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The following information is provided by Nationwide, the No. 1 farm and ranch insurer in the U.S.
There’s a lot happening around the world that’s applying downward pressure to revenue prospects for farmers. Inflation, logistical hurdles, rising energy and crop input prices at home and conflict overseas could all continue to contribute to the erosion of farm revenue potential.
But maximizing farm revenue requires investment. That investment is likely to come with some sticker shock this spring and beyond. The right insurance coverage can help.
Staying on top of your insurance coverage can help keep unexpected expenses like rising replacement costs from cutting potential farm revenue. A close eye on your coverage and a call to your agent can help make sure these costs don’t add to the financial pressure caused by inflation and other factors at home and abroad.
“All of these issues have a big impact on farm operational costs. We’re seeing higher prices for energy, machinery and many other inputs,” said Nationwide Senior Economist Ben Ayers. “It puts a lot of pressure on revenues many farmers are facing.”
Connecting with your agent is key
During this time of uncertainty, Nationwide and your local Nationwide farm agent are working hard to help farmers maintain the right coverage levels without incurring too much additional cost. Now is time to talk with your agent.
“My immediate concern is making sure you have adequate coverage,” said Nationwide Associate Vice President for Agribusiness Regional Sales Nick McCleish. “We have to make sure the amount of insurance is keeping pace with rising costs.”
McCleish cites a recent example when a farmer had to replace a $75,000 grain cart. But at the time of replacement, the price for that grain cart had surged to $90,000. That meant the farmer paid the additional cost out-of-pocket. “Paying those types of increased costs become much more difficult if you don’t keep your policy updated,” McCleish said.
Adding inflation guard coverage can help
The optional inflation guard coverage can help prevent such revenue losses by increasing dwelling and structure coverage limits at policy renewal. Also known as Construction Cost Adjustment, it helps to account for inflation in replacement or construction costs based on appraisals.
But inflation guard doesn’t always cover all additional costs. It’s important to have a good idea of costs for things like building materials and equipment ahead of time. Then match coverage levels to potential unexpected replacement or repair needs.
“Your insurance should not be a ‘set-it-and-forget-it’ type of activity. Keep your agent up to speed on how your operation’s changing. Make sure you’re covered appropriately,” McCleish said. “Have an agent that understands your operation, and the uniqueness of what you’re trying to do. Our Farm Certified agents serve that purpose.”
Visit AgInsightCenter.com for more expert tips and information from Nationwide.
*A.M. Best Market Share Report 2020. Nationwide, the Nationwide N and Eagle, and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. © 2021 Nationwide
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