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“There are two under-insurance traps growers need to avoid,” informs Insurance Broker John Bowman of Ausure Insurance Young. Most winter crop policies have a cut-off date from which sums insured can not be reduced. The traps are before and after this date:
· Before the cut-off date, the potential yield is uncertain and can change from week to week depending on growing conditions. Prior to the cut-off date, most policies do not apply the 48 hour waiting period, nor does the estimated yield have to be accurate. If a grower suffers a hail strike early in the growing season, most policies will pay the potential yield the crop would have achieved even if your sum insured is too low, thus avoiding one of the under-insurance traps.
· After the cut-off date, the potential yield of a crop can be determined with some degree of accuracy. Growers are advised to review their policies at the cut-off date to ensure that their estimated yields and agreed sums insured are accurate. If the estimate is too high, then unnecessary premium is paid to insurers, if too low then the losses could be very high. Once the cut-off date for reducing sums insured has passed there is a 48 hour waiting period.