Demystifying Farm Building Insurance: The Essentials

The importance of insurance in protecting your clients' farms and their assets cannot be overstated. Farm building insurance is a pillar in the range of insurance alternatives available to farmers. But not all farm insurance plans are created equal, necessitating a detailed understanding of the differences between insurers. This is especially true when creating complete protection against unanticipated occurrences and protection against inflation. In this article, Land Based Underwriters delves into the crucial principles of the subject matter.

Deciphering 'Day One' Coverage and the 'Uplift' Factor

In the context of farm building insurance, the idea of ‘Day One’ coverage merits further investigation. This phrase refers to protection against inflation from the time of loss until restoration. The idea of ‘uplift’ comes into play at this point, which refers to an insurance policy's adjustment for inflation, as well as coverage improvements to take into account rising material prices throughout the reconstruction period.

'Day One' coverage does not always receive an uplift from insurers, which must be noted. Some farm insurance plans only pay out compensation based on the value at the time of the loss, failing to take into account the rising costs associated with reconstruction over time. This differential can result in a significant difference in the amount of compensation received. 

The Weight of Uplift Magnitudes

In its ‘uplift’ clauses, various insurers provide varied uplift magnitudes. The bulk may give an uplift of 15%, while a select handful stands out by offering an uplift of 50%. This discrepancy is important, particularly in light of any difficulties that can arise throughout the restoration process, including adherence to planning laws, building standards, and the complexities of material availability.

It is wise to choose an insurer with a larger uplift percentage since it provides a more durable safety net against the risks involved in rebuilding farm buildings.

Unveiling the Role of Rebuild Cost Assessment and RICS Surveyors

The method of calculating the precise rebuild cost, sometimes known as ‘replacement loss’, has become increasingly difficult. Royal Institution of Chartered Surveyors (RICS) surveyors are well-suited for this job. Not all insurance companies and intermediaries, meanwhile, offer aid with this cost-estimating project.

As a result of realising the importance of this assessment, several insurers offer assistance in the form of a cost surveyor. On the other hand, some people might not provide the same help. Additionally, a fascinating caveat is present. Some insurers could waive the underinsurance clause if you present a RICS survey with your claim paperwork, while others would not consider such leniency.

Get in Touch

Securing the correct coverage for your client’s interests can be tricky. Ensuring that the fundamental disparities among insurers, including inflation protection, uplift extents and the role of RICS surveyors are pivotal. Get in touch with Land Based Underwriters today to explore how we can best serve you.