For Farmowners Clients: Blanketing vs Specific Listing of Farm Inventories, Equipment and Livestock
Consider blanketing if you are insuring more than $25,000 of farm inventory: As a more dynamic alternative to specifically listing inventory items on your farmowners policy you may want to consider “blanketing”.
When you blanket you must inventory everything on the farm, including livestock owned by you, produce (including hay and straw), supplies, chemicals, and shop tools. HOWEVER, you can then EXCLUDE anyone or multiple categories from that blanket. As an example if you don’t want to insure livestock or supplies and chemicals, you can simply add an exclusion for those items to the blanket. This prevents them from being included in the adjustment process in the event of a claim.
Advantages of blanketing:
- Automatic coverage (no time limitation as with Coverage F) for newly acquired items*
- When your total inventory is determined, you ONLY need to purchase coverage for 80% of the inventory amount. Yet everything IS covered at its full actual cash value. THIS SAVES MONEY!!!!
- Value of items is determined at time of loss, rather than pegged arbitrarily ahead of time by the policy. The amount paid will be the actual cash value of the item or the repair at the time of loss. Remember even with Coverage F, if an item is listed for more than it’s worth, the company will still only pay the worth of the item.
- Less concern with keeping the blanket updated. We will contact you approximately every three years for an update request. However if you ever purchase highly valued piece we should be notified immediately so you don’t become underinsured. And of course it is important to review the list periodically to re-evaluate the worth of existing inventories as they depreciate, and on occasion, appreciate.
*The company reserves the right to perform an inventory at time of loss to determine your ACTUAL inventory, and then compare it to the amount of blanket coverage you have purchased. If your purchased amount is LESS than 80% of your actual inventory at time of loss, there IS a co-insurance penalty. So it is IMPERATIVE to keep an eye on your actual inventory vs your insurance amount for Coverage G.
Remember to include shop tools, small equipment, i.e.: generators, welders, etc, and lawnmowers worth over $2500. The farmowners policy our agency utilizes will only cover lawnmowers up to $2500 as personal property (Cov C).
You can lump shop tools and misc equipment on one line. Example: “Misc tools and equipment- $8000.” There is no need to list every hammer and nail…. For this “misc line”, I usually recommend listing out on the Coverage G inventory those items worth $1,000 or more, and lumping all other items into “Misc tools and equipment”. This will keep your list more manageable. The blanket rate per $1000 of coverage is about .60 higher, however, the 20% “back out” in every case will more than override this slightly higher rate and save you money. If you are interested in this type of protection and want to pursue it, please contact our office.
Until Next Time,
Brian E Matthias