10 Mistakes to Avoid When Insuring Livestock

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There are unique challenges and potential risks that come with running a livestock operation. Your livestock is essential to your operation, and it’s important to protect them. Having a robust, comprehensive risk management plan in place can help protect your livestock, protect your operation against potential risks, and protect your livelihood. When it comes to insurance for your livestock, it’s essential to have the right types of coverage and enough of it. Here are some common mistakes to avoid when insuring livestock:

Mistake #1 – Underinsuring Livestock or Having Insufficient Limits

One of the most common mistakes to avoid when insuring livestock is underinsuring them or having insufficient limits on your policy. Not only does this underestimate the value of your livestock assets and productions, but it can also leave you undercompensated if a loss occurs.

Having enough insurance is one thing. Keeping accurate and detailed inventory records on your livestock can help ensure your animals are correctly valued and sufficiently covered on your insurance policy. Include and update things like:

• Species
• Breed
• Age
• Gender
• Purchase price
• Purchase receipts
• Photographs
• Current market value
• Health records

Not having the right types of coverage or the right limits on your insurance policy is a serious risk of financial loss if something goes wrong with your livestock or operations, which is why these are mistakes to avoid when insuring your livestock and farm. Without proper coverage, the larger the scale of the loss, the bigger the financial loss your operation incurs. With sufficient coverage for your livestock, assets, and operation, your ranch is protected against vulnerabilities, and you can avoid costly surprises.

Mistake #2 – Not Getting Mortality Insurance

Your animals are key assets to your ag operation. Not only are they a substantial financial investment, but their health and care are essential to your livestock operation’s long-term profitability.

Losing an animal isn’t just the loss of the animal itself, but also means a decrease in production, future potential, and more. Not having insurance coverage for those situations when they occur can mean substantial financial losses for your operation.

Livestock mortality insurance is like life insurance for your animals. Rates will vary based on use of the animal, age, and more, but this insurance can provide coverage in the event of a loss. Not getting mortality insurance is a mistake to avoid when insuring livestock.

When it comes to equine mortality insurance, another common mistake is not adding major medical coverage as an endorsement on the policy. Major medical coverage is only available as an add-on to a mortality policy and can help cover unexpected or unforeseen veterinary expenses should your horse get injured or become ill.

Mistake #3 – Not Listing All Insureds on the Policy

Having the right insurance for your livestock is one thing; making sure the coverage extends to everyone else in your livestock operation is another. What is needed can vary depending on liability coverage and policies, but you want to make sure that your insurance coverage extends to cover whoever is working in your operation and working with or around your livestock.

Check your insurance policy declarations page and see who is listed as an insured on the policy. Make sure everyone who should be listed on the policy is listed on the policy. If anyone needs to be added, or if you are not sure if someone or a specific situation would be covered, ask your insurance agent. It’s important to know the coverage you have and to update your policy if needed before you need to use it.

Mistake #4 – Focusing on Short-Term Fixes

Another common mistake to avoid when insuring livestock is focusing on short-term fixes while ignoring long-term risks and challenges. You may need insurance to help you handle immediate situations. However, if you are not also taking measures to manage risk long-term, you are leaving your operation vulnerable to loss and repeated problems in the future.

A common example of this is a disease outbreak that causes some of your animals to fall ill. There are immediate responses required to handle that situation and protect your livestock. Depending on the situation and the insurance coverage you have, your policy may also respond. In addition to handling the immediate situation, it is essential to review and improve biosecurity measures to help prevent outbreaks and ensure the protection of your animals in the future.

Relying on short-term fixes and ignoring these necessary considerations for long-term risk management is a mistake. Not only can it cause extensive financial loss in your operation, but it can also result in repeated claims in the future, which can increase your insurance costs, lead to claims being denied, becoming ineligible for certain types of coverage, or even a non-renewal notice for your policy.

Mistake #5 – Not Having a Disease Prevention Plan

Disease outbreaks can easily wipe out your flock or herd. Even if a disease outbreak is able to be contained quickly, it can still be devastating for your operation. Not only can there be production delays and costly treatments, but there can also be ongoing health concerns for your livestock. Preventative care and biosecurity protocols are essential for protecting your livestock. They are also required by some livestock insurance policies.

Having good biosecurity measures and protocols in place for disease prevention can help reduce the risk for your livestock when there are outbreaks. It can also help reduce the risk of the spread of human diseases to your animals. Additionally, you can invest in insurance coverage that can help reduce the financial loss from disease outbreaks. In addition to protection and stability for your operation, this also allows you to focus your time and energy on recovery.

Mistake #6 – Only Having Coverage For Certain Types of Loss

It’s important to consider all potential risks to your operation and have coverage for likely types of loss. If you do not consider all potential risks and only have coverage for certain types of loss, you could be leaving your livestock operation unprotected and vulnerable.

Potential risks for livestock operations can include, but are not limited to:

• Damage or loss caused by severe weather
• Feed supply shortages
• Labor shortages
• Safety concerns for workers
• Animal health issues
• Environmental hazards
• Economic instability
• Market volatility

Severe Weather

Severe weather and extreme weather can cause severe damage to livestock operations. In addition to damaged buildings or equipment, broken fences, or damage to other infrastructure, debris or damage from storms can reduce or block access to feed, or block or disrupt the water supply.

