The year is flying by. When this article is published, we will be past our last frost date and the infamous tax day, and be knocking on the first day of spring. Already we have jonquils popping up everywhere, the pastures are starting to green up, and the wheat crop is off to a good start.
The last article I wrote discussed having contingency measures in place on our operations in case of disease, disaster or disablement of the primary operator.
Most of the article focused on physical actions we can put in place on our operations, but what I did not address is most probably the obvious first contingency planning option – insurance.
From the stigma of bygone years reputation to the unending debate surrounding the current health care law, insurance has never been a popular topic. Many see it as an unnecessary expense, rationalizing that since neither they, nor their parents, nor their grandparents used it, why pay for it now? Others are overwhelmed by the many choices in providers, policies, coverage options, etc. and would just rather not deal with the seeming complexities of having insurance.
Working in the lending industry, I have heard just about all the arguments for and against insurance. Just about any type of loan anymore requires proof of insurance held on the collateral. For most, it is a matter of course to carry insurance on their assets, at least the most valuable.
I’d like to suggest to those who decline to carry insurance to take another look at the tool – from a purely preventative point of view.
For a poultry producer – can you afford to go several months without a flock due to a disease? If not, wouldn’t business interruption insurance seem a reasonable contingency plan for that possibility?
Or say you are a crop producer – if Mother Nature strikes, can you still pay for those inputs you already have used, as well as make your loan payments, if a crop is not produced, or do you need an insurance policy to cover that possible situation? Or what about our cattle producers? If the bull jumps the fence or a flood takes out the fence and the herd gets off the farm, can you afford the liability if someone is injured by the animals? Or does a farm liability policy sound like a good backup plan to that situation?
It is important to realize that thinking ahead and preparing for those scenarios is not negative or pessimistic thinking. Rather, you are positioning yourself so if those situations happen along, you and your farm are prepared, ensuring that the family farm survives and can be passed on to the next generation when the time comes.