Farmers are on the verge of a new insurance model that will give them more control over the farm and provide more flexibility to their insurance policies, according to Farmland Insurers Association (FIA) president and CEO James Bowers.
Farmland insurance policies will be less expensive and be more flexible, Bowers told Farm Bureau of America President and CEO Tom Nardone.
“This is going to be a great thing for farmers,” he said.
The Farmland Insurance Policy (FIP) will cover the farmers insurance for up to three years and provide coverage for farm-related damage and expenses, but only if they are not involved in the farming operations, such as livestock and the sale of their farm equipment.
“I think that’s a great way to do it, and this is going be a good thing for farm farmers,” Bowers said.
Farm Bureau President and Chief Financial Officer Mark Stoddard agreed.
“It’s a good solution for farmers who want a more robust policy that covers their operations,” he told Farm Business Daily.
The insurance will be available to the public in two tiers: Farm Basic (also known as Basic Basic) which covers up to $250,000 of farm equipment, up to 5 percent of gross receipts and 1 percent of all farm-associated losses; and Farm Premium (also called Premium Basic) covering up to more than $250 in farm equipment and up to 3 percent of the gross receipts, up in value by the amount of loss.
Farmers who purchase Basic Basic Basic coverage must have farm equipment or equipment related to the farm as well as a current farm-specific policy with the farm.
Premium Basic coverage also covers up and above the basic cost of farm-based insurance policies.
The premium will be based on the cost of the farm’s farm machinery, equipment and other farm-owned equipment.
Premium basic will be offered in five tiers.
The first is Basic Basic, at $250 a month, and the next two tiers are Premium Basic and Premium Premium Premium, each covering up and over $250.
“We want to make sure that the policyholder understands that they are getting a better deal,” Stoddards said.
Premium Premium is the premium that farmers will pay for the premium-only plan, which covers farm-operated equipment, equipment related expenses and a portion of all losses.
The higher the premium, the higher the value the farm will receive for the farm insurance premium.
“The premium premium will continue to rise, and that will mean lower cost farm policies for farm owners,” Stoodysaid.
“Farm owners have to pay more, but they get more value.”
The policyholder also has the option to choose from different rates depending on their geographic location and farm type.
“They can have a farm with 10 acres and a farm in a different county that has a different rate,” Bower said.
“There are a lot of ways that people can get different rates for their farm insurance.”
This new model is different from what the industry has seen recently.
The industry is looking to sell the farm business as a “farm-owned business” as it has been in the past, but that will not be the case with Farmland Premium Basic.
The new Farmland Basic will be sold as an insurance product to farmers who are not farming.
“That will be the future of the industry,” Bows said.
Farmers will be able to see a farm that will pay a lower premium than the current policies on the farm, and more value for the farmer and their insurance company.
“When I say this is a new policy, this is the most advanced policy that we have seen in the last 10 years,” Nardonesaid.