Review insurance cover in light of high stock values

The increase in livestock values over the past year means many farm businesses run the risk of being underinsured if they suffer theft or other insured loss.

Mike Clementson, a director and head of agriculture at Charles Taylor Adjusting, estimates that more than 60% of farm businesses are underinsured to some extent.

This risks the practice of averaging being applied to claims, which means policyholders will only receive a percentage of the value of their stolen stock.

See also: Correct costings will avoid insurance shortfalls

For example, if a farmer had a herd of 100 cattle insured for £10,000 (£100 a head) and he has 50 stolen but at the time of the theft the cattle were in fact worth £200 a head, he is 50% underinsured.

Under the condition of average, he can only claim 50% of the £10,000, giving him £5,000. As the cattle now cost £200 a head, he can only replace his 50 stolen cattle with 25 new animals.

“Essentially, if you are only half insured for the entire value of your stock you only receive half of your adjusted claim,” said Mr Clementson.

The most common types of current livestock claims come as a result of theft, sheep worrying, straying, fatalities or injury to cattle, says Mr Clementson, who advises stock owners to review policies and check that there is adequate cover.