Farm Insurance Coverage Questions

What does farm insurance cover in New Zealand?

Farm insurance in New Zealand provides comprehensive coverage for agricultural operations, including:

• Farm buildings: Farmhouses, workers' cottages, barns, hay sheds, machinery sheds, woolsheds, milking parlors, greenhouses
• Equipment and machinery: Tractors, harvesters, planters, cultivators, spray equipment, irrigation systems
• Livestock: Dairy cattle, beef cattle, sheep, goats, horses, pigs, deer (typically optional)
• Business contents: Tools, workshop equipment, office equipment, stored feed, chemicals, fertilizers
• Public liability: Third-party injuries and property damage
• Business interruption: Loss of income from covered events

Policies are highly customizable based on your specific farming operation, size, and risk profile.

What's the difference between sum insured and replacement value?

Sum insured is the maximum amount you choose to insure an asset for - this is the cap on what the insurer will pay. Replacement value is the actual current cost to replace an item with a new equivalent. If your sum insured ($80,000) is less than replacement value ($100,000), you're underinsured. Many policies include "average clauses" meaning you'll only receive proportional payment even for partial losses. For example, being 20% underinsured means you only get 80% of any claim. Always set sum insured amounts at or above current replacement values and review annually as costs rise.

Is farm insurance coverage "all risks" or "named perils"?

Most farm insurance policies in New Zealand offer both options. Named perils policies cover only specific listed events like fire, lightning, storm, earthquake, theft, and collision. All risks (or accidental damage) policies cover any sudden, unforeseen event except specific exclusions. All risks coverage is broader and more expensive but provides better protection. For high-value equipment and machinery, all risks coverage is recommended. Buildings are commonly insured on named perils, while mobile equipment benefits from all risks coverage.

Does farm insurance cover natural disasters?

Yes, most farm insurance policies cover natural disasters including earthquakes, floods, storms, cyclones, landslips, volcanic eruptions, and fire. However, coverage varies by insurer and policy. The Earthquake Commission (EQC) covers residential buildings up to certain limits for natural disasters. Commercial farm buildings, equipment, and contents require private insurance. Some high-risk flood areas may have exclusions or higher excesses. Always verify your policy covers the specific natural disasters most likely to affect your region.

Are farm insurance policies on an indemnity or replacement basis?

Most farm buildings are covered on a replacement basis, meaning the insurer pays to rebuild to current building standards regardless of the building's age (subject to sum insured limits). Equipment and machinery can be covered either way: replacement value pays for new equivalent items, while indemnity value pays replacement cost minus depreciation based on age and condition. Replacement cover costs more but provides better protection. For expensive machinery, replacement cover is worth the extra premium. Always clarify which basis applies to each asset category in your policy.

Are all farm buildings covered under farm insurance?

Yes, comprehensive farm insurance covers all permanent structures on your property including farmhouses, workers' cottages, barns, hay sheds, machinery sheds, woolsheds, milking parlors, dairy sheds, greenhouses, storage facilities, workshops, and garage structures. Coverage typically includes the buildings themselves, fixed machinery within buildings, and permanently attached fixtures. Temporary structures, dilapidated buildings, and structures built from non-standard materials may have limited coverage or exclusions. Each building should be separately itemized with its own sum insured amount.

Is the farmhouse covered differently than other buildings?

Yes, farmhouses are typically covered as residential dwellings and may have different policy terms than commercial farm buildings. The farmhouse often includes higher specification coverage similar to standard home insurance, covering internal fixtures, fittings, and finishes to a higher standard. Workers' cottages receive similar residential treatment. Commercial buildings like sheds and barns have more basic coverage focused on structure and function. Some insurers separate residential and commercial buildings into different policy sections with different excesses and terms.

Does farm insurance cover dairy sheds and milking equipment?

Yes, dairy sheds are covered as farm buildings, and permanently installed milking equipment (rotary platforms, herringbone systems, vats, refrigeration) is typically covered as part of the building or as fixed machinery. Portable equipment like cups, hoses, and mobile units may be covered under farm contents or equipment. Given the high value of modern milking systems ($500,000+ for large operations), ensure adequate sum insured amounts. Business interruption insurance is crucial for dairy farms as milking equipment failure directly impacts daily income.

