Episode 9: Ten Types of Farm Insurance Coverage You Should Know About
Ensuring that your operation is covered for various risks and liabilities isn’t the most exciting part of farming, but it is an important task for any successful operation to stay diligent on.
In this episode, we bring in Luke Lichtensteiger, an experienced farm insurance specialist with Leland Smith Insurance to discuss the ins and outs of farm insurance.
Just as agriculture is ever-evolving, so is insurance; and Luke explains what he considers are the most important farm insurance products every farmer should know about so that they can understand the types of coverage that work best for their particular operation.
Here are the top ten farm insurance coverages you should know about:
Manure and chemical application are two typical liability risks. In the event of over-application, runoff, drifting or most significantly, a spill, this type of insurance is commonly added to insurance policies as a “pollution endorsement.”
Blanket coverage is often a saving grace for farmers. This “line item” on your insurance policy might include a multitude of miscellaneous things like equipment, tools, hay, feed, etc.
“The bigger that blanket can be, the more forgiveness a farmer can have if something appreciated from the previous year,” says Luke.
In a situation where, for example, you upgraded to a new combine and it just so happens to experience damage but you’ve neglected to chat to your insurance agent about the upgrade, it would be hard to find coverage to cover that new combine. However, if you have a blanket policy, you have room for coverage.
3. Rock Ingestion
One type of coverage Luke says every farmer should consider is rock ingestion. Even though this type of coverage is unique, Luke explains that rock ingestion coverage has become a typical coverage helpful in the event of field hazards damaging equipment.
4. Extra Expense
This type of coverage comes in handy during peak times like planting and harvest.
For example, if your combine goes down when you’re running in October, what often happens is that it will be slim pickings to find a replacement combine.
“If you have a claim, it gives you coverage to either go rent another machine or if that’s not available, it will pay a neighbor or a custom applicator to come in and get you caught up,” explains Luke.
Luke says one of the most frequent questions he gets from grain farmers is if they should insure all their grain.
As the grain markets drastically change, it can be hard to keep up with price fluctuation - resulting in farmers not knowing what number to insure their grain at. Because of this, Luke doesn’t recommend trying to insure every bushel of grain.
As input prices skyrocket, farmers have become concerned with chemicals being stolen off of their farms. Luke’s answer to these never-before-seen times, is that it all comes back to your blanket coverage.
“I’m just a big advocate of keeping that blanket as big as you can keep it because then it fills in these gaps, these differences,” says Luke.
7. Farm Buildings and Barns
“[Farm buildings] are not just the old work-only barns anymore,” states Luke.
Depending on the type of building, coverage can vary. For example, coverage for a concrete, insulated building is going to look different than a run-of-the-mill pole barn.
Luke also explains that in light of building material price increases, the most important thing to note is that the number on your insurance policy is what you are limited to. Barns and buildings should be insured for what it would cost to rebuild them, not what it had cost to build them 30, 40 or 50 years ago.
Coverage for independent livestock producers is handled differently than coverage for contract livestock producers.
If you own your livestock, coverage should fall under the blanket coverage category on a per head basis. On the other hand, if you are a contract grower and don’t have ownership of the livestock, a liability endorsement would come into play for the owner of the barn where the animals are housed.
9. Loss of Income
A particular type of coverage Luke recommends to young and beginning farmers is loss of income. In a situation where you might have a loan on a barn you are making payments on, gets damaged or destroyed, you would not be receiving income during the time of rebuilding.
Loss of income coverage would make sure that you are maintaining an income level to keep making those payments.
10. Life Insurance
Luke explains that life insurance is a risk management tool that everyone should consider.
“Life insurance in the ag sector is very important, whether it’s estate planning or a key man situation, it’s just a tool to keep an operation from taking an even bigger hit after losing a necessary person.”
Here’s a glance at this episode:
- [5:59] As a farm insurance specialist, Luke recommends farmers get umbrella and excess liability insurance.
- [7:15] When it comes to farm liability insurance, one of the biggest liability risks a farmer has is pollution, from either manure or chemicals.
- [9:27] Pollution coverage helps when there is a concern of over-application, runoff, or most significantly, a spill.
- [11:42] Two important insurance lingo words to understand are “policy” and “endorsements.” Your insurance policy is the shell - what you are covered for at a minimum. Endorsements can be described as add-ons to your policy for additional coverage.
- [14:26] “Blanket” items on your insurance policy might include miscellaneous things like tools, hay, feed, etc.
- [16:17] You should keep your loan agent up-to-date on changes and meet with them at least once a year.
- [18:28] As a farmer, common types of coverage include rock ingestion coverage and extra expense coverage.
- [20:12-29:18] Our hosts cover various types of insurance and Luke answers common questions he gets about them, including grain, inputs, livestock, loss of income, and life insurance.
- [30:09] Luke goes through the steps of filing an insurance claim with an example scenario of a heavy windstorm damaging a barn.
Resources mentioned in this episode:
Farm Transportation Meeting on Monday, February 28, 2022 at 7:00 pm
Willow Bend Country Club, 579 Hospital Dr., Van Wert, OH 45891
Topics include Ag Trucking/Transportation Compliance, Farm Equipment Transportation Safety, Update on Ag Transportation Restrictions and Q&A with Law Enforcement
RSVP by February 21, 2022 by calling AgCredit at 419-238-6838
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Luke has 13 years of experience working as a Farm Specialist at Leland Smith Insurance. Luke also works as an operator on his family farm west of Van Wert where he lives with his wife and four children. As a farmer, Luke gets to see first-hand the changes of new equipment, technology, and techniques, which in turn helps him better relate to his clients who are doing the very same thing. Because of that, Luke can take his experience as a farmer and help his clients find and understand the coverage that works best for their particular property.
