The time to think about insurance should not occur when we need it. Since cattle prices are at their highest in over a decade and operating costs are also rising, insurance should be used as a tool to protect your most valuable asset: your operation.
Shane Baum, cow-calf producer and agent for Specialty Risk Insurance, told WLJ it is important to sit down with an insurance agent and discuss how much risk you are willing to offset and the agent can tailor products to fit your needs and budget.
Shane said there has been a substantial increase in value due to higher cattle prices and replacement costs, so it is crucial not to undervalue what you are insuring.
“We’re looking at higher values on all classes of cattle this year based on the market, and because we are seeing elevated prices on everything—making everyone’s balance sheet look better—we are at higher risk,” Shane said. “We have products that can mitigate some of that risk in case of a substantial loss.”
Shane said that during this time of year, with producers shipping cattle to the auction barns, there has been a greater amount of truck accidents. With calves rising almost one-third in value from last year, a producer could lose that value if policies are not updated to reflect the prices cattle are garnering, should an accident occur during shipping. Shane said a cargo policy would cover the transport of animals and insure against injuries or death of the animals.
Additionally, Shane said his company offers livestock policies to cover the females in the herd or a mortality policy for special-valued animals such as breeding bulls separate from a farm and ranch policy. He said the cost varies but is usually about the same as the supplement on a farm and ranch policy, but it covers more animal perils. Shane said a unique product they offer is if an operator is custom feeding and doesn’t own the animals, they can have endorsements for contaminated feed or water.
Shane said Speciality Risk Insurance also offers insurance products backed by the government, such as Livestock Risk Protection (LRP); Pasture, Rangeland, and Forage (PRF); Rainfall Index; and Annual Forage.
Shane continued he has seen an increase in awareness of these products, and more producers are purchasing LRP to protect their investment due to the current volatility in the market.
Shane said producers in his area of northeastern Colorado are purchasing policies that cover forage and pastureland due to the unpredictability of the weather.
In addition to protecting cow-calf operators, he said the company can cover feedlots, backgrounding yards, dairy operations, farm/ranch operations and livestock barns. Feedyards can also purchase policies that report on a monthly reporting basis as cattle move in and out continually.
Shane said more producers are also buying umbrella policies to cover liability situations, such as if a cow gets out and gets killed. While producers may balk at buying additional policies to cover these expenses, Shane said the costs are minimal and pointed out if a producer does suffer a significant loss and is forced to get an operating loan, the current interest rates create a heavier burden on an operation’s bottom line.
Shane likes to sit down with the client and discuss the risk they want to take to offset potential losses.
“If I am sitting down with a cow-calf producer and they are worried about the $20,000 bull they just bought out in the pasture, we can provide some peace of mind on that $20,000 investment,” he said.“If they are in the North and bad weather comes through, we can have a pasture policy that makes them feel a little better about the $2,500 bred female they just bought.”
Shane continued that by being at the producer’s operation, he can tailor products to suit their specific needs.
“Maybe you’re a cow-calf operation that also backgrounds some. Or maybe you don’t wean and send them directly to the sale barn,” Shane said. “We offer such a broad range of products that sitting down and getting that one-on-one with someone helps determine what their specific risks are, get a feeling of what they want to insure or what they don’t, and look into the balance sheet, as it can change quickly.” — Charles Wallace, WLJ contributing editor
