Improve dairy farm insurability by addressing these five claim risks

The following information is provided by Nationwide®, your approved insurance and financial services company.

Today’s dairy farms face significant risks that can lead to costly insurance claims. Adding to the challenge, fewer insurance carriers are willing to work with dairy farmers, making insurability a growing concern. But with proactive planning and management, dairy farmers can reduce the likelihood and severity of claims, ensure smoother operations and enhance their farm's insurability.

"Most dairy farmers understand the importance of being prepared, but they often struggle to find the time to act on it," said Nationwide Senior Dairy Consultant Dan Rice. "Unfortunately, this can lead to massive losses and prolonged disruptions, especially in cases like fires that account for  45 percent of our dairy farm claims. By taking a few proactive steps, dairy farmers can't only reduce the risk of such losses but also improve their insurability."

Five major causes for dairy farm insurance claims

1.     Fire is among the most significant and costly risk for dairy operations. To minimize fire hazards on your dairy farm, it’s crucial to assess key areas such as electrical systems, well systems and milking parlor equipment. Consider these preventative measures:

• Relocate electrical rooms at least 100 feet away from main barns and parlors
• Install fire-retardant panel systems to contain potential fires
• Place wells and mechanical systems in separate, standalone buildings
• Implement cost-effective fire suppression systems in high-risk areas
  

2.     Severe weather events pose significant risks to dairy farms, including heavy snow accumulating on roofs, structural vulnerabilities during severe weather and damage caused by natural disasters. To mitigate these risks, consider the following proactive measures:

• Invest in reinforced structural designs to withstand extreme weather conditions
• Ensure buildings meet proper specifications for durability and safety
• Conduct regular assessments to identify and address potential weaknesses in facilities
• Carefully select building locations, considering proximity to other structures and environmental factors

3.     Motor vehicle accidents are a major cause of dairy farm claims. To reduce this risk, dairy farmers should consider these proactive steps:

• Provide comprehensive driver safety training for all qualified drivers
• Establish clear and consistent operating protocols
• Ensure daily cleaning, maintenance and inspection of equipment
• Equip all farm vehicles and equipment with fire mitigation tools, such as fire extinguishers and E Fire Balls

4.     Livestock losses due to illness, disease or natural disasters can significantly impact dairy farms. Proactively planning can help minimize claims and losses. Here are key strategies to consider:

• Implement robust biosecurity measures and limit visitor access
• Establish pre-arranged agreements with trucking companies for emergency animal evacuation
• Build networks with neighboring farms to secure temporary housing for livestock when needed
• Develop clear protocols to ensure animal welfare during emergencies
• Conduct regular training and drills to prepare for various emergency scenarios

5.     Equipment breakdowns and failures can severely impact operations. Minimize the risk with these proactive measures:

• Conduct regular thermal imaging on electrical systems
• Deploy advanced electrical monitoring tools, such as PrevTech
• Implement comprehensive preventive maintenance programs
• Establish backup systems for essential equipment
• Provide thorough employee training on equipment use and maintenance

Collaborate with your agent to improve insurability

To help enhance their insurability, dairy farmers should not only adopt effective risk management practices but also foster strong, proactive relationships with their insurance agents. Regular meetings with your agent are crucial for discussing risk management strategies, reviewing current policies and identifying any gaps or necessary updates to address new and emerging risks. By working closely with your agent, you can ensure comprehensive coverage and stay prepared for unforeseen challenges—while helping to protect your next.

Prevention and preparedness are keys to insurability and cutting the risk of losses and disruption from the most common causes for insurance claims on today’s dairy farms. By taking these steps, dairy farmers can demonstrate their commitment to reducing risks, making them more attractive to insurers and potentially leading to better coverage terms.

Visit AgInsightCenter.com for more resources and expert tips to help you run a successful business and maintain the safety of your operation.

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