Running a feedyard has its own inherent risks. There's no need to increase those risks by having inadequate insurance coverage. To protect your business, a yearly insurance review is a worthwhile exercise.
"Insurance protects your assets in many kinds of losses and gives you peace of mind," says Larry McKean, a consultant and rural business expert with State Farm Insurance Companies, Bloomington, IL, the country's largest farm business insurance provider. "Good policies provide financial security in situations that create expenses the business can't absorb."
McKean says good business management dictates having adequate coverage for all aspects of the business. And, it's likely you and your agent can find a policy to fit specifics of your feedyard.
"Your insurance agent should be a good risk manager and understand your business," McKean says.
"At the same time, feeders need to evaluate what type of exposure the business has in each department. Share this with the agent and, know what can put the company out of business," he says.
There's no need to jump at every coverage opportunity offered. McKean says that when a potential risk is something the feedyard can absorb financially, it's probably more prudent to self insure.
For example, if you have aging vehicles, he suggests putting money for comprehensive and collision coverage aside and buying only liability coverage. The money saved can be used to cover the loss of older vehicles or buy newer ones.
"There's always the risk of personal injury on any operation," McKean says. "A good liability policy will cover the medical costs of accidents up to predetermined limits, regardless of fault. In addition, we recommend an umbrella policy which has some underlying limits, but can be put in effect with limits of $1 million to $10 million, depending on the size of the business."
Legal risks are unavoidable as well. Relatively new in the industry are policies written for employer's practice liability. This coverage takes care of litigation costs and settlement fees, plus helps protect the business against individual employee acts of sexual harassment and discrimination.
There are limits to the amount and kind of insurance available. Events related to ground or groundwater contamination, such as an anhydrous spill or slurry tank spill, are limited to $100,000 coverage. That's only if the spill is sudden or accidental. Higher coverage limits aren't available, according to McKean.
Insurance policies that are thoroughly researched and bought for the right price will reduce business exposure and risk, McKean adds. The cost can be well worth the investment when disaster hits.