The right insurance is a lifesaver when disaster strikes. The wrong insurance can be worse than the disaster itself.

Examining your feedyard insurance package each year can be tedious, but in today's business climate it's a task that shouldn't be taken lightly, says Pete Fish, client project manager with Insurance and Consulting Associates (ICA), Kansas City, MO.

ICA is an agent for Firemen's Fund Insurance Company specializing in risk management and insurance services for auction markets, commercial feedyards and swine confinement operations.

"Basically, if it doesn't smell, we don't insure it," Fish says.

Fish and ICA associates Mike Young, Julie Steinbock and Lola Holmes manage an exclusive nationwide contract with Firemen's Fund to service the feeding industry. ICA's philosophy is simply to protect the assets of a client's business, Fish adds.

Smelly animals aren't strangers to Steve Parks. Area manager for livestock operations based in St. Joseph, MO, for The Hartford, Hartford, CT, Parks has written policies for everything from a local 4-H club with 20 head of calves to feeders feeding 125,000 head per year. Staying close to the producer is key to Parks' business and The Hartford philosophy.

Approaches To Coverage "There are several approaches to offering coverage," Mike Young, ICA managing partner says. "ICA's method is to develop a relationship with the feedyard management and ideally become a part of the management team.

"While we offer coverage that includes property damage, business interruption, personal property, feedstuffs/hay and medical supplies among several other items, these alone are not our primary goal," he adds. "We spend a lot of time learning as much about the operation as possible, before even approaching the client.

"In doing so, we can bring forward a 'package concept' that offers coverages such as general liability, boilers and machinery, inland marine, auto insurance and so on."

This doesn't happen instantly though. A complete risk audit is conducted before any recommendations are made, Fish says. "These audits require a significant time investment on our part and include an on-site inspection of every aspect of the operation."

Based on these audits, ICA then recommends a coverage approach that puts the company into an exclusive arrangement between the feedyard and Firemen's Fund. Ideally, ICA becomes a risk management partner with the feedyard.

Parks says The Hartford approach begins with a basic coverage form consistent to all feedyard customers. Then, additional coverages are added based on individual feedyard needs.

"For instance, we have available coverage for losses due to measles, contaminated feed or water, freezing losses and others," Parks says. "Our basic trust is livestock - we're going to provide coverage for livestock for which we'll provide all coverages necessary. Liability and structure insurance policies are available from our farm department."

Types Of Claims There are as many types of claims as there are cattle feeders, but one claim is as consistent as its inconsistent cause - weather.

"Weather is by far the cause of most of our claims," Young says. "Inevitably, a blizzard will hit causing several deaths in several yards. At that point we have to act quickly."

Parks agrees that weather-related claims represent the largest percentage of claims The Hartford incurs. While pasture and feedlot policies provide coverage for losses caused by lightning, tornadoes and other perils, the largest dollar losses arise from blizzards and snowstorms.

In general, loss claims can be handled by mail or fax. After the company is notified, proof of loss is required.

Young says ICA requires that a qualified veterinarian perform a necropsy on 20% of the dead animals. Rendering receipts are then required for all deads. Payment is made to the feedyard based on the current market value of the animals.

Processes with The Hartford are similar.

"We want to be notified within 24 hours of a loss," Parks says. "We're not looking for final information at that point. The first responsibility of the feedyard staff is to maintain the health and condition of existing animals. Once that's done and the relatively simple amount of paperwork is completed, we can turn the claim around and return a fair market value payment based on animal loss."

Like most services, costs vary from feedyard to feedyard. Fish, Young and Parks all say variability results from individual feedyard needs and the level of risk involved.

"Whatever you do, don't make a buying decision based on price," Fish says. "Seek out policies that fit the specific needs of your feedyard, backed by reputable, highly-rated companies. Ratings services such as A.M. Best Company can help with this part of your decision."

Tough times in the industry present new ways of doing business for insurance carriers. The current market downside is a prime example.

"What the current market situation does for us is present new challenges," Parks says. "As operations consolidate and get larger, the more independent they become on items such as insurance. This means the responsibility comes back to us to work with them to develop a product they can use.

"Things are changing faster than ever now, but we've been here since the beginning of the feeding industry - we'll find the right keys to work in different situations," Park says.

Fish says ICA works on an account basis, rather than a commission structure. "As part of a feeder's risk management team, we'll find ways to adjust to different ways of doing business."