Farmers urged to protect themselves from huge insurance payouts

Farmers are being urged to reassess their insurance cover as personal injury settlements are set to rise.

A new law passed in March this year will push up the value of settlements, warns broker Farmers & Mercantile (F&M). 

This will apply to all future claims and all claims that have yet to reach a settlement – leaving farmers currently facing a claim particularly exposed.

The current record payout in the UK was made in 2012 and totalled £23m.

See also: Business Clinic: Am I insured for snow-clearing jobs?

A spokesperson for F&M said all farmers should check the amount covered by their insurance policy and consider increasing this mid-term if the policy is not due for renewal in the immediate future.

Increased risk

It is recommending that any business now takes minimum limits of £20m for employers’ liability and £20m for public or products liability cover, doubling its previous recommendation.

It added that there is likely to be widespread underinsurance in farming.

However for businesses whose employees are likely to be undertaking particularly risky activities such as working on roofs or in forestry, the level of cover needed will be even higher and could largely depend on the variables of the individual claimant.

This includes how much the injured person earns currently and their future earning potential, and will also take any dependents into account.

Worst case scenario

“It is not just prudent, but we would say essential, to reconsider the adequacy of the limits of cover carried under both employers’ and public/products liability policies,” F&M’s founding director Nigel Wellings said.

Policyholders need to look at the “worst case scenario” and fully consider what they stand to lose in the event of a claim, such as property or land which may have been farmed for generations, said Mr Wellings.

Farmers must ensure that the full range of activities that will be undertaken on the farm over the course of the year will be covered, he said.

This should include variables such as seasonal workers.