Smallholding

Smallholding insurance

Insurance is not one of the most exciting aspects of running a smallholding, but it's something that could prove invaluable if the worst happens. If you have a smallholding, you should consider what risks it poses to you and others who may be impacted by what you keep or produce on it.

Your average home insurance policy rarely covers the additional risks a smallholding brings so don't assume your activity is just covered. With the exception of providers such as NFU Mutual, whose home policy does extend to cover smallholdings, most of us will have to search for a Smallholder Combined or small farm commercial policy.

Often a simple, but comprehensive, smallholder insurance policy can provide peace of mind and a knowledgeable local insurance agent can provide valuable advice and support.

Why might you need it?

While most of us have general home insurance policy, these are unlikely to cover the additional risks that come with running a smallholding. For example, most policies will only cover domestic animals not livestock, and won't include any public liability or property cover for purely agricultural activity.

Research by NFU Mutual has found one of the largest concerns of smallholders to be damage or injury to other people and their property caused by livestock. We have all heard anecdotes of livestock causing damage (usually rams!) to visitor’s cars and other property, or getting loose on the road and causing near misses or accidents. The option to ‘self-insure’ some small risks can be viable, but with no public liability insurance you could find yourself facing a hefty bill in legal costs or damages if the worst happens.

This is where Smallholder Extensions or Smallholder Insurance policies come in. If you have livestock, tools and outbuildings situated on your land or find people visiting it (even if it is only for a few hours to do seasonal jobs), you are likely to need insurance.

What cover do you need?

Before you think about getting quotes, do some preparation and write a list of the key items and animals you will require insurance for.

If you do forget anything, a specialist insurance agent can suggest items that other smallholders cover, or spot particular features of your property and activities that may increase risk.

Also, talk to other smallholders and do not be afraid to call an insurer for advice, as unlike car policies, it can often be difficult to compare agricultural covers.

Check your existing cover

Check for cover in any existing policies you have. We ended up consolidating our insurance policy with one company to cover household and smallholding because there was some duplication of cover – it worked out cheaper in the end and we have a single point of contact, making claims much more straightforward.

When it comes to insuring your smallholding you should always ensure your current policy fits your activity, not reduce cover in the hope that everything will be covered if the worst happens.

Consider the following questions before contacting an insurer – livestock prices and rebuild material costs can change over time and all affect your premium:

  • Are the tools and equipment I use insured for the right amounts?
  • If my outbuildings are damaged, do I want them rebuilt as they were or with cheaper materials?
  • Is my livestock valued correctly?
  • Do I have any public rights of way on my land or near by?
  • Do I rely on the smallholding income to pay my bills and mortgage?

Below are the most common areas that smallholding policies will cover, although one option is to split your cover with different insurers if you’re willing to shop around. For instance a specialist machinery insurer may provide more cost effective cover for tractors and trailers than you would get under a general smallholding policy.

Property - Outbuildings, equipment, and tools

Outbuildings, fences and equipment all require regular maintenance - even if you only manage a few acres.

In the event of damage, your insurance must provide the right amount of cover for repairs or replacement, plus the cost of alternative storage or housing. Also, do not forget any fuel or livestock feed you may keep on the premises, as well as tools you may have borrowed from a neighbouring smallholder.

Remember to only include items used primarily on your smallholding, do not insure household items again under another extension or policy. These should include any sundries and utensils too – we probably have hundreds of pounds worth of pots in our potting shed over winter, which should be covered against loss.

Vehicles

Make sure the policy covers the typical vehicles you will use on the land. These can include compact tractors, ATVs, ride-on-mowers and trailers.

If the value of these items is high, a specialist Agricultural Vehicle policy should be considered which could provide cover for breakdown and packing materials if the vehicles are regularly transporting goods or livestock on the road.

Livestock

Animals need looking after and feeding every day, and fodder crops need tending to. Ensure you have adequate cover in place for all your livestock should they be injured, stolen, stray or die on the smallholding or at a showground. This cover should accurately reflect their value, especially for pedigree stock.

You should consider public liability cover as well as fatal injury to cover costs if your larger animals ever injures a third party or damages their property.

Following an increase in dog attacks in the countryside, some policies will also give you the option for insuring against livestock worrying – this is when livestock is injured or killed following a dog attack. This comes at an additional cost but should be carefully evaluated depending on where your smallholding is located.

