Every year, farmers run the risk of losing barns, machine sheds, milking parlors, houses, grain facilities, other buildings, equipment and livestock to fires and windstorms. Everything you have worked for can be gone in the blink of an eye unless you are adequately covered by farm insurance.

Mike Pusnik, farm and ranch insurance agent with American Family Insurance through the Kyle Lange Agency in Menasha, Wis., one of Wisconsin’s largest farm insurers, says he has seen it all in his 45-year career in the insurance industry.

Necessary evil

“Insurance is a necessary evil,” he says. “When I talk to farmers, the challenge is you don’t know what you have until you need it. Insurance is designed to protect you, and when you have some sort of disaster or claim, that’s when you find out how good it is.”

Pusnik says, “If you are farming today, you have to look at every facet of your business and determine what you need to protect that business. That’s what having insurance is all about.”

He says farm insurance coverage has really changed in the past 10 years. “A decade ago, there was no insurance to cover lost income for dairy farms. That started five or six years ago,” Pusnik says. “Loss of income is critical for dairy farmers. If you have a barn fire or a tornado, it could take four to six months or longer to get a barn and/or parlor rebuilt before you can milk cows at the farm again.”

Another cost farmers often overlook is fire department charges. “Most have a $500 charge for a fire department getting called out,” he says. “You may get a bill for several thousand dollars from each fire department if several departments are called to the fire. There are a few fire departments that still may not charge for a call, but many may charge several thousand dollars to pay for their training and equipment.”

Pusnik says it is important to update your policy at renewal time each year, when you purchase a new piece of equipment, you add more cows or cattle, or you put up a new building. “Don’t forget to call your insurance agent and add that.”

Pusnik says there are two types of insurance — replacement cost insurance and actual cash value insurance. He recommends having replacement cost insurance on equipment. “There is a 10-year look back on equipment; it needs to be younger than 10 years. Not all insurance companies have the same look-back period.”

He recommends having replacement cost insurance on buildings that are eligible. “If you have cash value insurance, you will get $60,000 if that’s what you have the parlor insured for. If you have blanket coverage, it’s considered to be a part of a complex. If it costs $80,000 to rebuild it, then it pays $80,000,” Pusnik explains.

Pusnik says there are three different types of insurance policies:

Also, farmers who live on floodplains may need to purchase flood insurance from the federal government.

In April 2018, northeastern Wisconsin had a lot of snow and a lot of barn roofs collapsed on buildings. “Most farmers had insurance on the equipment, but not on the snow load,” Pusnik says. “Then there is no coverage if the roof falls in due to snow. You must have the snow load endorsement on your buildings.”

Pusnik admits that reading an insurance policy is not exactly exciting. “We try to look at a person’s policy and what perils are they covering, what are their limits the policy is giving them,” he says. “A lot of times farmers try to devalue what they have to hold premiums down. You are better off increasing your deductible and insuring your property for what it is worth. A higher deductible will reduce the premium.”

Pusnik says it is not unusual for large farms to carry a policy with a $25,000 deductible. “With a smaller farm, most will have a $1,000, $2,500 or $5,000 deductible policy.”

He says farmers can also insure their machinery with a lower deductible than the buildings or vice versa. “Wherever you feel you have more exposure to a certain incident, you can control the cost of the premiums with deductibles.”

Lumber prices have recently skyrocketed, Pusnik says, and a lot of houses and buildings are undervalued as a result because lumber prices have increased so much. He advises farmers to check their policies and increase coverage on their home and buildings.

Liability limits

In addition to having insurance coverage on your house, farm buildings, equipment and livestock, Pusnik says farmers also need liability coverage.

“We look at your income, what type of farm you have, how many employees are there, what is your net worth and how many people are coming in and out of the farm each week,” he explains. “We recommend that farmers have a liability coverage that covers the amount of assets of your operation.”

If you have questions about farm insurance, contact Pusnik at [email protected].