Are irrigation systems covered by farm insurance?

Yes, irrigation systems are generally covered, but coverage depends on the type. Permanent pivot irrigators and underground systems are typically covered under farm equipment or as building fixtures. Portable irrigation equipment is covered as farm contents or machinery. Coverage includes the irrigation system itself plus associated pumps, motors, control systems, and piping. Damage from electrical failure, freezing, or mechanical breakdown may require optional coverage. Given irrigation system values ($50,000-$300,000+), specify these items separately with appropriate sum insured amounts.

Does building coverage include fences and gates?

Standard farm insurance typically provides limited coverage for fences and gates, often only covering damage from specified events like fire, storm, flood, earthquake, or malicious damage. Normal fence damage from stock pressure, weather deterioration, or falling trees may not be covered. Some policies exclude fences entirely or have low sub-limits ($5,000-$10,000). Given the high cost of farm fencing, consider whether your policy adequately covers this. Specialized boundary fences, electric fencing systems, and livestock handling facilities should be specifically itemized if coverage is important.

What about sheds with mixed use (storage and workshop)?

Mixed-use buildings are covered, but you need to ensure both the building structure and contents are adequately insured. The building itself is covered under farm buildings. Workshop equipment, tools, and stored items need separate coverage under farm contents or equipment sections. Be specific about what's kept in mixed-use buildings when discussing coverage with your insurer. High-value items like welding equipment, machinery parts inventory, or stored chemicals should be itemized separately to ensure adequate coverage limits.

What farm equipment and machinery is covered?

Farm equipment insurance covers tractors, combine harvesters, planters, seed drills, cultivators, ploughs, harrows, spray equipment, spreaders, balers, mowers, front-end loaders, telehandlers, quad bikes, utility vehicles, feed mixers, grain augers, and other farm machinery. Coverage typically includes accidental damage, theft, fire, malicious damage, collision, and overturning. Each item should be listed with make, model, year, and insured value. Equipment used on public roads may require additional motor vehicle insurance.

Does equipment insurance cover mechanical breakdown?

Standard farm equipment insurance typically does NOT cover mechanical or electrical breakdown, wear and tear, or gradual deterioration. This is considered maintenance rather than insurable risk. However, mechanical breakdown insurance can be added as optional coverage for an additional premium. This extension covers sudden, unforeseen mechanical or electrical failure. Given modern equipment costs ($200,000+ tractors, $500,000+ harvesters), mechanical breakdown coverage provides valuable protection. It's particularly worthwhile for newer equipment under 10 years old where repair costs can be substantial.

Is equipment covered when being transported?

Equipment being transported on your own farm is generally covered under your farm insurance policy. Equipment being transported on public roads or to other locations may have limited coverage or require transit insurance. If you regularly transport equipment to contractors, shows, or other farms, discuss transit coverage with your insurer. Damage during loading/unloading may be excluded. Professional transport companies should have their own insurance, but verify coverage before handing over expensive equipment. For valuable items, consider specific transit insurance endorsements.

Are attachments and implements covered separately?

Tractor attachments and implements (ploughs, cultivators, mowers, post-hole diggers, etc.) are covered but should be itemized separately from the base tractor. Don't assume they're automatically covered under the tractor's sum insured - a $100,000 tractor might have $50,000 worth of attachments. List each significant attachment with its own value. Small, inexpensive implements may be covered under a general farm contents allowance, but anything over $5,000 should be specifically listed to ensure full coverage.

Does coverage include GPS and precision farming equipment?

Modern tractors and equipment often have expensive GPS guidance systems, auto-steer technology, yield monitors, and precision farming electronics worth $10,000-$50,000+. These should be specifically declared on your policy as they're highly valuable and theft-prone. Some insurers automatically include electronics as part of the machinery value, others require separate itemization. GPS equipment that's easily removable is particularly vulnerable to theft and should be highlighted to your insurer. Consider whether your policy covers technology at replacement cost or depreciated value.

