Agriculture is an essential part of any country’s economy, and in many developing countries, it is one of the biggest industries. However, agriculture can be a risky business. From unpredictable weather conditions to widespread disease or pest infestations and more, many risks can impact your farm at any time. If you own or operate an agricultural business, it’s important to understand how agriculture insurance can help protect your assets and financial future in the event of a catastrophe. Here are some key things you should know about agricultural insurance if you own or operate a farm:

What is Agriculture Insurance?

Agriculture insurance is a type of insurance that protects farmers and other agricultural business owners from risk. There are many different types of agricultural insurance. Insurance policies work similarly, but the type of coverage depends on which type of policy you choose. For example, crop insurance coverage protects against loss due to natural or environmental factors, like poor weather conditions or disease. And livestock insurance can cover loss due to theft, death by accident, or death by natural causes.

Types of Agriculture Insurance

Crop Insurance

If you are a farmer, then crop insurance can help protect your harvest in the event of unexpected weather conditions or a widespread outbreak. Crop insurance can cover a harvest destroyed by weather, floods, extreme temperatures, wildfires, or other natural disasters.

what’s in it for the crop insurance?

• It covers all commercial field crops including wheat, maize, barley, rice, tea crop, coffee, sugar cane, tobacco, all horticultural crops, and floriculture and tree crops.
• Also covers farm assets and equipment including greenhouses and irrigation facilities.
• The insured farm will have greater access to agriculture credit since the policy document will be accepted by financing institutions as an alternative form of security
• policies available under crop insurance ;

The two policies available under crop insurance are:

Multi-Peril Policy – This covers the crop against various perils except those specifically excluded.
Index-Based (Kilimo Salama) – is a microinsurance product that covers crops against identified weather perils that can be measured using a computerized weather station.
This cover protects your farm crops against various perils such as losses due to adverse weather conditions such as floods, hailstorms, drought, barn fire, uncontrollable pests, theft, etc. The sum insured can be the farmer’s input costs, output (expected yield), or both.

What’s not included on the cover?

All crop losses as a result of non-insured perils:

• Deterioration of crop and product quality due to interruption of work or any process accidents.
• Consequential loss due to delay in harvesting, detention, or confiscation of produce or equipment
• Error in pesticide application and failure to adhere to recommendation on application procedures.
• Theft, mysterious disappearances, and unaccountable losses

How are crop insurance premiums charged?

The premium rate depends on the crop type and the number of insured perils. This ranges between 4% to 15% of the sum insured

Livestock Insurance

If you own a ranch, you probably have a number of animals on your land. Livestock insurance generally covers accidents, acts of God, theft,s and so forth. It usually excludes illegal acts, confiscation, and quarantines. Livestock insurance can also cover the loss of a breeding herd in the event of a natural disaster such as a wildfire.

What’s in it for you?

• The insured farm will have greater access to agriculture credit since the policy document will be accepted by financing institutions as an alternative form of security.
• You get to have greater access to livestock improvement loans.
• In the event of a loss of livestock brought through a finance facility, both the insured and the financing institution are protected since the insurer pays for the loss.

How does livestock insurance work?

It applies to an individual or herd-specific coverage to your animals. These animals can be anything from cattle to small ruminants (pigs, rabbits, poultry) — it makes no difference. Your farm will need to have a secure footing on operations to avoid potential accidents and diseases that could befall the livestock.

This is a cover against losses due to accidental death, diseases of terminal nature, emergency slaughter on the advice of a recognized veterinary surgeon, and theft of livestock in raising units or paddocks.

What is not covered by the livestock insurance?

• The first 10% of loss for each and every loss
• The first 20% of the loss for theft
• Famine, malnutrition, and feed poisoning
• Impotence and infertility
• Prior diseases and deformities
• Any death due to neglect and prior husbandry practices

How is the premium on the insurance charged?

• Premium rates depend on livestock type and population, years of experience, and skilled manpower. This rate ranges between 4% and 9% on the sum insured. (Subject to a minimum premium of Kshs. (3000-5000 per farmer) depending on the entity of the livestock they have insured.
• Veterinary and evaluation reports act as a basis for determining the sum insured

Why is Agricultural Insurance Important?

The first major benefit of taking agriculture insurance is that it aids in fighting poverty. A natural disaster is unpredictable. In case of a disaster, the insurance company compensates anyone who had bought their insurance. With the money paid out, farmers are in place to reinvest in farming and other agricultural activities making them rich again.

Agriculture investment is expensive since it involves putting a lot of resources in one place. Agriculture is a risky business; however, it is among the most profitable. Farmers who buy the insurance premiums for their agriculture businesses have a big advantage because they are in place to recoup all their losses. Such losses could be in crops, animals, and farm inputs. By paying an affordable insurance premium, farmers recover their losses.

An important benefit of buying agriculture insurance premiums is that farmers get peace of mind. Natural disasters are unpredictable since they can happen at any time. Those who have bought insurance premiums, get peace of mind in that if anything happens to their investment, they are sure of compensation from the company providing insurance packages.

A good agriculture practice involves investment in new technology, machines, and tools. Agriculture insurance taken against the crops and livestock allows farm managers to open up to new technologies in the market. Each year, there are new technologies invented to help farmers get more produce from their investments. Since the new investments are risky, insurance packages help the farmer to try new technologies. The insurance companies allow farmers to get insurance covers for the new technologies such that, if they fail, farmers will not incur losses, as the insurance company would compensate them.

Agriculture Insurance FAQs

How to Find the Right Agricultural Insurance?

Agricultural insurance can be complicated. There are many different types of policies, and each one covers different risks and has different terms and conditions. To find the right agricultural insurance, we at Shimin Insurance Agency first need to determine what risks your farm faces, then we research the coverage each type of policy offers and choose the one that best suits your needs

If you are unsure of what risks you need to prepare for, you can visit one of our offices that is closest to you and we can help you understand the risks your farm faces, and we can also walk you through the different types of agricultural insurance available with our trusted partners and find one that best suits you.