Host Matt Adams
Matt serves Paulding County as an account officer at AgCredit. He has worked in ag lending for over three years and previously worked in farm equipment sales for 11 years. He and his wife farm in northwest Ohio with their two daughters and son. His favorite part about AgCredit is the people. From the member-borrowers to the internal team at AgCredit, every day keeps getting better. Matt hopes to bring insights to ag lending and some laughs to the AgCredit Said It podcast.
Host Phil Young
Phil is an account officer for AgCredit serving Van Wert County. He’s been in ag lending for over three years but his agricultural background goes back much farther. He grew up on his family’s farm where his father raised a large herd of sheep. Currently, he helps with the family farm raising corn, soybeans and wheat. Phil likes working at AgCredit because he can help people achieve their dreams. Whether that is purchasing a new piece of farm ground, updating a piece of equipment, or helping a borrower understand their financials, helping his clients succeed is always his goal.
Speaker 1 (00:02):Welcome to AgCredit Said It, the podcast for farm newbies and seasoned professionals alike. In each episode, our hosts sit down with experts from across the agriculture industry to bring you insights, advice, and must-have information on all things rural living, from farming to finance and everything in-between. So, let's get to it.
Phil Young (00:27):Welcome back to another great episode of AgCredit Said It. I'm Phil Young, one of your hosts and an account officer in Van Wert. Also, joining me is Matt Adams, another great host you've heard on here before and an account officer. And across the table from us today is our very special guest, Luke Lichtensteiger. He's a farm insurance specialist with Leland Smith Insurance out of Van Wert, Ohio. And, we are actually sitting in the great county of Van Wert, Ohio today to record this. And want to give a special shout out to Chris Roberts of WERT 1220 AM for letting us use their facilities today. So we are legitimately on in a radio studio and-
Matt Adams (01:04):Very nice facilities too.
Phil Young (01:05):Yes. Yeah. So hopefully we, I feel like maybe we're going to, we're not going to look better, but we're going to sound better at least, maybe today.
Matt Adams (01:12):That's right.
Phil Young (01:14):But, so WERT, really thankful for them. They're not only a great radio station, but also just a great supporter of local agriculture, so I want to thank them for that. So if you haven't guessed it by Luke's title, farm insurance specialist, we are going to talk and chat a little bit about the ins and outs of farm liability insurance today. A topic that's definitely an important place for any successful farmer operation is kind of your risk management portfolio, making sure that you're adequately secured, and that you're kind of covering, I guess, your backend, making the stuff's okay with everything.
Phil Young (01:44):So on that note, we'd like to welcome Mr. Luke Lichtensteiger to the podcast. Welcome Luke.
Luke Lichtensteiger (01:50):Morning Phil. Good morning, Matt.
Phil Young (01:51):Good morning.
Luke Lichtensteiger (01:51):It's good to see you guys.
Phil Young (01:52):Yeah. So Luke, before we dive into the topic of insurance, would you tell us a little bit about yourself, your background, ag background, insurance background, all that good stuff, all the juicy details.
Luke Lichtensteiger (02:04):Gotcha. So we'll try to keep today's conversation light, because I know insurance is probably not the most exciting topic. Little bit about myself, I am married, my wife is Kristin. She comes from a farm, the Eickholts, they farm west of Van Wert as well. We have four kids, boy, girl, boy, boy. So, that's kind of the home life. My wife started working with me in the insurance office last year, so that's been kind of nice to have her on board. So background, went to Crestview, I actually graduated with the Phillip Young sitting across the table, went to St. Francis, played some football, got a business finance degree, got done there, kind of came home thinking, always knew I wanted a farm. Got home and I just remembered my grandpa who I farm with saying, "So, what are you going to do for income?"
Luke Lichtensteiger (03:02):And I guess, I looked at him and thought I was just going to farm and I guess reality hit. So yeah, that's kind of put me where I am now. My neighbor at the time, Randy Myers asked me about joining the insurance world. And I guess, the rest is history. So, a little bit about our agency. I do work with Leland Smith Insurance and we have locations in Van Wert, Paulding, Antwerp, Delphos, Convoy and Ottoville. So, that's just kind of a little bit about my history and the agency that I'm affiliated with.
Phil Young (03:37):Nice. How long have you been Leland Smith? How long have you been doing insurance?
Luke Lichtensteiger (03:40):Since 2009.
Phil Young (03:41):Nine. Okay.
Luke Lichtensteiger (03:42):So, 12 years.
Phil Young (03:44):So we've seen a lot of different things happen since 2009, you've probably had a gambit of situations thrown at you?
Luke Lichtensteiger (03:49):Lot of things, especially in agriculture. And so, I do farm, we farm actually over by the Young's farm. We're kind of over in that same neck of the woods. As much changes in farming, there's kind of the same thing in insurance, anywhere from insurance values, all the way to all the different chemicals that have changed, that have kind of thrown everything in kind of a mix.
Matt Adams (04:18):Mm-hmm (affirmative). It does seem like in agriculture, every aspect of our business is constantly changing, and evolving almost quicker than I think we can keep up with sometimes.
Phil Young (04:30):Yeah, you got to pay attention, that's for sure.
Matt Adams (04:32):Well, to kind of start off then Luke, can you give us just kind of a brief overview of the different farm insurance products that you help farmers get?
Luke Lichtensteiger (04:42):Within agriculture, I always love when people use the term farmer, because it can really mean, I mean anything. We got mink farms in the county.
Phil Young (04:51):Yeah, true.
