Understanding occasional farm contracting and how it impacts insurance cover

In the ever-evolving landscape of agriculture, many farmers are seeking more ways to save and bolster their income. One such avenue is occasional farm contracting.

But what is occasional farm contracting, and how can insurance brokers ensure their clients are adequately covered when arranging insurance for these activities?

Let's delve into the nuances of this practice and how the right insurance can safeguard farming operations.

What is Occasional Farm Contracting?

Occasional farm contracting is the provision of farming services by one farmer to another on a contractual basis', according to Peter Morsley, Farm Underwriting Manager from ARGIS Farm Insurance.

It refers to sporadic engagements to supplement farming income rather than a fully-fledged contracting business. It can range from offering services to neighbouring farmers to undertaking a few regular contracts within the area.

"It is crucial to distinguish occasional contracting from other arrangements like share farming or commercial contracting businesses," Peter says.

"Making this distinction impacts how insurance coverage may be applied. For example, share farming and commercial contracting typically fall within specific legal and operational frameworks, which require distinct insurance considerations and coverage options."

When is occasional farm contracting covered in a typical farm insurance policy?

Every policy can differ, but under the ARGIS Farm Extra Insurance policy, occasional farm contracting is automatically covered, Peter says.

"However, the contracting activities must remain within the normal scope of the farmer's own farming operations as listed in the insured’s certificate, and the annual turnover from these activities must be within the policy limits. Any deviation may require separate insurance cover, such as liability or vehicle cover."

It's also important to note that contracting services provided by the farmer to entities outside the farming sector, such as local councils or government organisations, do not fall under occasional farm contracting activities. These are considered outside the scope of a farmer's regular work.

How can brokers help ensure that their clients are covered correctly?

Whether a farmer is contracting or not should always be a question every broker asks their farming clients when arranging insurance.

"It's essential to review farming operations annually to ensure ongoing alignment with the core farming business and the policy limits," says Peter. "Brokers should encourage clients to disclose any contracting activities that may pose a risk of exceeding these limits”.

Brokers also play a pivotal role in educating clients about potential risks associated with contracting work.

"For example, if a key piece of machinery does get damaged doing a job on someone else's farm, it could be out of action for some time. This could adversely impact a farmer's own farming operations," Peter warns.

Occasional farm contracting can be an opportunity for farmers to diversify their income. However, it comes with its own set of insurance considerations.

Brokers can play an important role in understanding the nuances and helping farming clients to assess their risks as many navigate the complexities of modern farming.

For more information about farm insurance solutions, call ARGIS Farm Insurance on 1300 794 364, or email at argis@argis.com.au. Together, let's safeguard the future of Australian agriculture.

The cover is subject to terms and conditions, limits and exclusions of the policy. Any information provided above is general advice only and has been prepared without taking into account your objectives, financial situation or needs. SGUAS Pty Ltd t/as ARGIS Insurance (ARGIS) acts for the insurer, Pacific International Insurance Pty Limited (Pacific). Consider the Product Disclosure Statement and Target Market Determination, available by contacting ARGIS on 1300 794 364 or visiting www.argis.com.au, before deciding if it is right for you.