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june 2016 year
june 2016 year
Partner Andrey Kosenkov
exclusively for journal "Business"

How to Choose Optimal Insurance Coverage for Agricultural Machinery?

Partner Andrey Kosenkov
exclusively for journal "Business"

Successful claim settlement depends mainly on your careful consideration of insurance coverage options available in the market. The choice should be defined primarily by your business needs.

Full CASCO coverage similar to vehicle insurance

In 99 % of cases insurance companies would offer you this type of coverage. However such insurance policy has plenty of pitfalls, the biggest one being the simple fact that agricultural machinery is covered by insurance only while it is on the road. This means that 100 % of field operations are not insured at all.   Statistics show that the lion’s share of insured events happen to the agricultural machinery during field works. Not to mention that such insurance coverage is the most expensive of all.

Insurance coverage of field operations with limited CASCO coverage

It’s important that risk of rollover be also included in the coverage although a lot of insurers tend to deliberately exclude this peril from quote.
This type of policy covers major risks as it fully insures the agricultural machinery while it is operating in the fields. Normally harvesters or seeding machines use limited open roads therefore it’s a common practice to list them in the insurance policies.  It’s important that risk of rollover be also included in the coverage although a lot of insurers tend to deliberately exclude this peril from quote.

Property insurance coverage for storage periods

This kind of policy is relevant for the agricultural machinery during the period of time when it is not used  - normally, during winter. Judging by my experience, the best option is to draft combined type of insurance policy consisting of field operations plus limited open roads’ coverage and property insurance coverage for winter period.    

A few more nuances

- To insure agricultural machinery during its transporting you will need to conclude cargo insurance policy as the abovementioned programs are not applicable to shipments.

- Make sure to include the risk of fire due to the short circuit into the policy as nearly 95 % of fires are caused by it.

- Find out the certificates of which competent authorities would be sufficient to prove the occurrence of insured event. A great number of policies require the police certificates while the police have a right to issue the certificates only for the open roads accidents. If the insured event took place in the field, the only state authority empowered to issue the necessary document is Technical Inspection Department of State Agricultural Inspection. Ministry of Emergency Situations, in its turn, is the only competent authority which has a right to issue certificates relating to the fires.  

Obviously, conclusion of the right insurance agreement requires much time and efforts. Nonetheless it is totally worth it. Careful examination of the policy clauses, thorough understanding of insurance coverage and responsibilities under the contract allow avoiding misunderstandings and disputes in the future to guarantee speedy claim settlement.