Luke Lichtensteiger (04:53):And so, I guess I kind of pride myself and our agency does, there's nothing that ends in the word agriculture that we can't insure. And it's funny, because we talk about this guys that their kids come back to the farm just like me and they're looking for ways to keep the boys or girls from leaving. So they got to find a way to generate some income, whether that be trucking, confinement buildings, selling some seed, selling insurance, whatever. So, we run into a lot of different animals with that. So I would say, we kind of pride ourselves at our agency that if it smells of agriculture, we got a home for it.
Phil Young (05:39):Okay, nice. So I guess, you've kind of covered this as a farm insurance specialist, you yourself farm, where should... And it's kind of a spectrum, you said it's kind of a lot of different operations styles. Where should a farmer spend their money on insurance? What should they be looking to do and spend their money?
Luke Lichtensteiger (05:59):So, that's a good question that we could probably go a million directions on. The biggest thing for me that I guess, I push and I think a couple years ago we partnered with AgCredit on a LLC meeting, starting an LLC and I know that's still a big ticket item. I guess on the insurance world, we believe very strongly in excess liability, umbrella policies they're called. If you don't have one, talk to your agent. They come in intervals of a million dollars. It's probably the policy you'll never use. Hopefully you'll never use it. But if you ever need it, you're going to thank your agent that you have it.
Matt Adams (06:41):Probably give him a big bear hug.
Luke Lichtensteiger (06:42):Big bear hug, yeah. So, that would be probably my biggest takeaway. If you don't have an umbrella, that's where I would start spending my money.
Phil Young (06:53):Okay.
Matt Adams (06:55):We're talking about the big changes in agriculture and how quickly everything is changing. We look at agriculture today, what are the biggest liability risks that you see right now on just say general family farm operation?
Luke Lichtensteiger (07:15):So for me, probably the most recent concern is the kind... It's kind of become a buzzword I guess, is the word pollution, look across the area, we've got multiple government programs, H2Ohio program for manure, and phosphorous levels and all these things. And now with all these chemical options on your soybeans, you've got, I don't know, there's probably four or five with... You've got the original Roundup, you've got Liberty, you've got Enlist, Xtend and any variation of them in that. So, you've always got that concern of what's my neighbor got? I know I do the spraying and I'm always texting your brother, I'll shoot a text like, "Hey, what do we got?" "We got some weeds sitting between our fields, what do you have?"
Luke Lichtensteiger (08:09):And I think that's always a good idea, but within that, there's always that risk of drift, the product lifting up and moving. Those are kind of the biggest concerns on paper. Now, I guess not to say that you shouldn't be concerned with that, I would say every year we have, I don't know, two or three calls where a guy says, "Oh, a bunch of my neighbors fields are turning, it's cupping, the corn looks bad." I think I got it. And not to say that those never amount to a claim, they always look worse than they are. Come harvest time, the neighbor farmers looking for a yield that they didn't lose a lot of times.
Luke Lichtensteiger (08:55):So, that's probably the biggest buzzword. But to me, the biggest concern within that idea is that tank that you're hauling in your sprayer, let's say that that axle breaks and a thousand gallon goes in the ditch, that's an immediate concern. Because believe it or not, those ditches have a lot of fish in them and the EPAs are really good at counting. Like the fish that you didn't think were worth anything, they got a dollar amount for every one of those.
Phil Young (09:27):Right, yeah.
Luke Lichtensteiger (09:27):So, that's kind of the area that maybe it's still a concern, I just would focus on it differently maybe, but that's a pollution coverage. And within that, there's concern of over application of manure and runoff. All of that goes into that pollution.
Phil Young (09:46):Coverage. What does that coverage look like? You kind of gave some micro with the drift, and then some macro where you have a whole tank spill, what does that coverage look like?
Luke Lichtensteiger (09:56):So that coverage, without going into exciting legalese.
Matt Adams (10:01):Nerd details, right?
Phil Young (10:01):Yeah.
Luke Lichtensteiger (10:04):Yeah. We always laugh at the office when somebody walks in and they say, "I was reading over my policy," which if you guys have a policy it's 60 pages long usually. And I always get nervous when somebody walks in and says, "I was reading my policy," oh boy. You know what they read?
Matt Adams (10:17):Yeah. Good luck with that too.
Luke Lichtensteiger (10:20):Good luck. Sit it by the toilet and have a nice read.
Matt Adams (10:22):Yeah.
Luke Lichtensteiger (10:24):So what that looks like, it's a pollution endorsement, most policies don't come with a lot of coverage for that.
Phil Young (10:31):Okay.
Matt Adams (10:32):Okay.
Luke Lichtensteiger (10:32):Most farm policies include 25,000, which isn't a big number.
Phil Young (10:36):Yeah. Seems like that gets spent pretty quick.
Luke Lichtensteiger (10:37):And it typically can be purchased up to a million.
Phil Young (10:39):Okay.
Matt Adams (10:40):Okay.
Luke Lichtensteiger (10:40):So another one of those things that just ask, ask your agent, ask somebody, because as soon as that spill occurs, 25,000, that's gone quick.
Matt Adams (10:50):And I'm sure with the ramp up with H2Ohio programs and the really push for conservation, it's probably much more of a thing to keep up on. And I would guess even, we talked about for chemical application, but even our livestock guys from a newer application runoff from a barn or something like that, I think is probably a definite big concern for a lot.
Luke Lichtensteiger (11:18):Yeah. And with the application, and I know a lot of these confinement guys aren't necessarily spreading their own manure, but there are a few that are and the way the forecast is. There's no rain, and then there is rain, just like that. So even the guy that does it to the letter, there's still tremendous risk in that, so.
Phil Young (11:42):Mm-hmm (affirmative). And the one thing I wanted to cover, this is kind of a, I described this as a learning podcast, so you said the word endorsement.
Luke Lichtensteiger (11:49):Mm-hmm (affirmative).
