Make sure you have sufficient cover

Almost two years ago, in June 2016 the Dutch greenhouse sector was left reeling after a massive hailstorm, when hailstones the size of golf balls, hit the Brabant region, causing some €130 million of damage to the industry and destroying some nurseries completely.

Two years earlier in January 2014 growers near Arnhem suffered damage worth between €400,000 and €1 million due to strong winds. Even the best greenhouses may be subject to the vagaries of weather or accidental damage.

While some growers see insurance as an unwanted and unwelcome overhead cost, for those who have had to make a claim, it can be the difference between a business surviving or going under. “Engaging with your insurer can have a pro-active benefit for the business,” says James Bleazard of insurer Towergate Allseasons which works with the HTA to supply insurance services to horticulture.

“Growers need to buy insurance as they often have substantial financial assets, which are particularly susceptible to damage by the elements, usually most significantly their greenhouses and the crop within. It is essential growers consider the value of the crop as a relatively small amount of glass damage could, at the wrong time of year, have a major impact on the yield of the crop and subsequently their income.”

“If the worst happens such as storm or fire, insurance is essential to cover the loss of income and to ensure the business is able to sustain the event and carry on,” says Lee Stiles, NFU Mutual agent and Secretary for the Lea Valley Growers Association. “Glasshouse structures can be susceptible to storm damage and expensive computer equipment involved in irrigation and temperature control can break down. Many growers also specialise in one plant salad crops, such as cucumbers, peppers or tomatoes for example, which means they only have one chance to get it right.

“Major losses tend to be from storm events and although newer glass can withstand higher winds, flying debris such as pallets can fly into glass and have costly consequences. Claims for high value crops such as tomatoes can easily run into hundreds of thousands of pounds, underlining the importance of adequate glasshouse insurance.”

Having determined the need for insurance, it is then important to select a policy which provides the right types and levels of cover for the business in question. Some advisors recommend looking for a policy that can offer cover on a new for old or reinstatement basis to ensure there is no financial shortfall if growers need to replace a glasshouse following structural damage. Regular reviews should also be a standard part of any policy in order to check that customers are adequately covered and their insurance is up to date and covers any changes to business activities.

“Insurance is effectively organised to transfer some of the potential possible risks of running a business away from the client onto a third party, in exchange for a premium considerably lower than the possible total financial cost in the event of a disaster,” explains James. “In choosing the correct policy and ensuring they have the right level of cover growers must consider how much of the risk they want to transfer.”

He says that it is essential to give sufficient consideration to the adequacy of the sums insured as, due to the heavy reliance on Dutch technology, following Brexit the cost of glasshouses and related machinery may increase considerably. “If the current sum insured is deemed to be insufficient, insurers may well then impose the condition of average and look to reduce the amount they are willing to pay out,” he warns.

“In addition it also depends on how the type of crop is grown. For example, with crops that are particularly susceptible to changes in temperature and where heating must be maintained, clients may need to consider engineering insurance which can cover boiler breakdown and even loss of crops as a result of boiler breakdown.”

While a number of companies may offer business insurance to greenhouse producers and nurseries, it is important to make sure that they understand the nature of the business and that loss adjusters are familiar with the technology employed. “Knowing the price of something does not necessarily mean knowing its value,” warns Lee. “We always aim to provide cover at the best price which offers real value. Check if your insurer is committed to fair payment of claims and ask if you will be rewarded with discounts for your continued loyalty as a customer. It is essential to carefully look at the indemnity and excess, for example, at NFU Mutual the standard excess for a glasshouse is typically £250 for storm damage.”