Business Clinic: What insurance is needed to do contracting?

Whether you have a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.

Here, Tim Slinger, associate director at A-Plan Rural Insurance looks at what you need to consider in terms of insurance when starting contracting work.

See also: How to reduce risk of harvest farm fire

Q: I’m looking to supplement my farm income by doing contracting work. I have previously helped a neighbouring farmer with ad-hoc jobs, but if I am to work for others on a more formal basis, what do I need to need to consider by way of insurance?

A: There are infinite ways to supplement a farm’s income, from jobs outside the business to diversification projects and ad-hoc services.

In any of these cases, it is important to discuss plans with your insurance broker before starting work.

Working for others or “contracting” is likely to affect your liabilities, income and, potentially, the machinery and kit used on the farm. It is important to establish who will be responsible in the event of a loss and who, therefore, needs insurance.

The additional cost is likely to be minor. However, having the right cover in place is essential.

Here are examples of contract work we see and the main things to consider:

Ad-hoc or casual work

1. Who is employed by whom? Are you or your staff working for a neighbour (off your payroll)?  Or are you or your staff still working for you, just on a neighbour’s farm (covered by your employer’s liability insurance)?
2. Whose kit are you using? Are you or your employees insured to use it? Do you/they have the correct qualifications to operate it?
3. Who has done the risk assessment?

Arable contract farming

Many farmers help others with combining, carting, storing and even drying grain. Always check the contract – it should stipulate who is responsible for what.

1. Combining and carting

• Does your insurance extend employer’s and public liability cover to you and your staff when working on other farms?
• Will you be using your own machinery and tools? Is your kit insured away from your own premises?
• If your combine or machinery breaks down, do you have cover for the cost of short-term replacements?

2. Storing and drying grain

• Who is responsible for insuring the grain when stored at your farm? You may be liable for damage to third-party grain stored in your buildings, so check the agreement.
• Income received for storing and drying grain can also be insured if facilities are lost or damaged – for instance, in a fire or flood.

Whole-farm contracting

For those undertaking contract work throughout the year, here are some additional considerations:

• Who is responsible for a breach in Defra’s cross-compliance rules? Cover is available, but ensure you are fully aware of what the farmer/landowner is responsible and covered for and what the contractor is responsible and covered for.
• Are you advising on crops to be grown, seed rates, chemical and fertilisers to be applied and general strategy?
• Crop spraying is higher risk than most other work because of the chance of damaging crops. Ensure that your liability cover extends to damage to third-party crops.

Other activities

Activities such as groundworks, hedgecutting, snowploughing, building and tree maintenance or felling are usually insurable as part of the farm insurance policy.

However, if it increases in size, it may be sensible to cover certain aspects with more specific and specialist insurance policies.

Check agreements and be aware of any conditions applied – such as “minimum depth” or “maximum height” when doing groundworks or tree maintenance, respectively.

The key to getting insurance right in all these examples is ensuring that your broker and insurer understand the work you are undertaking.

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