melloInsurance

Serving our clients, Serving our community

loss of use

Understanding ‘Loss of Use’ Insurance Coverage for Farm Machinery

We understand as a farmer, your machinery is vital to daily operations. So, let’s go over some key points about ‘Loss of Use’ coverage, ensuring you’re well-informed and prepared for any unexpected machinery issues.

What is ‘Loss of Use’ Coverage?

Q: What exactly does ‘loss of use’ coverage entail?

A: ‘Loss of Use’ coverage is essentially a safety net for when your machinery is out of commission due to an event covered by your policy. It’s designed to help compensate for lost income by covering costs like renting replacement equip

ment, ensuring your farming operations can continue without significant interruption.

What Does ‘Loss of Use’ Cover?

Q: Which situations are typically covered under ‘loss of use’ insurance for farm machinery?

A: This coverage typically applies when your equipment is damaged by specific events such as fire, theft, vandalism, or certain natural disasters. It helps by covering the cost of renting or leasing equipment or hiring someone to perform those tasks.

 

Q: Are there any limits or restrictions on what this coverage pays for?

A: Yes, there are usually limits on the duration and total amount the policy will cover. For example, it might cover up to a certain number of days or a maximum dollar amount per day. In the event of a total loss of the machinery, most insurers cover loss of use until an offer is made for payment. At Block’s Agencies, we offer a solution with ‘Extended Rental Expense’ through our partner, First Acre Insurance. ‘Extended Rental Expense’ provides an increased period of time for machinery rental expenses when the delay to replace lost machinery is outside of your control. It’s crucial to review your policy thoroughly to understand these specifics. Different insurers may offer different types of coverage in this scenario.

What Does ‘Loss of Use’ Not Cover?

Q: Are there any common exclusions to watch out for in ‘loss of use’ coverage?

A: Absolutely, there are common exclusions. Typically, this coverage won’t extend to issues like machinery breakdowns due to normal wear and tear, lack of maintenance, or mechanical failures unless your policy explicitly states so.

Q: Does this coverage apply to all types of farm machinery?

A: Not always. Coverage can vary depending on the type and age of your machinery and the specifics of your policy. Some policies might exclude older models or specialized equipment, so it’s important to check what your policy specifically covers.

How to Ensure Adequate Coverage

Q: How can farmers ensure they have adequate ‘loss of use’ coverage for their machinery?

A: To ensure adequate coverage, you should regularly review your insurance policies and assess the value and types of your machinery. It’s also a good idea to consult us to make sure your coverage aligns with your needs. Remember to update your policy as you acquire new equipment or as your farm’s conditions change.

In conclusion, while ‘Loss of Use’ coverage can be extremely beneficial in minimizing disruption, understanding the details of what is covered is essential. Proper management of this insurance can help protect your finances and keep your farming operations running smoothly, even when unexpected challenges arise. If you have any more questions or need further assistance, feel free to reach out!

Be prepared for this years Harvest

With the warm weather comes a ripening crop. We are approaching harvest very quickly, in fact there were some combines out in the field already.

Every harvest has potential risks, and we need to make sure that those risks are either managed properly or that you have coverage in place to protect yourself in the event of a loss. First of all, with the warm weather and dry stalk, there is a potential fire trap in the combine. From the risk management side, you should have a fire extinguisher nearby at all times, and a water truck on the field, wouldn’t be a bad idea either. As for insurance, please review your equipment list with us and look over the values on that equipment, to make sure it is up to date. We would hate to have a loss and realize the equipment wasn’t listed or it was underinsured.


It  is important to make sure you have loss of use coverage on your policy for your machinery. Loss of use coverage is money you can use for a rental, if your equipment has had an insurable loss. For example: You have an ingestion claim on your combine that has resulted in damages of $25,000. The ingestion damage is covered under your insurance policy on your combine, however, you need another combine to continue with harvest while this is being repaired. If you have loss of use coverage of $10,000, you can use this coverage to rent a combine during the time your combine is being repaired.  There are different limits you can buy, we used $10,000 as an example. Please contact our office if you would like to add this coverage or more information on it.

If the conditions were right this year, you may have a bumper crop. Once that crop is in the bin ready to be transported; we need to make sure that your investment is covered. Insuring your threshed grain should be a priority to prevent losses due to theft, fire, windstorm, and upset and overturn during transportation. Your grain should be insured to a minimum 80% of replacement value to avoid co-insurance.
Today’s bins are getting larger and more complicated. With automatic bin sweeps, aeration fan systems and other technology; we need to properly insure these structures. For risk management, we would  suggest anchoring down your hopper bins to make sure they are secure, even if there is or isn’t grain in the bins. This will also result in a rate reduction for the insurance premiums on those bins. With all of  the fixed equipment in the bin, “equipment breakdown” coverage will help cover losses due to a sudden and accidental mechanical failure. And again, when insuring the bin, we should insure it for the replacement value, that way if there was damage due to fire, wind or collision from moving machinery, you are eligible for full value of the bin if replacement or repairs are needed.

The old farm saying is, the season is not over until the grains in the bin. Some might say until you have a cheque in your hand. There are a lot of variables on the way, and if we can protect your investment through that process, you will sleep better at night.