What is

Loss of Income
Coverage?

Loss of income coverage for a farm in Ontario, also referred to as “Farm Business Interruption Insurance” or “Farm Income Protection Insurance,” is designed to provide financial support if your farming operations are temporarily unable to generate income due to a covered peril. The coverage is especially important when you rely on the farm as your main source of livelihood.

Loss of Income for a farm operation requires careful tailoring to meet the specific needs of your operation, taking into account factors like revenue stream, farming activities and potential risks. Your Excalibur Insurance broker is ready to do the heavy lifting, sorting, and wrangling the details into a coverage package that lets you rest assured that your farm livelihood is protected with this insurance.

lossofincomephoot

Here are just a few of the items covered by loss of farm income insurance:

18 marketvalueprotection

Revenue Loss

Compensation for loss of income due to covered events such as natural disasters, fire, or equipment breakdown.

18 preventionofaccess

Prevention of Access

Income losses caused by an inability to access your farm premises due to damage to public infrastructure, such as roads or bridges, caused by a covered event.

18 temporaryfacilities

Cost of Temporary Facilities

This reimbursement covers expenses associated with setting up temporary facilities or renting alternative premises to continue essential farm activities.

18 civilauthority

Civil Authority Coverage

Coverage for income losses resulting from government orders restricting access to your farm or surrounding areas due to a covered event, such as a natural disaster or public health emergency.

18 continuationofexpenses

Continuation of Expenses

Coverage for ongoing expenses necessary to maintain your farm operation during an interruption, including mortgage or rent payments, utilities, salaries, taxes, insurance premiums, and other fixed costs.

18 dependentproperty

Dependent Property Coverage

Compensation for lost income resulting from damage to property owned by others but essential to your farm’s operations, such as leased land or equipment.

18 extraexpenses

Extra Expenses

Coverage for additional expenses incurred to minimize the interruption and expedite the resumption of farm operations, such as hiring extra labour, renting replacement equipment, transportation costs for relocating livestock or crops, and emergency repairs.

The reality is that a fire or other peril could destroy your barn. The livestock you were going to sell or feed you would use are gone. The loss of income is unavoidable. The bills and mortgage payments are still coming in, but the farm income has been reduced or stopped altogether. These risks make loss of income coverage integral to any farm insurance program. Your broker will work with you to determine the correct level of coverage that your operation needs to keep going should a significant loss occur.

Loss of income coverage is available at different levels and lengths of time to protect your farm. While many types of loss of income coverage exist, the right type for your farm operation depends on two major factors:

THE FIRST FACTOR is the type of coverage that is in place. It can include Earnings Coverage, which provides coverage for the difference between the total net sales and the cost of production or Extra Expense coverage, which includes coverage for an increase in the total cost and expense of the operation due to the damage. There is also coverage available for contingent earnings and extra expense for a loss at a supplier or where your products (livestock or produce) are to be shipped. The next level, and the recommended coverage, for loss of income is Actual Loss Sustained coverage. It can provide coverage for all the previously mentioned losses.

THE SECOND FACTOR is the length of time the coverage provides. Generally, policies will consider the level of loss of income coverage for 12 months following a loss. There are longer terms available, up to 18 months in some cases. It is crucial to consider the length of coverage. For example, a fire that destroys your barn usually takes over 12 months to rebuild and resume pre-loss production levels.

Your Excalibur Insurance farm broker will work with you to explain the different coverage options and lengths of time available to you. The essential consideration in building the right coverage package for you will be determining the correct loss of income coverage for the future of your farm operation and getting the farm back to where it was before the loss.

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