Are You Covered? How To Reduce Your Operation’s Insurance Risk
With the cost of living on the rise, so are the values of insurance settlements paid out in lawsuits. Kevin Charleston, owner of Specialty Risk Insurance in Carthage, Mo., shares a few ways to protect yourself and your operation against a gap in coverage.
Who’s On the Policy
According to Charleston, the name on an insurance policy can cause confusion. Is it under the LLC? The operator and their spouse? The spraying business? He says this often gets lost in the shuffle when property is transferred into a trust.
“Whatever names are on the policy is who they're going to write the check to. If it's not correct, then that causes a whole big problem,” he said on an episode of the Farming the American Countryside podcast. “You really compromise the insurance contract if your name isn’t on it because they don’t have a duty to defend that name when it’s not on there.
Charleston recommends sitting down with your insurance agent for just a few minutes to double check that everything is named properly.
“Every time I sit down with somebody, I find out something they didn't tell me about,” he says. “Nobody wants to call your insurance agent and talk to them unless you have to. But it’s just part of the deal.”
Valuation of Assets
Charleston says a common mistake is having liability insurance that only covers the value of the operation’s assets.
“You have to figure out your personal assets — not just the company you're protecting — and if someone could get through the company to your personal assets [in the event of an accident and lawsuit],” he explains.
Even with personal assets included, he suggests taking the extra step to have coverage above that value.
“A jury of our peers is not necessarily a jury of our peers. It's somebody who's emotional and has never lived on a farm,” he says. “We're seeing awards of $5 million to $15 million over something that would have been $300,000 three or four years ago. If there's a child involved in any way, we're seeing awards beyond what we've ever seen.”
Documentation
Another step Charleston says can help protect you is documenting as much as possible, such as:
• Safety training
• Defensive driving training
• DoT compliance
• Semi inspection/walkaround
“Trucks are the No. 1 target point for an attorney,” he says. “You need to have your scheduled maintenance documented. You need to have your walkarounds documented. That plays well in court if you have an issue.”
He says overall, it’s important to remember there's a lack of public awareness when it comes to the ag industry.
“In farming and agriculture, our thought process of common sense is not the same typical thought process of somebody just driving down the road,” he says. “The biggest thing I tell everybody to plan for today is the people who don't understand what we truly do.
To hear more from Charleston, listen to this episode of Farming the American Countryside.
