It's amazing just how many things a beef operation can insure. With prices of inputs and animals rising, insurance looks increasingly like a viable business consideration.
Rachel Myers, an insurance specialist with Great Plains Ag Credit at Amarillo, answers a series of questions about livestock production insurance for Beef Producer.
Here is that conversation:
BP: How do I decide whether I need to insure a certain thing or not?
Myers: Livestock insurance comes in many shapes and sizes. One can choose a "broad-form" policy that covers numerous perils, like smothering, electrocution, lightning, tornados, etc (see list below).
Other people may need "full mortality" coverage for high-value animals, such as race horses, registered livestock or show animals. This coverage will pay on the death of an animal due to any cause, rather than just named perils. Obviously, it has to be a legitimate death, and they will investigate.
Deciding whether or not to insure animals is just like deciding whether or not to insure yourself – Can you financially sustain the full impact of an accident, or do you need to share the risk with an insurance company? It is a personal decision that each person must weigh. In many cases it is also a decision that is made along with one's lender.
BP: Secondarily, what things are insurable?
Myers: With a standard livestock insurance policy, you could have coverage from the following, unless it is specifically excluded:
› Smothering caused directly by blizzard or snowstorm
› Smoke, fire, lightning, windstorm, flood or hail
› Attack by dogs or wild animals
› Accidental shooting
› Collision with vehicles,falling objects
› Collapse of a structure, including building, culvert, bridge
› Sinkhole collapse
› Riot or civil commotion
There are also endorsements and extensions to this coverage, some with additional costs and others that simply must be added in writing at the inception of the policy.
BP: You gave the example of wheat pasture value being insurable. What else? Loss during trucking from break-downs or other problems is a common area of loss. Could that be insured and is it worth it?
Myers: Sometimes, a standard policy will not have certain features, and that is why I encourage customers to work with their agents to try and adapt the policy to fit their needs. Obviously, some things will never be insurable. To answer your questions related to trucking break-downs, I can tell you that we do write livestock transit policies that cover death and crippling due to insurable causes; however, the policy does not cover mechanical failure of the truck
BP: Death loss from illness is another issue. Is it insurable in any fashion?
Myers: Death from illness is insurable with a full mortality insurance policy. The cost of a full mortality policy is directly correlated to the value of the animal that is being insured.
BP: Theft of cattle on pasture is not that common from ranch to ranch but it happens. Is it insurable?
Myers: Theft is covered under a specific endorsement that must be agreed to by the insured and the underwriting company.
BP: Performance loss from winter storms can be major issues in feedlots. Is that insurable?
Myers: Currently, the type of insurance offered to feedlots is the broad-form policy that covers multiple perils, including smothering (typically from snow-pack). For an additional cost, feedlots can add a "hypothermia" endorsement that will extend coverage to animals that perish due to hypothermia-like conditions, such as freezing rain, severe cold, etc.
You should always assess your needs and ask for what is missing. I have never had someone ask for coverage like this, but that doesn't mean that a company will not consider it.
BP: How can one learn these things? One insurance agent may not have all the answers, right?
Myers: True. Many times one agent may be privy to more information than another just because they have been faced with a specific situation. While the agent may not immediately know the answer, they do have a sales representative with the underwriting company that can give specific, clarifying answers. Agents should always be will to "run something up the flag pole" to find the answer for a customer.
BP: Do you go in and ask about areas which are major concerns for your operation and ask the agent to research these and get prices and coverages?
Myers: Typically, when I have a new customer call with interest about our products, I try to ask enough leading questions to understand their specific needs. Then, I let them know what is currently available. If we are still not meeting their needs, we go to the next step of asking our insurance provider to give us additional quotes on prices and coverage levels. I can't speak for all agents, but I'm more than willing to do the research for my customers. Farmers and ranchers cannot be experts in every field; therefore they rely on a sound agent to help them understand the complex world of insurance. I feel it is my job to put all of the options on the table so they can make an educated decision without having to spend hours researching something outside of their realm of expertise.
BP: And again, even if insurable, is it worth it?
Myers: I like to ask this a different way, "Can you afford to not have insurance?" For most people, this is the true question. How much of a loss can your operation sustain before you cannot financially recover? And by the way, have you ever seen the effects of a winter storm in the Texas Panhandle? Some people have escaped losses for years, but there are others who are true believers in insurance because they would not be in business today had it not been for their livestock insurance coverage.
For more information about how you might use insurance in your livestock operation, contact your local livestock insurance agent or contact the Hartford directly at 800-934-1263.
* For simplicity, this article does not include all the features, conditions, exclusions and limitations of a Hartford policy. For full information, consult your independent agent. On all losses and claims, policy terms apply.
This story first appeared March 9, 2011. It was updated May 11, 2015.