Phil Young (11:50):I guess, can you break down for someone who's not real up on insurance? You have the policy and you have endorsements, which I would assume... are Consumer like add-ons.
Luke Lichtensteiger (11:58):Yes.
Phil Young (11:58):Yeah.
Luke Lichtensteiger (11:59):So every policy, and I really don't know how far to go into this because it's not terribly exciting, but…
Phil Young (12:04):Yeah. If there's one man in this world that can make it exciting, it's Luke Lichtensteiger.
Luke Lichtensteiger (12:11):So, yeah. I mean, your policy kind of comes with a shell, that is what a policy includes and that's the 60 pages that is on everybody's farm policy. If you have six chickens and I have a poultry confinement barn, our base jacket looks the same.
Phil Young (12:27):Okay.
Luke Lichtensteiger (12:28):Okay. But then, you probably aren't going to pick a lot of endorsements with your six chickens. I'm going to need, maybe I need coverage for all those chickens or maybe I just grow those chickens for somebody, but all of those options are add-on endorsements and they all come with a premium.
Phil Young (12:47):Okay.
Luke Lichtensteiger (12:47):We don't give anything away free.
Phil Young (12:49):Yeah.
Luke Lichtensteiger (12:49):Insurance is known for giving stuff away...
Phil Young (12:51):No BOGOs out there, no buy one get one’s?
Luke Lichtensteiger (12:53):No sir.
Phil Young (12:54):No. All right. Well, Matt and I, we actually did a few episodes or two ago, talked about equipment, equipment values and how we've seen a lot of appreciation and equipment this year. How does a farmer, when they chat with their agent, how does that increase in value affect their policy? And, what should they be proactively doing with their policies when that happens?
Luke Lichtensteiger (13:15):Yes. So it's funny because when I talk to guys, I always ask them about AgCredit because I know and I was actually just working on this week, the fun balance sheet that you guys send every year.
Phil Young (13:26):Oh, yes.
Luke Lichtensteiger (13:27):I was working on that the other night, because I had tons of time. But so, I mean that's a good place to start, guys that are constantly working with AgCredit. Every year you guys are kind of looking at what does that equipment look like? Whether they get that number from your tractor house, machine repeat type websites, or if they have a good relationship with their dealer. A lot of times if you're buying stuff, a lot of times you can go to your dealer and say, "Hey, here's my 10 big items." "What did they do last year?" "Are they worth the same?" And then within that, that's kind of the document we look at, because everybody thinks that their tractors are the best one in the state. You know what I mean? Everybody's, I'd say mine is better than anybody.
Phil Young (14:08):The cleanest, the best paint.
Luke Lichtensteiger (14:09):Yeah. Only driven on Sunday by my grandma, kind of thing. We still got to realize that equipment is kind of based on the year, the hours and the condition is a factor, but it's not necessarily doesn't trump those other things obviously either, but…
Matt Adams (14:24):Mm-hmm (affirmative).
Phil Young (14:25):Okay.
Luke Lichtensteiger (14:26):But, I'm a big... Okay, so before we go away from that, the way we do farms is we believe in blankets. So I think historically the thing I've seen change a lot and equipment is insurance policies used to schedule each item and it was on the declaration page, that page we talked about. And every item was on there, listed out.
Luke Lichtensteiger (14:49):And then at the bottom, there may be a blanket of miscellaneous things, tools, hay, straw, grain, feed, whatever. The bigger that blanket can be, the more forgiveness a farmer can have if something appreciated from the previous year. So, instead of having a hundred thousand a blanket with all my 20 items listed separately, if I can put all of those into one blanket and now my blanket goes from a hundred to one and a half million, well now I've got a lot of freedom then, if one tractor burns up and I only had it insured at 150 and it's worth 170.
Phil Young (15:28):Okay.
Luke Lichtensteiger (15:29):That's what I like. It's a forgiving tool…
Phil Young (15:32):Okay.
Matt Adams (15:32):Okay.
Luke Lichtensteiger (15:33):... for the guys that, I mean, everybody knows they're not talking to their agent once a week.
Matt Adams (15:37):Right.
Luke Lichtensteiger (15:37):It just doesn't happen, I'd love to see guys call me more often, but it just isn't reality.
Phil Young (15:44):If like a scenario where someone's got an older combine, they make a huge upgrade to a brand new combine, and they neglect to maybe chat with you about it. If they don't have a blanket policy and they don't tell you, hey, I got this new $200,000 combine, in that scenario, you're saying the blanket would kind of save them, so to speak, because they'd be covered. But if they didn't have that blanket, and they didn't update you and they still had a $20,000 combine listed and that one burned up, the expensive one.
Luke Lichtensteiger (16:11):Yes, it would be difficult to find coverage to cover that combine in that situation.
Phil Young (16:15):Yeah.
Luke Lichtensteiger (16:16):Yes.
Phil Young (16:16):Yeah.
Luke Lichtensteiger (16:17):As a farmer myself, I know that that communication doesn't occur. I like to meet with insureds once a year, that doesn't even always happen. And things have changed, where with loans, when people are taking loans out, you guys know this, you guys contact me, so and so bought a combine. I mean, anytime there's a loan, the lenders are keeping on top of that pretty good. But when you schedule everything, you've got to be very diligent in updating. I'm not saying that people don't ensure it that way and that it can't be done that way, it's just, you need to be a little bit more diligent in that situation.
Matt Adams (16:55):Okay.
Phil Young (16:56):Yeah, not many people like obviously sitting down and doing paperwork, but there's a reason you have to... It's important to do. It's important to do that. Yeah.
Matt Adams (17:03):Well, Luke kind of taking it one step further, we talk about the price of the equipment nowadays. We also look at repair costs. What other coverages should I consider as a farmer when I'm dealing with my equipment? What if a field hazard, I take a rock through the combine and it pretty much annihilates the guts of it?
