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Rising Farm Insurance Costs – Why is it Happening?
Having adequate farm insurance is an essential part of managing the risks that come with the business of farming. And the combination of higher insurance premiums, rising production expenses, higher labor costs, lower commodity prices, and higher interest rates is putting an overall financial strain on farms. This article aims to help farmers better understand why insurance costs have increased.
Factors Contributing to Rising Farm Insurance Costs
1. Market Conditions: Many insurers are exiting the market or have reduced the amount of business they are willing to write, which means there is an increasingly limited supply of farm insurance. This limited supply, combined with sustained high demand, has resulted in higher insurance premiums.
In addition, insurance companies are being more selective about which farms they insure. Many insurance companies are favoring businesses with strong management, effective risk control programs, and good financial health.
Volatile Market Conditions – However, even well-managed farms are seeing rate increases due to volatile market conditions. Fluctuations in commodity prices can significantly impact a farmer's income, leading to increased risk for insurers.
2. Technological Advancements: New technologies adopted by insurance companies can sometimes mitigate risks, but they can also increase the cost of managing these technologies and accessing risks. These technology costs can contribute to farmers paying higher premiums for farm insurance.
3. Climate Change: Farm insurance exists to protect you from financial losses caused by unforeseen events. However, as climate risks grow, insurers are facing higher claims, which drives up premiums. As extreme weather events are becoming more common, these are some of the factors leading to higher farm insurance premiums:
Higher Crop Losses
Commodity Prices
Damage to Infrastructure
Increased Reinsurance Costs
What You Can Do
Managing Rising Farm Insurance Costs
As farm insurance premiums increase, you may want to explore these strategies to protect your bottom line.
Implement Proactive Measures: Diversifying and rotating your crops, adding irrigation systems, and conserving soil can help mitigate weather-related risks and potentially lower premiums.
Diversify Income Sources: Agritourism or renewable energy projects are alternative income streams you may want to consider providing more financial stability.
Leverage Government Programs: Take advantage of subsidized insurance and disaster relief programs. The USDA’s crop insurance options through the RMA (Risk Management Agency) will pay a portion of your premiums.
Tailor Your Insurance Coverage: Farm & Country Insurance agents can customize your policy based on your specific needs. This ensures you’re covered where it matters most without paying for unnecessary extras. We will evaluate the level of coverage your farm needs based on your specific risks and financial situation.
Invest in Resilient Infrastructure: Strengthen your farm’s infrastructure to withstand extreme weather. This could include reinforced buildings or improved drainage systems to minimize damage.
Protecting Your Farm for the Future
Call on Farm & Country Insurance located in Honeoye Falls, NY, to help you find the right insurance solutions that will best meet your farm’s business's needs. At Farm & Country Insurance, we are committed to helping you find comprehensive coverage that fits their unique needs, ensuring your farming legacy is well-protected. Call our office today at (585) 624-2474 and speak to one of our helpful agents.
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