Business Clinic: What insurance is necessary to contract?

Whether you have a legal, tax, insurance, management or land problem, The Farmers’ Weekly Business Clinic experts can help.

Here, Tim Slinger, Associate Director at A-Plan Rural Insurance, looks at what you need to consider in terms of insurance when you start contracting work.

See also: How to Reduce the Risk of Crop Farm Fire

Q: I am looking to supplement my farming income by doing custom work. I have already helped a neighboring farmer with part-time jobs, but if I have to work for others more formally, what should I consider as insurance?

A: There are endless ways to supplement farm income, from off-farm employment to diversification projects and one-time services.

In all of these cases, it is important to discuss the plans with your insurance broker before you start working.

Working for others or “outsourcing” is likely to affect your responsibilities, your income and, potentially, the machinery and equipment used on the farm. It is important to establish who will be liable in the event of a claim and who therefore needs insurance.

The overhead will likely be minimal. However, having the right cover in place is essential.

Here are some examples of contract work we see and key things to consider:

Occasional or occasional work

  1. Who is employed by whom? Do you or your staff work for a neighbor (outside your payroll)? Or do you or your staff still work for you, just on a neighbor’s farm (covered by your employer’s liability insurance)?
  2. What kit do you use? Are you or your employees insured to use it? Do you/they have the qualifications to use it?
  3. Who did the risk assessment?

Arable contract farming

Many farmers help others combine, transport, store and even dry grain. Always check the contract – it should state who is responsible for what.

1. Combine and transport

  • Does your insurance extend civil and employer’s liability cover to you and your staff when you work on other operations?
  • Will you use your own machines and tools? Is your kit insured outside your home?
  • If your combine or machinery breaks down, do you have coverage for the cost of short-term replacements?

2. Grain storage and drying

  • Who is responsible for insuring grain while it is stored on your farm? You can be held liable for damage to third-party grain stored in your buildings, so check the agreement.
  • Income collected for the storage and drying of grain can also be insured if the facilities are lost or damaged, for example during a fire or flood.

Contractualization of the entire operation

For those undertaking contract work throughout the year, here are some additional considerations:

  • Who is liable for a breach of Defra’s conditionality rules? Coverage is available, but make sure you are fully aware of what the farmer/owner is responsible for and covered and what the contractor is responsible for and covered.
  • Do you advise on crops to grow, seeding rates, chemicals and fertilizers to apply and general strategy?
  • Crop spraying is higher risk than most other jobs due to the risk of crop damage. Make sure your liability coverage extends to damage to third-party crops.

Other activities

Activities such as earthworks, hedge trimming, snow removal, maintenance of buildings and trees or felling are generally insurable under the agricultural insurance policy.

However, if it expands, it may be wise to cover certain aspects with more specific and specialized insurance.

Check agreements and be aware of any conditions applied – such as ‘minimum depth’ or ‘maximum height’ when grading or maintaining trees, respectively.

The key to getting good insurance in all of these examples is to make sure your broker and insurer understand the work you are undertaking.

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