Luke Lichtensteiger (17:26):Right. So, that's an interesting coverage you bring up is rock ingestion. That's one that's changed a tremendous amount. And mostly, and forgive me, I'm a John Deere guy, so.
Matt Adams (17:40):We won't hold that against you.
Luke Lichtensteiger (17:41):Yeah. So most of my examples are going to be John Deere, but the biggest thing that changed in that world is going from the old walker system to the rotors. And so, when I started it, it was pretty common to see guys would have rock ingestion coverage for 10,000. Well now, with a new rotor machine, if a rock gets through that trap or a fence poster, an old field cultivator shovel, whatever shank gets in there, it starts at 20 and goes up, 20,000.
Matt Adams (18:16):Oh yeah.
Luke Lichtensteiger (18:16):So that's a coverage that, it's not as rare as it used to be, but you really need to make sure you've got at least 50,000 on rock ingestion, if not more on that.
Phil Young (18:27):Okay.
Matt Adams (18:27):Okay.
Luke Lichtensteiger (18:28):But as far as other coverages, we talk about extra expense coverage. It's essentially that coverage, where if you do have a claim and keyword, you have an insurance claim, whether it be fire, collision, rock ingestion, and those always happen peak times. I mean, you're not running your combine in May, maybe, you have oats or something, but you're not running it in the spring, because they're going to have plenty to rent you in the spring. You're running it in October and November. And so, inevitably what happens is when you have that claim, you go by Kenn-Feld, it's pretty slim pickings to find a combine. So what that coverage does, if you have a claim, it gives you coverage to either go rent another machine, or if that's not available, it will pay a neighbor, a custom applicator to come in and get you caught up.
Matt Adams (19:23):Okay.
Phil Young (19:23):Yeah. Pay for those custom harvest fees.
Luke Lichtensteiger (19:26):And, that's a coverage we see more on the younger farmer's side. A lot of these add-on coverages, I don't want to say that they're not purchased. I mean, it all just depends on your need. If you're got a little bit deeper pockets than the grandson, then you may not pick those coverages as that important to you.
Phil Young (19:49):And again, and I kind of want to jump back to, I guess this year, 2021, 2022, as we enter the 2022 crop year, we've seen some increase, prices and higher prices, higher yields. What happens when that happens? The last year, we kind of been, we had a really good year, at least locally here in the Van Wert County area. What does that look like from an insurance standpoint?
Luke Lichtensteiger (20:12):Well, I think the question is probably what do you do with grain? That's probably my number one question from farms, grain farms is, do I try to ensure all this grain? And if I do want to insure it all, what number do I put on it? I mean, you go back six months. Corn was what? In the three's probably still. So, I mean, everybody's bins are probably pretty full right now. If I put that at 350 versus 620, that number drastically changes.
Phil Young (20:47):Oh, yeah.
Luke Lichtensteiger (20:48):So, the old adage is you can be insurance poor. And so, I would say it's very uncommon for a customer to ensure every bit of their grain.
Phil Young (20:59):Okay.
Luke Lichtensteiger (20:59):It becomes almost impossible to keep up with it, one, and then it's, I don't want to say you don't ever see grain bins go down that are full, it's not the most common. So when you ask me where I would spend my money, if I was telling you, I would probably not spend it all there. I wouldn't spend it all trying to insure every bushel on my farm.
Phil Young (21:26):Okay.
Matt Adams (21:26):I think we talked about the grain stored on the farm, there again with inputs that have really skyrocketed for us here, for the 2022 growing season. Lots of stored fertilizer, chemicals, seed on the farm. Should a farmer look to adjust that insurance on the higher prices of the inputs, what we have in these now?
Luke Lichtensteiger (21:48):Yeah, so I think I'm going to go, that particular question, it's kind of funny because, well, one, if you can even get your chemicals right now and fertilizer, we kind of laughed on anhydrous. They made us a terrible offer and we took it this year. And so, that's kind of the thing, everybody's, they're looking at Roundup is probably the biggest jump. One, they probably don't have it in their barn yet, but when they do, they're going to lock it up with padlocks this year. It's not something anybody's ever really brought up, is somebody stealing my chemicals, but I've actually had that question brought to me a couple times. But to answer the question, I think it all comes back to the term, the blanket that we talked about. I'm just a big advocate of keeping that blanket as big as you can keep it, because then it fills in these gaps, these differences, these... Maybe you have on a normal year, you have 50,000 of chemicals sitting out there.
Luke Lichtensteiger (22:50):Well, I have a million dollar blanket and I just use that number. I'm not saying we only deal with million dollar blankets, but you have that million dollar blanket. Well now, if it went from 50 to a hundred thousand in value, my chemicals, that doesn't look like a big difference, because I have this large pool to pick from. So, that's probably where I would just make sure that you keep that blanket reasonable. Don't go through and cut all your equipment 20% and cut your fertilizer, and then rely on it because you still have that risk of a fire, or a tornado where the whole barn could go.
Matt Adams (23:28):Gotcha.
Phil Young (23:28):True. Yeah.
Luke Lichtensteiger (23:29):So the key that I tell farmers is, look at the numbers on the policy because all these coverages sound great. The policy can use the fanciest words, but the numbers written on the policy are the most they're going to pay.
Matt Adams (23:43):Gotcha.
Luke Lichtensteiger (23:44):So…
Phil Young (23:44):Yep, that's good to think about, just because something's worth more today doesn't mean.... Yeah. And, that kind of spins me into my next question actually. You and I talked a little bit about, this would have been midway through 2021, when we saw cost to construct, building materials, everyone kind of saw wood prices go up. And, I know you and I had a conversation about people putting up buildings, or constructive buildings a few years ago, what should they be doing and how should they be chatting with you about barn fires or something like that, come a windstorm, coming knocking a barn down?
