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Date Created: 12/21/15
Why Is Farm Insurance Important? Nowadays, farms are for-profit business with the benefits of profits and the risks of losses during its operations. As a form of protection against the risks of losses arising from plant and animal diseases, natural disasters, and manmade events, owners and managers of these agricultural establishments are strongly advised to secure the appropriate farm insurance package. Aside from the usual risks faced by businesses in the modern economy, farms must deal with unique circumstances that necessitate agricultural insurance for crops, livestock and equipment, among other assets. These unique risks come from several aspects of normal farm operations including but not limited to: • The crop harvests and/or livestock production are unpredictable to a large degree since illnesses (i.e., plant diseases brought by pests, fungi and bacteria) and injuries to the animals are possible despite the best preventative measures. Negative outcomes can also swing in two ways – either the harvest/production falls short of the target or falls completely into losses. • The harvest/production is partly dependent on uncontrollable events particularly related to Mother Nature. Farm insurance is, in fact, a must in areas where natural disasters such as tornadoes, storms and hurricanes frequently happen (i.e., the so- called Tornado Alley where farms are located). • The risks of price fluctuations for the crops and livestock should also be considered when getting farm insurance quotes. Farmers can rely on the insurance coverage to cover a part of the losses in case of price drops in the market for their products. The bottom line: Farmers are at the mercy of so many uncontrollable factors mainly brought by Mother Nature so much so that farm insurance remains as the best hope as buffer against losses. Then there’s also the fact of life that farms face similar opportunities and threats as businesses in non-agricultural industries as well as allied industries. Keep in mind that, in modern-day economies, all industries are interrelated and interdependent so much so that a gloomy forecast on the service industry can spell trouble for the agricultural industry. The business risks for farms will obviously vary depending on the size, types of operations, and geographical area, among other factors, of the establishment. The farm insurance quotes will reflect such differences in coverage, premiums and other aspects of the insurance package. Ultimately, agricultural insurance is an integral aspect of effective and efficient risk management for farms. It is always easier to plan and pay for the insurance premiums than to be faced with unexpected business losses. Of course, not all farm insurance packages will address all types of needs and wants in premiums, coverage and special conditions. You must then choose the right type of agricultural insurance based on your unique circumstances, requirements and goals. Your best bet: Discuss your options with insurance brokers at Ford Kinter with its main office in Victoria, Australia for your options. www.fordkinter.com.au
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