Is hired or leased equipment covered?

Your farm insurance generally doesn't cover hired or leased equipment - that's the owner's responsibility. However, you may be liable for damage to hired equipment while in your care. Check lease agreements for insurance requirements; many require you to cover the equipment or have liability insurance for damage. If you regularly hire equipment, consider adding "hired equipment" coverage to your policy. This protects you from financial liability if hired machinery is damaged while under your control. Always verify insurance arrangements before taking delivery of hired equipment.

Does farm insurance automatically include livestock coverage?

No, livestock insurance is typically optional and purchased as a separate policy or add-on. Standard farm insurance covers buildings and equipment but not livestock unless specifically added. You can choose to insure all stock, only high-value animals, or self-insure entirely. For dairy herds with valuable genetics, breeding stock, pedigree animals, and show animals, separate livestock insurance is highly recommended. Commercial sheep or beef on extensive properties are sometimes self-insured, but this represents significant financial risk.

What livestock events are covered?

Livestock insurance covers death or necessary destruction resulting from accident (falls, drowning, vehicular impact), illness or disease (subject to policy terms), natural disasters (earthquake, flood, fire, lightning), attacks by dogs or wild animals, electrocution, and complications from pregnancy or birth for breeding animals. Some policies cover only accidental death; others include illness. Disease coverage often has exclusions for certain conditions or requires vaccination proof. Transit coverage for stock being transported is usually optional. Read policy wording carefully for specific event coverage and exclusions.

How is livestock valued for insurance purposes?

Livestock can be insured at market value, agreed value, or on a per-head basis. Market value policies pay current sale value at time of loss. Agreed value sets a specific value per animal at policy inception, providing certainty but potentially over or under-paying depending on market changes. Per-head sum insured sets a fixed payment amount per animal. For breeding stock and valuable animals, agreed value or detailed individual valuations provide best protection. Commercial stock is often insured at average market values per head. Values should be reviewed annually, especially as young stock mature.

Are there different policies for different livestock types?

Yes, livestock insurance is typically species-specific with different coverage, terms, and premiums. Dairy cattle insurance focuses on production value and genetics. Beef cattle policies emphasize breeding stock or commercial herds. Sheep insurance may cover breeding ewes or rams separately from commercial sheep. Horses have specialized coverage including mortality, loss of use, and veterinary expenses. Pigs, deer, and goats each have tailored options. Premium rates vary significantly by species based on risk profiles. Discuss species-specific coverage details with your insurer or broker.

Does livestock insurance cover disease outbreaks?

Disease coverage varies significantly between policies. Many standard livestock policies exclude specific diseases or only cover "unforeseen disease." Notifiable diseases requiring government-ordered destruction (like Mycoplasma bovis) may be excluded, with government compensation being the primary recourse. Some insurers offer disease coverage extensions. Always verify which diseases are covered and excluded. Vaccination requirements may apply for certain disease coverage. Given New Zealand's biosecurity risks, understand your policy's disease provisions thoroughly. Consider business interruption insurance to cover income loss from disease outbreaks.

Is there coverage for livestock in transit?

Transit coverage for livestock being transported to market, shows, or other farms is typically optional. Standard livestock policies may only cover animals while on your property. Transit insurance covers death, injury, or necessary destruction during transport including loading/unloading. For high-value breeding stock or show animals, transit coverage is essential. Even commercial stock being transported to sale has significant value warranting coverage. Specify regular transport activities to your insurer. If using professional livestock transport, verify their insurance coverage limits and whether you need supplementary protection.

What is public liability insurance and is it included?

Public liability insurance protects you if someone is injured on your property or if your farming activities cause damage to others' property. It covers legal liability for bodily injury or property damage to third parties. Coverage is typically included in comprehensive farm policies or available as essential add-on. It covers injuries to farm visitors, contractors, delivery drivers, members of the public, and damage your stock, equipment, or activities cause to neighbors' property. Coverage limits typically range from $1 million to $20 million. This is absolutely essential coverage for any farming operation.