Luke Lichtensteiger (24:17):Yeah. So I guess, I mentioned at the beginning, my wife started working with me and this was something that we started tackling last February, I think. January or February. And unfortunately in insurance, you learn a lot from experience. So we started seeing some claims, where what we had barns insured at and what they cost to rebuild, there was getting to be a pretty good gap there. And when we talk about the term replacement cost and that does mean that the insurance policy will replace the building. But, the key takeaway is the number that's on that policy is you're still subject to that limit. So, what we run into and especially for some of our older customers, when I talk to them, they give me the, "Well, I built that barn in 1975 and that only cost me 30,000."
Luke Lichtensteiger (25:10):Well, it cost you 210 to build it today.
Phil Young (25:12):Right.
Luke Lichtensteiger (25:13):And so, my younger generation farmers were all looking at me. And even their dad and grandpa were going, "Okay, we've got to ensure this for what it would cost to build it." As much as they love AgCredit, they don't want to have to go back to AgCredit to get a barn they're already using back.
Phil Young (25:28):Mm-hmm (affirmative). Yep.
Luke Lichtensteiger (25:29):So, that was the thing as we were changing a lot of square footage. Guys that used to be using $8 a square foot on a pole barn, we were seeing that number going up closer to 20, 25 30, depending on what it looked like. And you guys know, not every pole barn's the same.
Phil Young (25:49):Right, yep.
Luke Lichtensteiger (25:49):There's the names on the side of them and there's some stick-built ones from the Amish crews that not to say, they're not as good, but the price is different.
Phil Young (26:00):Lots of features from concrete, to insulation to bathrooms to…
Luke Lichtensteiger (26:04):Yes.
Phil Young (26:06):Yep.
Luke Lichtensteiger (26:07):They're not just the old work only barns anymore either.
Matt Adams (26:10):Luke, we talk about bringing our livestock producers into this, what type of coverage and variables should they consider for insurances livestock producers?
Luke Lichtensteiger (26:22):Yeah. So, that's a pretty wide question because within the livestock farmers, you've still got some guys that have cattle barns and hog barns, where they still own the hogs. I think it's probably becoming a little bit more rare. I don't know, you guys have some experience with that too.
Matt Adams (26:43):Yeah. There's definitely not as many independents.
Phil Young (26:47):Yeah. A lot more contracts.
Matt Adams (26:49):A lot more contracts. And I'm sure that, like you said, it's probably going to change a lot how you look at things too.
Luke Lichtensteiger (26:54):Absolutely. Yeah. I mean, the guys that own their own cattle, they need to have those items, either the per head of cattle, or if they've got pigs, or some big sheep farmers in the area, as you know, Phil.
Phil Young (27:12):That's true.
Luke Lichtensteiger (27:14):So those items, when you own them, those need to be on that blanket. And I feel like I keep saying the same word over and over again, but that's just one more thing that falls into that same blanket category. As far as the other side of it, the turkey confinements, the hog confinements, where they're just getting paid rent, square footage, they don't own the animals. There's just a whole lot of coverages that we could go into. But the one I want to start with is called contract growers.
Luke Lichtensteiger (27:45):Essentially what it is, it's a liability endorsement to cover where the owner of the barn somehow is liable for damaging the animals that they don't own. Because obviously, when we talk about a blanket, those insure items you own. Well, in the case that you're a contract grower, you would not have ownership of those animals.
Phil Young (28:04):Got you.
Luke Lichtensteiger (28:04):So, that's where we would like to see, it's a liability endorsement for animals you're responsible for.
Matt Adams (28:09):Okay.
Luke Lichtensteiger (28:10):Now the other side of it that probably pertains more to the AgCredit side is loss of income. So as you guys know, guys that have a loan on a barn, they're making payments to somebody. If that barn is destroyed, they're not going to be receiving income during that period of rebuild. So, that's another coverage that might be something that a young farmer, in particular would want to look into, just to make sure that they're maintaining their income level to make those payments, while that barn is being rebuilt.
Phil Young (28:43):Okay. Another question I just of do you deal with like key man policies at all? Is that your…
Luke Lichtensteiger (28:49):On the life side?
Phil Young (28:50):Yeah, I guess on the life side, I mean, that's kind of, we're kind of bridging a different topic and different side of insurance, but when loss of income, you have the person that obviously is the main stakeholder, the guy with all the knowledge. And all of a sudden, he's not there anymore, or he passes or we're in a COVID environment.
Luke Lichtensteiger (29:09):Yeah. I mean, the only thing to make this conversation more exciting is life insurance, I feel.
Phil Young (29:13):Or bringing up the topic of COVID, we don't hear that enough.
Luke Lichtensteiger (29:16):Let's do it.
Phil Young (29:17):Yeah.
Luke Lichtensteiger (29:18):Yeah. So I mean, life insurance is, it's another tool, it's a risk management tool that I mean, I think everybody should consider. There's disability policies. There's all kinds of things. I mean, like I wouldn't be a true insurance agent if I didn't say, "We'll sell it, if you want it." Life insurance in the ag sector is very important, whether it's estate planning or like you said, key man, it's just a tool to keep an operation from taking an even bigger hit, from losing that person, that person that's necessary. And money doesn't always solve the problem, but it's a nice way to help. My uncle always said, "Money doesn't buy happiness, but he'd like one chance to prove that wrong."
