Dairy Insurance

We’ve being working alongside dairy farmers for over 100 years, and during that time not only have we become the leading rural insurer – we’ve also developed a real understanding of what your biggest concerns are.

With the reduced payout, we know you need to maximise profitability and control your costs right now. We also understand that it’s vitally important to keep your farm operating during the whole milking season. That’s why we recommend you have adequate insurance cover for three key areas of potential financial impact.

Please note that the information below is a summary of some of our cover options. For full details you should refer to the relevant policy wordings.

Rainfall has been heavy, the grass is growing and milk production is looking good. But what happens when the rain doesn’t stop and a flood washes out your road, preventing the collection of your milk?

Our Farm Contents policy gives you the option to insure for the non-collection of your milk because property, roads or bridges in the vicinity of your farm have been accidentally damaged by natural disaster, storm or flood. You’re insured if this damage prevents your milk being collected.

Under the Optional Farm Milk benefit, we will pay either the income that you lose, the value of the lost milk, or the amount shown on your insurance certificate.

In the flush of peak season, high winds bring down an old tree that you’ve been meaning to clear for some time. A string of bad luck sees the tree land on your power lines, not only taking out power to your own shed but to your neighbour’s shed too.

FMG provides a number of insurance solutions that would support you during this loss. Farming Interruption cover (provided under your Farm Contents policy) provides for the reasonable additional costs you incur to maintain your farming operations. Should a tree bring down your shed’s power supply, Farming Interruption cover would pay the hire costs of a generator, if a claim has been accepted under the Farm Buildings policy, until the power was back on. We pay up to $10,000 per event (or a higher amount if specified on your insurance certificate).

If you’ve taken our Unspecified Farm Building policy, the power poles and lines on your property that you’re responsible for are covered. We will pay the least of; the reasonable costs to repair or replace, present day value, or $5,000 per event. You can choose to insure up to a higher amount if needed – this will be shown in your insurance certificate.

FMG’s Liability policy covers you for your legal liability for the damage of property belonging to others, if you are found to be negligent. If your neighbour’s shed is out of action because your tree took out their power, you may be liable for the third party losses. In this case, your neighbours insurer may pay the cost of repairing the pole and then claim for their payment, which your liability insurance will cover.

Our Rural Managers can help you establish what level of cover you need, so you pay the right premium for the risk (rather than a blanket sum unrelated to the specific risks you’ve identified for your own operation).

To make sure you’re ready for this season, call your FMG Rural Manager or if you’re new to FMG, call our Service Centre on 0800 366 466 and our team will help get you started.

Please note that the information above is a summary of some of our cover options. For full details you should refer to the relevant policy wordings.

Click on the Dairy Sales Presenter.pdf(231.17 KB) to find out more about what we offer dairy farmers.

Understanding how and when you’re covered – business interruption insurance for dairy farm operators

Over recent months there have been a number of articles written about the downstream effects of storms, power outages, fires and the like on dairy farm operations – particularly around loss of farm profits and loss of farm milk. From our reading of these articles, one thing seems to be clear – there is considerable confusion about what insurance is available, and what it does and does not cover, for these kinds of risks.

In the case of loss of farm profits, Business Interruption insurance (also called Loss of Profits Insurance) is designed to maintain income and minimise the financial shortfall caused by an interruption to your business – such as increased costs of working (hiring generators, transporting livestock), wages, loss of rent, etc.

A good place to start when understanding how Business Interruption insurance works, and what type of events are covered, is to think about what events could interfere and cause an interruption to your farming operation. For example:

Situation 1. There’s damage to your own milking shed building or contents which is interrupting your business (e.g. milking shed fire)

Situation 2. The interruption to your business is caused by damage to someone else’s property (e.g. damage to a power station which cuts off power to your milking shed)

The level of Business Interruption cover you may need depends on which type of scenario you face. In Situation 1 your farm contents policy or the policy on your milking shed may well include some basic level of farm interruption cover which kicks in when your milking shed is damaged and your business is interrupted as a result.

This basic form of business interruption cover, called Farming Interruption, is automatically included in FMG’s Farm Contents policy. This pays up to $10,000 but only for reasonable additional costs required to maintain your farming operations, for up to 12 months after an interruption to your business caused directly by accidental loss to your farm buildings or contents insured with FMG. The cover kicks in when a claim under your FMG Farm Contents or Farm Buildings policy is accepted.

Situation 2 above is slightly more complicated. Loss of farm profits caused by a power cut resulting from damage to a power station would not be covered under the additional benefit like the one above, because the interruption has not been caused by damage to your own insured property. This is where a more comprehensive form of Business Interruption cover is required, generally in a separate policy.

FMG’s Business Interruption policy provides cover for gross profits, additional increased costs of working, dual wages, outstanding debtors’ and wages in lieu of notice. The policy also offers some important optional benefits – including Electric Power and Substations cover. This benefit would cover Situation 2 above, if the damage to the power station was caused by one of the events defined in the policy (fire, explosion, lightning, snow, storm, vandalism, etc).

As highlighted recently in the news, power outages caused by snowstorms have also led to farm milk losses – and some confusion about whether those losses were covered because the damage which caused the spoilage was not to the farmer’s own property. One article even said that, bar one insurer who recently entered the market, no insurance firm would cover power loss. This is simply not the case. FMG’s Business Interruption policy outlined above would cover the loss of value of your spoiled milk resulting from your milking shed being out of action because the supply of power to your shed was cut due to snowstorm damage to the power station.

The reported confusion seems to be around whether or not your own property needs to be damaged. As we have seen above, that depends on the level of business interruption cover you have. FMG’s advice to dairy farmers is that, because your business depends on daily milk production for most of the year, it makes sense to ensure you have comprehensive cover to ensure the effects of any disruption to your business are minimised. This includes a realistic sum insured for your Business Interruption policy – at the moment we’re finding that rebuilding a milking shed can take up to 12 months.

We recommend that you review your policy wordings thoroughly. Cover should include loss of profits, additional increased costs of working, farm milk, wages, prevention of access, power stations, natural disaster and the like. Be sure you know how the cover works – what kind of event and damage is insured to meet the conditions for a valid claim?

Think carefully about the types of risks that could happen to your milking shed which could potentially put your milking operation out of action, then put a contingency plan in place to deal with each of them. And of course, ensure you have the type and level of insurance cover to ensure those contingency plans are successful, should you need them.

FMG is New Zealand’s first and only specialist rural insurer. FMG’s rural managers can work with you to identify and plan how to handle your current and potential on-farm risks, based on your business objectives, financial structure, farming methods, industry type and physical farming location, etc … in other words, a risk management plan tailored just for you.

To find out more, call our Customer Service team today on 0800 366 466.