How much public liability coverage do I need?

Coverage needs depend on your farm type and public exposure. Commercial farms: $5-10 million minimum. Lifestyle blocks: $2-5 million. Farms with public access (farm stays, tours, shops, events): $10-20 million. Farms adjacent to public areas: $10 million+. A serious injury could result in multi-million dollar claims. ACC covers many injuries but not all - foreign visitors, non-physical harm claims, and certain legal actions aren't ACC-covered. Higher limits cost surprisingly little extra. Don't underinsure this critical coverage.

Does liability insurance cover damage my livestock causes?

Yes, public liability typically covers damage your livestock causes to neighboring properties - for example, if your cattle break through a fence and damage a neighbor's crops or property. It also covers injuries your animals cause to third parties. However, coverage may be limited if poor fencing, inadequate animal control, or negligent management contributed to the incident. Keeping proper fences, gates, and livestock handling facilities in good condition is essential. Document your farm management practices. Intentional actions or gross negligence are typically excluded from coverage.

Are employees covered under farm insurance?

ACC covers most workplace injuries in New Zealand, but you still need employers' liability insurance for claims not covered by ACC - including claims from overseas workers, certain types of legal action, and exemplary damages. If you employ workers or contractors, employers' liability insurance is essential. It covers legal defense costs and compensation for employment-related claims. Coverage limits should reflect your employee numbers and work nature. Farms with contractors, seasonal workers, or employees operating dangerous machinery need robust employers' liability coverage.

Does farm insurance include professional indemnity?

Standard farm insurance doesn't include professional indemnity, but you may need it if you provide professional services. Examples include farm consultancy, contract farming services, breeding advice, livestock agistment, or machinery contracting. Professional indemnity covers claims arising from professional advice, services, or errors. If your farming operation includes service provision to other farms or clients, discuss whether professional indemnity is needed. This is separate from public liability and requires specific coverage if your activities extend beyond traditional farming operations.

Is damage from farming operations excluded?

Damage resulting from normal farming operations is often excluded. For example, soil compaction from machinery, crop damage from harvesting operations, or damage to pasture from stock grazing aren't insurable events - they're normal farming activities. However, accidental damage beyond normal operations may be covered. If your harvester catches fire and destroys crops, that's covered. If you accidentally spray herbicide on the wrong field, that's likely excluded as operational error. The line between operational error and insurable accident can be unclear - document incidents thoroughly and let your insurer assess coverage.

Are there exclusions for certain weather events?

Most policies cover sudden weather events (storms, floods, hail) but exclude gradual weather effects. Drought damage, gradual wind erosion, frost damage to crops (unless specifically insured), and seasonal snow accumulation are typically excluded. Some policies exclude flooding in known flood zones or have significantly higher excesses for flood-prone properties. Coastal properties may have exclusions for coastal erosion or storm surge. Always verify weather-related coverage for events common in your region. Climate change is increasing extreme weather frequency - ensure your policy adequately covers likely scenarios.

Does insurance exclude damage from pests or vermin?

Damage caused by pests, vermin, insects, or birds is commonly excluded, especially if it results from gradual infestation or lack of preventative measures. For example, rat damage to wiring, possum damage to buildings, or bird damage to stored grain are typically excluded. However, sudden, significant damage from pests may be considered - each case is assessed individually. Maintain good pest control practices and document them. If you discover pest damage, report it immediately rather than letting it worsen. Some insurers offer limited pest damage coverage as optional extensions.

Should I add business interruption coverage?

Business interruption insurance is highly recommended, especially for dairy farms and intensive operations with daily income. It covers ongoing expenses (wages, loan payments, utilities) and lost revenue when your farm operations are disrupted by insured events. Without it, you must maintain all financial obligations from savings while generating no income during recovery. Coverage periods typically range 12-24 months. Calculate how long rebuilding might take and ensure adequate coverage period. For dairy farms, where daily milk income stops immediately with milking shed damage, business interruption coverage is absolutely essential.