Phil Young (30:09):Yeah. And we have a lot of younger listeners, so I wanted to kind of shift topics, I guess, and give you, kind of hit you with a scenario, maybe if you wanted to share one or two, or depending on what you think, but there's some people out there they have insurance, and thank heavens they've never had to file a claim. They're the lucky people that haven't had to do that. A situation where a windstorm comes through or a heavy storm knocks down their barn, I guess, what does filing a claim look like? Walk us through that entire process for someone who maybe hasn't done it before.
Luke Lichtensteiger (30:41):Yeah. So, let's just go with that example of a barn.
Phil Young (30:45):Yeah.
Luke Lichtensteiger (30:45):Barn blows down or burns, whatever, we could get into a lot of things here, but because within the barn, there could be a lot of things sitting inside of it.
Phil Young (30:55):Sure.
Luke Lichtensteiger (30:55):Those coverages are given to you on a policy and different line items. You've got buildings on one line item, you've got equipment on that blanket and obviously tools, whatever. But the first step is to communicate with your agent, let them know, hey, this is what happened. Get the ball rolling. That agent then is just going to send it to whatever company you bought the insurance from. So, we're just a representative of 12 insurance companies. We would see who you have it insured with. We're going to contact them. That claim is then assigned to a claims adjuster. Okay.
Phil Young (31:29):Okay.
Luke Lichtensteiger (31:30):That's the person that you're going to deal with the most.
Phil Young (31:33):Okay.
Luke Lichtensteiger (31:34):So conversations, emails, estimates, all the things that you're going to take to get that building rebuilt. And maybe what it is, is just stabilizing a building. Maybe that building can be saved or maybe, it's the money that I need to clean up the mess. All of these things, it just depends on the type of claim, but those are all conversations with your adjuster. Where we get involved is where, maybe there's something that didn't get communicated right to the adjuster, or there needs to be something looked at a little bit more thoroughly. And so, we'll get involved and say, "Hey, maybe you missed this because you didn't give them enough for this, because of this reason."
Matt Adams (32:19):Okay.
Phil Young (32:20):Okay.
Luke Lichtensteiger (32:20):So we're going to get involved more on the micro level, where you come to me and say, "I didn't think they gave me enough on this or..."
Phil Young (32:28):Be your advocate, basically.
Luke Lichtensteiger (32:29):Yeah. That's kind of our job to step in. And because we know the customer, where the adjuster, maybe he just knows farms, but he may not know your whole story, I guess.
Matt Adams (32:40):Gotcha.
Phil Young (32:42):I guess, I mean pictures, I mean, should that be kind of step two then, call you and then just snap as many instant... As soon as you see it, snap pictures of it, is that something you should do or…
Luke Lichtensteiger (32:49):I mean, pictures are great in insurance, if you can just remember where you saved them. I've got jump drives of pictures at home of different things and... When you bring up pictures, I think it's a good idea to, I always tell guys in their shop, just go in your shop and take a picture of each wall. I mean, just look at what would it cost to replace a parts bin?
Phil Young (33:09):Oh, gosh.
Luke Lichtensteiger (33:10):You know what I mean? Like, that doesn't even go on anybody's list. Just a bolt’s bin, my goodness. You got 70 years of bolts and some farmers are more pack ratty than the others, I guess. But yeah, so pictures are great. I mean, pictures say an awful lot.
Phil Young (33:27):Yeah.
Luke Lichtensteiger (33:27):So, I would encourage you to get pictures before, as well as after the pictures don't look as good. Pictures are great, because it kind of tells a story without somebody having to, especially on smaller claims, or an adjuster may not come out. If you've got a couple thousand dollars claim on a vehicle, a lot of times they'll rely on pictures.
Phil Young (33:48):Okay. And we kind of talked a little bit about this, I think before, but is it an annual conversation, I think? How often should they be meeting with you? And obviously, there's situations that maybe call for more, a higher frequency, but…
Luke Lichtensteiger (34:03):Yeah. I mean, I guess, you guys kind of know there's a lot of differences between farmers, but there's guys that haven't bought a piece of equipment in 30 years. If your newest piece of equipment is a 4020, probably not a lot has changed from the previous year. But then, there's guys that you could probably meet once a month and they could tell you something new that they did. So, I think to answer that question is it needs to be as often as it needs to be, because I don't want to take up somebody's time for an hour when they have nothing to say and just to hear myself talk. But on the other side of it, you can't just assume your agent knows because you know.
Phil Young (34:50):Yeah.
Luke Lichtensteiger (34:50):So.
Phil Young (34:52):Yeah, it's one of those things where, as a lender, we like to go like, "Is there a change?" When a change happens, probably maybe wouldn't hurt to call your agent. You are buying something, probably call your agent, just to let them know.
Luke Lichtensteiger (35:06):But you know that answer, you get farmers like, "Did you buy anything?" "Nope." And then, you're looking at the balance. You're like, "Where did this tractor come from?" "Oh well, I bought a tractor."
Phil Young (35:15):Yeah. And, you think of three or four things.
Luke Lichtensteiger (35:16):Yeah.
Phil Young (35:16):Yeah. "I thought that was two years ago."
Matt Adams (35:20):Well Luke, any other advice or insurance tips you can give the listeners?
Luke Lichtensteiger (35:24):We kind of talked about the communication, I think that's key. I mean, it's funny because guys will call me and say, "Oh, I'm so sorry to bug you." I just had a question or I was thinking about something. You know what happens?
Phil Young (35:36):Yeah.
Luke Lichtensteiger (35:36):It's always after hours when you're just sitting at home idly thinking and you go, "I wonder if that would be covered?" Just call, I guarantee your agent will not mind if you call and ask those questions. Because a lot of times, they may look at and go, "Oh shoot, I don't even know the answer to that." It gives them an opportunity to learn and not only do they learn for your policy, they learn for your neighbors, maybe that was something that they never considered. So I just, anytime I'm never... I would think it would be a bad idea as an agent to discourage phone calls, because they always lead to something.
