I happened to be flying from Port Lincoln to Adelaide in November when fires tore through a large portion of the Mid-North. The scene from the air was devastating. Many farmers and residents lost houses, sheds and other property. This type of awful event is the reason why we take out insurance. The purpose of insurance is to put the insured back in the same or similar position as before the disaster. Having the correct cover is critical.
When similar fires burnt through Lower Eyre Peninsula in 2005 many farmers found that they were significantly underinsured. This was partly a decision based on the cost of premiums versus the level of cover, partly because the cost to reinstate property such as fences was higher than expected and partly because not all items of value, such as the hay piled in the hay shed, were taken into account when the level was set.
Insurance is an essential part of a farmer’s business. It is easy to simply pay the annual premiums and to not give the level and type of cover much thought. But as many of the unfortunate victims of these types of events will attest, the correct level and type of insurance may be the difference between getting off the floor to fight another day and never fully recovering.
By Joseph Anderson, Partner, Mellor Olsson
This article was originally published in the Stock Journal on Thursday 11 February 2016.