If you regularly show livestock you may need to demonstrate adequate cover as a condition of entry.

Feed and medicines

If you have more than a handful of livestock, and with the increasing price of animal feed, your feed store may be an increasingly attractive target for thieves, and its contents will almost certainly need to be covered against loss. Similarly for medicines – calculate the value of stock you usually keep and make sure it’s covered.

Transportation of livestock

Your average private motor policy will not cover you for the transportation of livestock. If you do make more than the occasional journey moving stock or taking livestock to shows, you should check that your policy provides cover for livestock in transit.

Depending on the value of what you are transporting you may wish to look at commercial farm policies that also provide for breakdown, recovery and packing materials too.

People

As the owner of a smallholding, you are fully aware of the effort you put in to make it a success. Working about a smallholding can be dangerous, and if you depend on your good health to any degree for your living, you should check that any income protection insurance you already have covers you in the event of an incapacitating accident while working.

However, you must also consider who else works on your land throughout the year. This is often overlooked when you have pressing jobs to finish or livestock to manage.

Ensuring you have adequate Employers’ Liability insurance is key, especially if you employ contractors, family or work experience students over the summer. In the very worst case, a fall from height or slip on a yard can result in hefty legal damages and costs ranging from several thousand to several million, plus a fair amount of emotional distress too.

What about other people who visit your smallholding over the year? You may have family members (including young children wanting to see the animals!) and friends visiting at weekends or in the holidays.

Be aware that your liability may extend to unpaid help, including WOOFers and other volunteers – take advice from the insurer to be sure you’re adequately covered.

Some land will have a public right of way going through it or near by, increasing the risk of trespass or public injury. Remember you are responsible for any injuries to the public, even if they are trespassing!

Selling produce

If you sell produce, for example at a farmer’s market, you will need product liability insurance cover. This will cover you for any injury or damage to the buyer or public caused by your goods or produce. Some venues may insist on a minimum amount of cover so check this out before you sell beyond the farm gate.

Income

Most owners of smallholdings are not seeking to make large profits, however if you rely on the holding's income you should consider a policy with the right level of business interruption cover.

Some extensions or policies will provide for alternative care or property costs following damage as standard to help you until you get the smallholding back up and running.

If you stand to lose thousands in sales over a few months following a fire or theft, you should ask your insurance agent about Loss of Income cover.

Choosing an insurer

When it comes to insurance for a specialist area such as agriculture, you should always look for an insurer with proven knowledge of smallholding risks. If you do make a claim, you want an insurer who can handle a claim quickly and fairly – ask for proof of claim pay out rates and examples of how they can advise and support you following an insured event.

In recent years more brokers looking to insure smallholding risks have appeared in the market, however most smallholdings still typically see a premium of a few hundred pounds. Make sure you obtain a few quotes but compare the cover to check you are getting what you think you are.

Information needed for a quote

You will need to supply a fair bit of information to get an accurate quote. Have this to hand and the conversation will be much easier and quicker. You may be tempted to just rely on an old insurance schedule, but if something has changed over the years use, updated figures to ensure you are fully covered. This information tends to include:

  • The acreage (list separate areas for your agricultural activity and any garden)
  • The location of the land (is this adjacent to your home or in a town or village nearby?)
  • The value of any outbuildings and their condition
  • The value of any contents (e.g. tools, equipment, office contents, sundries)
  • The value of stock (e.g. feed, fuel, fertiliser or goods and produce)
  • The type and value of livestock you keep
  • The perils you want to insure you property and livestock for (e.g. fire, theft, worrying etc.)
  • Public rights of way on your land or nearby
  • The presence and number of any employees
  • The income your smallholding generates (insurers use this as a guide to see if you need more cover)
  • Any goods or manufactured food stuffs sold to the public
  • Your insurance loss history (if you have claimed a lot in the past this will be noted by an insurer) 

Always talk to your insurance agent about your cover. In most cases a Smallholder Extension or policy is all you need so do not over-pay. As you grow or buy new items, a small farm policy may be more useful.

Dan Champion

About Dan Champion

A self-confessed geek, Dan would spend 20 hours per day in front of a computer if he didn't live on a 12-acre smallholding in the east of Scotland (and if his wife would let him). He also built this website.

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