What is the difference between blanket and scheduled coverage for my farm equipment?

I know most of you will not read beyond the picture in this post, but I got to thinking the other day as I drove through our Robertson County farmland areas how great an investment farmers have in their equipment.  I saw combines combining wheat, no-till planters planting soybeans and milo, tractors pulling

Farm equipment is a great investment
Farm equipment is a great investment

round balers baling some late hay, and large bush hogs being used to clip pastures.  Our county is blessed to have many acres of agricultural land that good farmers managed well.

 

These farmers have a lot invested in this equipment and it just makes good sense that it is protected properly in case of damage incurred from fire, collison, wind, etc.  Properly insured is the key phrase here.  Case in point is the following true story:  (names are not the true names)

But a Sad Story:

Clyde ran a very successful hay business that marketed hay throughout the state and region.  He became very busy as his farming business grew.  He and his insurance agent, Steve, got together at his farm shop to write his farm policy.  With three hay fields maturing fast and a disc mower that needed repaired, Clyde was pressed for time  Therefore instead of scheduling the equipment Clyde wanted insured on the farm policy (this would have taken some time) he decided to instead give his agent a dollar amount for a blanket coverage to save time.  Fast forward a few years and a lot of growth in Clyde’s farm business which included corn by now when he experienced his first claim.  One of his new tractors caught fire and became a total loss of $50,000.  As procedure on a claim with any farm policy with blanket equipment coverage the insurance company’s claims adjuster asked for a complete list of Clyde’s equipment and total value of each item.  Long story short, Clyde’s complete list totaled over $500,000 but the blanket coverage on his policy was for $200,000.  Clyde had underestimated the total value of his equipment while his policy was never update.

Therefore keeping with the insurance contract, the company could only pay Clyde 40% of the value of the tractor, i.e. $20,000!

Now we can point fingers at the company, the agent, and Clyde himself as to who is to blame.  The company simply said they had been receiving premium all these years to protect only $200,000 worth of farm equipment.  The agent said that Clyde was confident that day that the value he gave was sufficient.  Finally, Clyde stated that the agent should have updated that value at least yearly with him. In the end, Clyde transferred his farm policy to another company.

What is my best option?

In conclusion, if you have a small farm with just a few pieces of nice equipment maybe scheduling your items one by one would be the safest way to go.  On the other hand, if you have many high dollar worth pieces of equipment on your large farm maybe a blanket amount would be good.

This amount should be a true total of the value of all the items you own.  

Update it regularly, i.e every time you purchase a new piece would be a good rule to follow.  An annual review of every piece of equipment insured should be routine for you and your agent.  Don’t live Clyde’s story!