The insurance cover that can unlock and protect

CAN you afford to be a man down? Spring has almost arrived and so too has the increased workload that comes with it.

The prospect of taking time off because of illness or incapacity is simply impossible or a source of great fear for many farmers.

This is why it’s essential to put in place the type of cover that will reduce worry and anxiety around these issues while providing financial security to the farm.

While many farmers hold core general insurance policies, they may not be covered for occurrences such as illness or disability that may remove them from the day-to-day work on the farm.

Insurance companies like FBD offer additional financial protections including ‘ keyman’ cover, which can help to protect the farmer, dependants and the financial security of the business.

Keyman insurance (also known as business protection) is often overlooked due to the many different policies that farmers will be required to have in the course of a year.

Keyman insurance is designed to financially protect farms from the effects of prolonged illness or even death of staff who are central to the dayto-day operation of the farm, including the farmer himself.

Keyman insurance can’t replace people but it can provide cash to buy time and cover the costs of temporary staff, loss of profits or provide a cash injection.

WHAT TO CONSIDER

If you decide to purchase Keyman insurance, you should give some thought to who are the ‘ key people’ for the running and success of the farm business.

It may extend beyond the farmer to the farmer’s wife/spouse, daughters or sons, or an essential farm employee.

Much like insuring property, you should give consideration to the monetary value of the services that would be lost due to the unavailability of the key person.

There is no real advantage to over-insurance as your premium will likely be higher and typically you will not be able to recover a claim for an amount higher than the actual loss.

Factors to be considered when deciding the value to insure a key person for include their replacement cost, the contribution that the key person made to earnings of the business in previous years, a year’s profits and the value of the loss of earnings.

Depending on the level of indebtedness of your farm business, you may be compelled by a lending institution to hold a policy like keyman insurance, which will ensure that even in the worst-case scenario for the farmer, there will be enough money to employ a labour unit to replace the