There are different levels and lengths of time of coverage available to protect your farm for loss of income. The reality is that should a fire or some other peril destroy a barn or other property you will suffer a loss of income as a result. The livestock you were going to sell or the feed you were going to use are gone. The bills and mortgage payments are still coming in but the income you were going to bring into the farm operation has stopped. This is why loss of income coverage is 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 major loss happen.
The loss of income coverage can also include loss of rental income should you be renting a farm outbuilding to others.
While there are many types of loss of income coverage for your farm operation they depend on two major factors.
The first factor is the type of coverage that is in place. This can include Earnings Coverage, which provides coverage for the difference between the total net sales less the cost of production or, Extra Expense coverage, which provides coverage for increase in the total cost and expense of the operation as a result of 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) is to be shipped. The next level, and the recommended coverage, for loss of income is known as Actual Loss Sustained coverage. This can provide coverage for all the previously mentioned losses.
The second factor is the length of time that the coverage is provided for. Generally policies will provide the level of loss of income coverage for a period of 12 months following a loss. There are longer terms available in some cases up to 18 months. This is a very important consideration to make. In the example of a total barn fire where a barn is completely destroyed it is usually taking more than 12 months to get the barn re-built and then to get your production back to the level it was before the loss.
Excalibur will work with you to explain the different coverage options and lengths of time available to you. The most important consideration in determining the coverage you have for loss of income is the future of your farm operation and getting the farm back to where it was before the loss.