You’re probably well prepared for the everyday mishaps that can interrupt work on the farm. A bit of rain, malfunctioning equipment, illness – you’re prepared for it all.
But are you prepared for – and properly insured against – the often unexpected and extensive damages that bushfires can cause?
The recent Sir Ivan Fire, east of Dunedoo, burned through almost 50,000 hectares of land and resulted in the loss of livestock, machinery and property. And while fortunately no lives were lost, the bush fire has seriously impacted local farmers’ ability to operate.
Rural residents are also facing high damage bills as a result of the bushfires. Speaking to ABC Radio Australia, Sam Conway spoke of the damage that another fire at Boggabri caused; he manages Boolah Partnership farmland and estimates his damage bill to be about $500,000.
Why you need to check your insurance cover
It’s easy to underestimate the value of your home, property contents, as well as the cost of any improvements you’ve made. That’s why you need to check your insurance cover and make sure you have enough to:
- Fully rebuild your home, accounting for any property improvements like driveways, fences or bridges
- Replace your furnishings and equipment
- Manage the impact of business interruption
Changes to national building standards in recent years have been introduced to make homes in bushfire-prone areas more resilient, but these have made the rebuilding costs for at-risk properties substantially higher. As a rural property owner, you need to factor this into your insurance and make sure you have adequate cover in place to protect your home and your business.
Case study: what can happen when your homestead is underinsured
A farmer’s private homestead was tragically destroyed by a fire. The property was insured for $350,000, but the cost to rebuild the home was $450,000. Why? Because of building improvements that needed to be made to meet Bushfire Attack Level (BAL) requirements. This included things like installing fire retardant doors, toughened glass windows and use of non-combustible building materials.
If the farmer had updated their sum insured to ensure the new BAL building requirements were met, they would have been covered for the additional $100,000 of rebuild expenses.
Get cover for all your assets – not just your buildings
A bushfire destroyed nearly two kilometres of fencing on a farm, without affecting any buildings or outbuildings. The farmer had insured the fencing for $10,000, but the cost of fully replacing the fencing – which included new timber posts, star pickets, box ends and writing – amounted to $32,000.
If the farmer had reviewed his sum insured for fencing, fully taking into account the costs to re-fence the entire property, he would have been covered for the additional $22,000 cost.
Farm continuation expenses and material damage cover: a necessity for working farms
A bushfire damaged a farmer’s $300,000 header machine during a critical harvest period. The cost of hiring a machine or contractor to harvest the crop was around $65,000.
If the farmer had taken out cover for their farm continuation expense and was insured for material damage under their policy, the costs associated with hiring the header machine or contractor would have been covered. But unfortunately, the farmer was left to cover the out-of-pocket expense alone.
In a similar case, a farmer’s shearing sheds were damaged following a bushfire, leaving the farm unable to shear its sheep. The farm owner needed to have the sheep shorn before shed repairs could be made, but his only option was to transport the sheep to a nearby farm and hire shearing sheds at a cost of approximately $17,000.
If the farmer had taken out cover for farm continuation expenses, the costs to transport the sheep and use an alternative property’s shearing sheds would have been covered.
Don’t put your business and your home at risk
Lots of things can go wrong on a farm, some with more serious impacts than others. But the threat of bushfire is very real, and you need to be sure that you can financially survive loss of property and business interruption in the event of a fire.
To be on the safe side you should review your current cover and talk to your local insurance broker about your insurance needs. The cost of underinsurance is far greater than you think, and your business is worth protecting.