Phil Young (36:14):In your situation, where you don't want to stare across the table from somebody and be like, "That's not covered."
Luke Lichtensteiger (36:19):Yeah.
Phil Young (36:20):You know, "I didn't know you had this or this is..." Yeah, that is a great question.
Luke Lichtensteiger (36:24):Learning afterwards sucks.
Phil Young (36:26):Yeah.
Luke Lichtensteiger (36:27):It's because there's just only so much we can do at the point that the policy doesn't show it. We can't, as much as I'd love to go back and just add it two weeks earlier, just can't.
Phil Young (36:40):Gotcha.
Matt Adams (36:42):So Luke, another question, I know that's on a lot of farm operations mind, we talk about equipment on the roads, hauling equipment going down the roads and even when we're harvesting, parking along the roads. As an insurance agent, what advice and tips can you give the guys?
Luke Lichtensteiger (37:05):Yeah, this is a big question. In fact, I think it's, I don't know if we're officially scheduled yet, but we're shooting for February 28th, Monday night at Willow Bend. We did this a couple years ago with AgCredit, Leland Smith did. And we bring in state troopers from, there's a guy from Findlay representing the Ohio Post. And then, I believe Adam got a guy from Fort Wayne, going to come in and just talk about... Just because there's so many guys going to Bunge and to Poet, and this new Valero in Bluffton and other places over there, New Haven. But so, it's a question I get a lot is, one, during harvest, where do I park wagons? Where do I park the semi? I mean in a perfect world, you'd park them in the field, but rain just doesn't allow for that every time.
Luke Lichtensteiger (38:03):So all I can answer from the insurance side is you have a policy, you have an umbrella that covers your liability, but that's not always the answer that a farmer's looking for. So, that's kind of the idea with this meeting is to get in the experts that say, "This is what you should do, if you have to park on the road." "This is what you should do, if you have a 20 foot implement, ways to be as safe as possible, so that you're not brought into a lawsuit because of transporting large equipment or semis going down there."
Phil Young (38:37):A lot of guys have more and more semis now.
Luke Lichtensteiger (38:39):Yes.
Matt Adams (38:39):Mm-hmm (affirmative).
Luke Lichtensteiger (38:40):Yeah. And so, that's always a question, along with, do I need the name on the side of my truck? Do I need a DOT number? Do I need to do IFTAS? These are all questions that I could look up and try to get answers to, but I'm just not really that qualified to give them. So, that's kind of the idea with this meeting is, get the guys in and do a big question and answer on how to be as safe as possible, but still... I think the guys we had in the past were pretty open to the fact that farmers still need to get the crop out of the field, and just because the wagon or the semi being on the road is an inconvenience, it doesn't mean that it's not still necessary. So we had a good meeting six, seven years ago and I just kind of felt like it was a good time for a refresher on that.
Phil Young (39:34):Yeah.
Luke Lichtensteiger (39:34):So the that's kind of the idea is to get those guys in and they're actually, last time they were just great guys, just real down to earth.
Matt Adams (39:43):Have the experts there that can answer the questions and the right answers.
Luke Lichtensteiger (39:47):I think they leave their hats on, their cowboy hats, but they do kind of take the edge off of what you would expect out of a state trooper.
Phil Young (39:56):Yeah.
Luke Lichtensteiger (39:56):They kind of are more down to earth.
Phil Young (39:58):No one was arrested at your last meeting?
Luke Lichtensteiger (39:59):No.
Phil Young (39:59):No, okay. Good. Okay. Yeah, that's good. Yeah. So I just, like Luke said, we're kind of co-hosting or co-collaborating on this event, AgCredit and Leland Smith. And so, we're shooting for the 28th of February. I know this podcast reaches a wide region of AgCredit, so Willow Bend is a country club. It's where we're shooting to have it, that's in Van Wert, Ohio. I think we're probably open to... It's free event. We're open to anyone coming. I think probably the biggest thing is maybe that we have a heads up that you are coming, just because that we do have a capacity limit on the venue. So if you are interested, you can call our Van Wert AgCredit office and that phone number is, 419-238-6838. If you want to register. Luke, do you want to share your phone number, if people want to call?
Luke Lichtensteiger (40:42):Yes, so Leland Smith is like I said, we're located in Van Wert, but also Paulding, Antwerp, if you're up north in Delphos, Convoy, and Ottoville. So the Van Wert office, I guess I'm not going to read off six numbers, but our Van Wert office is 419-238-7880. That's probably the best way to contact us.
Matt Adams (41:03):Wow. I tell you what, Phil, this has been a lot of great information today.
Luke Lichtensteiger (41:08):That's been good stuff.
Matt Adams (41:09):And Luke, we want to thank you for joining us today and sharing your knowledge and wisdom of farm insurance. We hope you've learned something today and are able to apply that to your own operation. Please feel free to message us on our social media or email us at email@example.com. If you have podcast topic suggestions, comments about Phil, not me necessarily…
Phil Young (41:30):Or you want to make fun of Matt.
Matt Adams (41:32):Yeah. And, don't forget to rate and subscribe to the AgCredit Said It podcast, and tune in for the next episode. If you're interested in learning more on how AgCredit can help you with financing your farm operation, feel free to visit us at agcredit.net and find your local AgCredit office. Thanks and we will see you next time.
Phil Young (41:51):See you next time.
Speaker 1 (41:53):Thank you for listening to AgCredit Said It Want to talk ag in-between episodes, follow us on Facebook, Twitter, and Instagram @AgCredit. For more tips and resources, visit agcredit.net and be sure to subscribe to the show in your favorite podcast player. Catch you next time.