanup of the pollutant could be the costliest part of the incident depending on who is doing the removal. With pollution, the government (ex. the EPA) has a lot of say in determining who is responsible, how it gets cleaned up, and how much it’s going to cost.
As organic farming, urban development, and government laws and regulations continue to become very close neighbors with traditional farming, pollution coverage has become a crucial coverage to have for anyone, especially a farmer.
Resources: IRMI Risk & Insurance AFIS, ISO
This week I received my schedule for the AgriCon in Indianapolis, Indiana hosted by IRMI. AgriCon for me is an insurance based conference but it doesn’t just cover insurance and making sure we know the forms to better serve you. Agricon is also a discussion about changes and laws in the industry that affect your business and how we write your insurance.
Since I earned my insurance license in Virginia I have been trying to take in as much information as I can. In my searches, I came across the AFIS Certification/Designation, which stands for Agribusiness and Farm Insurance Specialist. Once I found it, I signed up and paid for the first course, Farm Property. It didn’t take me long to work through the course and pass the test, which left one course down and four more to go! In getting prepared to take the next course, an email came across my inbox for the AgriCon Conference. This conference offers the courses during the three days there and I can get to listen to presenters share the knowledge and experience I hope to one day have!
I knew I didn’t want to pass up the opportunity to go, so I registered right away and now we are a week away from the event. I am trying to think of everything I should take with me- laptop, phone, notepad, business cards, and all the excitement to be a part of this conference. My family will also be joining me on the trip but they will get to experience other parts of Indiana. It will be our only vacation, and even though we won’t get to spend it as a family of five, I know the kids will enjoy the time with their dad as they get to explore a different state. They have been wanting to travel since we moved to Virginia and it’s like a door has been opened for them as they realize there is so much more to see outside of what was our home state of Pennsylvania.
As I wait for the next business week to pass by, I will continue to gather my supplies together, double checking my list of things I need, the list of things my family needs, and making sure I get all the notices from the Conference. Oh, and FYI, there is an app for the IRMI conferences! I have downloaded it and started to schedule my three-day trip. INDIANA HERE WE COME!!!
Be sure to check my Instagram and Facebook for pictures and highlights as the 3 days progress.
“It may sometimes seem that losses of tragic proportion only happen to others, but that is false perception. Those employed in the insurance industry know all too well that losses can occur to anyone at any time.” This quote from the article I read written by Sabrine Voigt says it all. We as insurance agents do see these losses but we also try our best to make sure when the loss occurs we can at least make sure the financial loss isn’t as tragic.
As insurance agents, we are here for those moments that aren’t going well- an auto accident, a fire, a flood, water damage, hail damage to your car, and so much more. We know that these things aren’t just emotionally draining, but also financially. We are here to help you through the bad moments and make the process of getting back on your feet faster and easier. In the Agribusiness industry I believe when you have a loss it is essental to get your routine back to normal as quickly and with as little bumps as possible.
There are many things as an operator that you can do to help make sure a loss is less likely, less damaging, and takes less time to repair.
~Doing walk arounds once a month can help you spot bad behaviors of employees that can cause injuries or property damage. Ex. Leaving hoses out where someone can trip over them or flammable containers left open where fumes can leak out and cause a fire.
~Mother nature can’t be stopped or predicted but you can help make the damage less costly. Ex. Cutting down trees that are too close to buildings or using hail impact resistant roofing.
~Electrical wiring is one of the most imporant items to keep inspected and up to date, as old or faulty wiring is one of the biggest causes of fire. “Fire in of itself is the largest cause of loss, regardless of property type, causing $14.3 billion in losses and 3,280 deaths each year” (Sabine Voigt).
~For Farms, storing hay properly and under a watchful eye is important to also keep a fire from occuring.
~Using proper safety procedures and equipment is vital to keep employees from getting injured. On farms, injury can be a major loss. Follow lock out/tag out procedures and don’t wear loose clothing around equipment. “PTO shaft rotates at 540 rpms and travels more than 2 meters in less than a second, injury or death may result from entanglement” (Sabine Voigt).
This is just a short list of items that help to deter a loss and make it less costly, but making sure you have proper coverage when a loss occurs is the reason I am here for you. Knowing your specific operations will help me determine the coverages you will need in case of loss. For example, a dairy farm will need Milk Contamination coverage, just in case something gets in the milk and it has to be dumped. A Beef farm should have coverage for their Beef cattle for flood, suffocation from snow or ice (if you live in the north), and if a fire would occur in the Barn. Making sure you have the coverages that fit your agribusiness is how I help you continue the business and life you have worked so hard to maintain and grow!
By Samantha Brensinger
Article Reference: "No Farm is Completely Safe" Published in Hoard's Dairyman Magazine Written by Sabine Voigt
In 2 weeks, it will be a year since we as a family decided to follow my sister and brother-in-law to Virginia. It wasn’t the smoothest move ever, but we made it to their dairy farm and have enjoyed the last year of new experiences. I enjoy two very different jobs: insurance agent and farm hand. For the most part, it has been an easy balance. Each brings such new experience and knowledge, it’s hard to say which I enjoy more.