Australian farmers operate in one of the riskiest environments in the world. Farming is already a risky industry to be in, but with the added risk of the unpredictable and severe Australian weather, it can become extremely difficult to manage.
Farmers are all too aware that a severe hailstorm, fire, or other unpredictable event can have a disastrous effect on their crops (and as such, source of income) throughout the growing season.
What Is Crop Insurance?
Crop Insurance offers financial protection to agricultural producers against either the loss of their crops due to natural disasters, such as hail, drought, and floods, or the loss of revenue due to declines in the prices of agricultural commodities.
What Does Crop Insurance Cover?
Crop Insurance is designed for farmers to minimise the uncertainty that they face each year. It protects cropping operation against a range of risks including:
- Hail
- Fire
- Chemical overspray
- Harvested crop, grain or hay
- Livestock intrusion or straying livestock
Why Buy Crop Insurance?
Crop Insurance works differently than other types of insurance, as it essentially evens out farm income over the years. Farmers pay premiums in profitable years in exchange for substantial payouts in poor harvest years.
There are many reasons for farmers to consider taking out crop insurance:
- It reduces the likelihood that the farm will have to raise external capital at difficult times.
- It improves the chances of having sufficient internal funds available to take advantage of investment opportunities.
- They may be able to negotiate with their bank for a lower borrowing rate, if their cover significantly reduces revenue risk.
- Insurance brings peace of mind to the farmer. Insured growers face less downside risk on their income, which means they are more likely to make better cropping decisions rather than try to cut corners.
Above all, knowing that they are protected against catastrophic risk, insured growers may find they enjoy life more as their financial stress is significantly reduced.
What Crop Insurances are Available in Australia?
No matter the size of your cropping operation, the number of fields on your farm or the number of different farms you own, you will be able to find Crop Insurance to suit your requirements.
There are several different types of crop insurance available in Australia. Different Insurers offer different types of cover and policy limits, so it makes sense to look around for the most appropriate cover for your needs.
PSC Insurance Brokers can help you make sense of the policies on the market.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.
