The following information is a Web Extra from the pages of Farm Journal. It corresponds with the article "Droplet Deductible." You can find the article in Farm Journal's 2013 September issue.
Cover Your System and File a Claim
Above all, insurers say, you should make sure to ask about replacement cost when choosing the right policy to ensure the right level of coverage. Being underinsured can result in a financial penalty from the insurance company. List every part of your irrigation system on your policy. And make sure your insurer can process claims quickly to avoid putting your crop at risk.
"They need it up and running in three or four days … they just have to have that water on that crop," says Jeff Focht, president of Omaha, Neb.-based Diversified.
Whether your pivot beats itself up or takes a beating from the elements, the first step to filing an insurance claim should be to contact both your insurer and your pivot dealership. Diversified uses a farmer’s irrigation dealer as its adjuster, allowing for fast service.
Photos are taken of the damage, the farmer fills out a sworn statement describing what happened and when, and the dealer provides an estimate to the insurer describing the costs associated with replacing the system. You should plan to provide a map showing the location of the equipment as well paperwork with a legal description of the location.
Types of Pivot Insurance Coverage
In general, pivot insurance policies fall into three categories, says Kevin Gubbels, who sells pivot insurance in Norfolk, Neb. Basic plans cover weather events, theft of copper wire and other parts, and collision with trucks, tractors and implements. Broad plans include events listed in basic as well as falling objects; ice, sleet and snow; and accidental water damage.
Most farmers Gubbels works with opt for a special form, which provides extra coverage for events not included in the other policies. Examples include lightning strikes and damage by pests. In one case, a customer discovered that a mouse had chewed on wiring connected to a 150-hp pivot motor valued at $9,000. The customer was protected under a special form on his policy.
Mechanical-electrical endorsements are also available with many pivot insurance plans. In the case of Diversified, the endorsement covers the cost of mechanical or electrical failure on a machine up to 20 years old. A farmer might need that endorsement if a switch fails and the pivot system walks into itself.
Before your pivot beats itself up or takes a beating from the elements, consider keeping your pivot policy separate from your farmowners policy, Gubbels adds. That mitigates the risk of a big premium increase when disaster strikes.
"If you have a dozen pivots and you had a windstorm come through and get those pivots, and you’re looking at spending $1 million to replace 12 pivots, you’re going to have a large claim on your farmowners policy," Gubbels says. "That’s going to affect your rate, your premiums in the future, because of your large loss."