Know your liabilities

We all hope a major loss doesn't happen to us; accident or injury, fire and flood - it's not pleasant to think about. Certain costs are clear - such as the replacement of contents, machinery and buildings - but the liability costs are often forgotten and misunderstood.

Fire liability

While there are obvious costs of fire such as the loss of your assets, replacing your items, and the time and stress involved in getting your property back up and running, there are also additional costs you may not be aware of. The cost to put out the fire and the liability cost if your fire damages neighbouring property - especially if your land borders DOC land or forestry plantations.

Charlie Taipana, FMG's Senior Underwriting Analyst, strongly recommends having Forest and Rural Fires Act liability cover. This insurance "provides cover for levies apportioned to you by a fire authority under sections 46 or 46A, and costs recoverable from you under section 43 of the Forest and Rural Fires Act 1977. The level of cover you need depends on the potential costs involved to put out a fire and, depending on your location, you may require more than the standard $250,000 of cover."  Talk to your local FMG manager for advice, as they can assess your property with risk prevention and management in mind.

General liability

As a farmer you require liability insurance when (not if) your stock get out on the road, to cover the cost of damage to others and their property, as well as any legal defence costs you may be required to pay. No matter whether your stock escaped through a gate you accidentally left open, or through a hole in the fence, you're still liable. Losing one animal and repairing a fence may not set you back financially, but the cost of repairing other people's badly damaged vehicles, or property can seriously affect your farming income. Conducting regular checks of your boundary fencing is one way to avoid these extra costs, and having adequate liability insurance will give you the cover you need to ensure your business continues to run smoothly after a loss.

Claims of liability made against you can be complicated, confusing and in many cases upsetting. The great thing about having Liability insurance is that all you have to do is provide full details of the circumstances to your FMG Claims team and they will assess whether or not you have been negligent. If you are found to be legally liable then, subject to the usual exclusions, your Liability policy will meet the third party claim. If you are not legally liable, FMG will support your innocence by declining liability on your behalf to the third party. Either way your Liability policy will ease your concern.

For other simple tips visit www.fmg.co.nz, or call us on 0800 366 466 to find out more about our specialist insurance options for lifestyle farmers.