Agents who work with agricultural producers strongly encourage their clients to sit down with their agent to review and update coverages at least once every three years. During this meeting, producers can add new buildings and update coverage levels for buildings in order to have sufficient coverage to cover the replacement cost for the structures.  Likewise, they should increase coverage levels if there have been upgrades of major pieces of equipment e.g. tractor, combine etc.  At this meeting, they may wish to analyze how deductibles on their policies influence their premiums.

The deductible is the amount that an individual pays out-of-pocket for expenses before the insurance company will cover the remaining costs of a claim. Producers may wish to think of a deductible as the amount of loss that they can sustain for an insurance claim and the business will continue to operate. For example with a $500 deductible on a $1,500 claim, the insured person pays $500 and the insurance company pays $1,000. Generally, higher deductibles will result in lower premiums for a given coverage level. Producers may wish to consider raising their deductibles to $1,000, $2,500 or $5,000 as a means to offset higher premiums due to increased coverage levels for a specific policy.

Premium levels are based on the frequency of claims, cause of the claim and the size of the claim. Insurance agents have stated that policy holders who frequently file claims as a way to offset some their premiums will have higher premiums than those who rarely file claims. In some situations, the policy will not be renewed by the insurance company.

Insurance plays an important role in protecting and preserving an individual’s net worth when catastrophic events such as fire, weather related events or judgments occur.   It is essential that a policy holder sit down with their insurance agent at least once every three years to review and update coverage levels so hard earned equity will not be lost or taken away.