Livestock can be injured in storms, and they can also cause livestock deaths. If fences and perimeters are damaged, livestock can also escape and wander away from your property, which also leaves them vulnerable.

Preparing for weather-related risks as much as possible can help prevent loss and reduce damage when they occur. You can also explore weather-related insurance coverage with your agent to make sure your operation has some insurance protection against these potential losses. The right coverage, and enough of it, can help keep your operation stable and keep it running after severe weather.

Feed Supply Shortages

Severe weather isn’t the only thing that can disrupt feed supply and cause a shortage. There can be supply chain issues, including shipping delays or decreased yields, as well as increased demand that can also cause feed supply shortages.

This has a huge impact on the health and safety of your livestock. On top of potential shortages, you may also have to contend with rising feed prices, which can be a challenge for your operation to handle and can cause instability in your production or profitability.

Instead of facing decreased productivity and profit, there are coverages available to help provide stability to weather fluctuations in the market or other issues. Make sure you discuss your options with your agent to determine what is available for you and what makes the most sense to address risk for your livestock operation.

Labor Risks

Labor shortages or workplace injuries are common labor risks that can cause disruption in a livestock operation, especially for skilled workers. If labor is scarce and you cannot find the employees you need, or if an employee is injured and cannot work, it is difficult to keep production running smoothly and at the same rate. In these situations, there can often be downtime that slows down or limits production. Increases to operational costs also often follow on top of any compensation for injured workers.

Comprehensive labor risk coverage for your livestock operation should include liability coverage and farm worker’s compensation coverage. Depending on your operation and specific situation, there may be other risks that require other coverages. A conversation with your insurance agent and a review of your farm insurance policy can help ensure you have the coverage you need.

Mistake #7 – Not Having Protection Against Market Swings or Loss of Income

Another one of the mistakes to avoid when insuring livestock is not having protection against market swings or loss of income. Livestock Risk Protection is a USDA livestock insurance program that can help protect eligible livestock from market swings or changes in commodity prices, at least against declining livestock prices.

When a loss occurs that disrupts your production, there is often a loss of income, and there could also be additional expenses that are required to keep operations going during a loss. Although they don’t protect against market changes or economic variations, Loss of Business Income and Extra Expense Coverage can help provide protection from financial loss or additional expenses incurred due to a covered cause of loss.

Mistake #8 – Ignoring or Not Understanding Policy Exclusions

A key mistake to avoid when insuring livestock, and with insurance in general, is ignoring or not understanding policy exclusions. It’s easy to assume that just because you have insurance or have a certain type of coverage, you are covered.

However, it’s not enough to just “have insurance.” Simply having insurance does not mean you are covered for everything. You have to have the right types of coverage, and you need to be aware of what policy exclusions may apply to your policy. For example, if you are transporting livestock or showing them at events, you may need to add or extend coverage to protect livestock while in transit or at events.

When reviewing your insurance policy and talking with your agent, make sure you know the covered losses as well as policy exclusions and documentation requirements. For any types of loss that are excluded on your current policy or not yet covered, there may be endorsements or other coverages you can add to your policy to make sure you are covered for those types of loss in the future.

Your insurance agent can help you evaluate what makes the most sense for your specific operation. If there are specific documentation requirements, your agent can also walk you through what those are and when and where they apply.

Mistake #9 – Not Consulting an Experienced Agent

Livestock operations have unique needs and unique risks that need to be addressed. Although an insurance agent who does not have experience in ag can still help you, it’s not the same as an agent with experience in insuring ag operations.

In addition to the standard risks and coverage for ag operations, there are also unique scenarios that come with working with other farmers and ranchers, transporting livestock and materials, and more. Depending on the details of your operation, these can be reasons why you need additional liability coverage for your ag operation.

An agent with ag experience knows the ins and outs of insuring ag operations. Not only do they understand all aspects of your operations better, but they can also efficiently go beyond common risks and coverage, avoid pitfalls, bring in coverage options and details that have the biggest impact on your operation, and truly customize your policy.

Mistake #10 – Not Updating Insurance Regularly

Another one of the mistakes to avoid when insuring livestock is not updating insurance regularly. Changes in your operation and changes in the value of your assets are signs you need to review your farm insurance policy, and could mean that it is necessary to update your insurance.

Sticking with the same policy for years without reviewing or making necessary changes can leave you with coverage gaps or outdated coverage. You don’t want to wait until a loss occurs to find out whether your coverage is up to date. Making sure you do a farm and ranch annual insurance review is a good standard, but you may need to review insurance more often depending on changes in your operation.

Make sure you are having conversations with your insurance agent as things change with your assets and operation. You may not always need to adjust coverage, but being proactive about it ensures you remain protected and avoid costly coverage gaps.

Get the Right Coverage For Your Livestock With Ruhl Insurance, a Division of Horst Insurance

Sufficiently managing risks in livestock operations is essential. Keeping these mistakes to avoid when insuring livestock in mind can help you cover many of them. Every livestock operation will have unique needs and risks to consider.

Talking with an independent insurance agent with ag experience can help you get the coverage you need for your operation. If you need to acquire coverage or want to review your current farm insurance coverage, contact Ruhl Insurance, a Division of Horst Insurance, at 717-665-2283 or 800-537-6880.

Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.