Farming is a risky business. Predators, disease and environmental disasters all pose serious risks to your livelihood, and without livestock insurance, one serious adverse event could cause financial ruin. As such, it's vital that you take out the right type of livestock insurance, and it's also crucial that the policy underwriting is right for your herd. Make sure an insurer never declines a valid claim, and consider the five following underwriting issues when you next renew or take out livestock insurance for your cattle.
Get a professional valuation for blanket coverage
Underinsurance is a common problem with any policy, but this issue could ruin a cattle farmer. Generally speaking, insurers will pay the lesser of the market value of your cattle as agreed at the time of death or the sum you originally agreed with the underwriter. As such, you need to make sure the policy value is enough to cover the full value of the herd.
It's generally better to get a professional valuation from a third-party because the value of your herd depends on many factors. Not only must you consider feed costs, yardage costs and other expenses, you must also take into account the value per hundredweight of the breed(s) you own. As these costs change all the time, only a professional valuation can really give you the confidence you need.
List high-value animals individually
Some unusual or rare breeds are considerably more valuable than others. Indeed, the Rare Breeds Canada Conservation List recognises thirteen rare breeds. The Galloway, Braunvieh and Dexter are vulnerable, but the list describes the Milking Shorthorn and Kerry as critical.
As such, if your herd consists of these (or other) more valuable breeds, you will need to list the animals individually on your policy, particularly if you have a bull for breeding. Again, you may need an expert valuation, but you should also make sure the policy documentation clearly lists these valuable assets.
Decide if you want extensions for disease
General livestock insurance terms will protect your herd against disease, but some insurers exclude certain conditions as standard. For example, some livestock insurance policies will not automatically cover your herd against foot and mouth disease, brucellosis or hepatitis.
As such, you should talk to your insurer about any extensions for disease you think you may need on the policy. Some conditions, like mad cow disease, are rare in Canada, but an outbreak can wipe out entire herds. Indeed, in 2002, an outbreak of mad cow devastated the Canadian cattle industry, so for these conditions, you may need to pay a higher premium to protect your cattle.
Other diseases may not kill your herd, but you may still face significant financial losses. For example, salmonellosis doesn't often kill cattle, but the cost of treatment, abortion and lower productivity all continue to pose a risk to your livelihood. As such, you need to make sure your policy gives you the protection you need.
Confirm full coverage for animals in transit
Most cattle farmers must regularly transport animals. While livestock insurance policies generally include transit cover, the terms of coverage can vary considerably. It's important to consider what sort of insurance you need, according to the type of herd you own.
For example, some policies do not cover the loss of an unborn foetus if something happens to the female in transit. Similarly, some policies exclude incidents where somebody steals one of your herd while the animal is in transit. It's important to understand these restrictions up-front so you can decide if you want special terms added to the policy.
Understand your care and husbandry responsibilities
Even if your policy covers the death of your cattle, it's important to remember that the way you care for your animals could influence the outcome of a claim. For example, stud stock insurance will protect you against the death of an animal from injury or illness, but you must normally take quick measures to try to save the animal's life. The policy may insist that you contact the insurance company before you instruct a vet to carry out surgery. Similarly, insurers will normally only cover destruction on humane grounds if a vet authorises and performs the necessary steps.
Livestock insurance protects your herd against unexpected events, but it's important to make sure you have the right policy for your needs. If you're unsure about the terms offered, talk to an experienced farm insurance broker for more advice.