A new insurance product has been unveiled which protects farmers whose machinery has been written off or stolen.
Rural insurance broker Lycetts has launched the guaranteed asset protection insurance (GAP) product specifically designed for agricultural machinery.
In the event of a total loss, GAP will help the farmer recover the agreed value rather than the market value usually offered by insurers.
Whilst widely offered for private vehicles, such as cars and vans, GAP is limited in the agricultural machinery sector.
Andrew Hay, farm expert for Lycetts, said that farmers face 'increasing uncertainty' over income, especially as farm support payments reduce.
He said: “At a time when they are already feeling the pinch due to low commodity prices, farmers are having to contend with a significant increase in the cost of machinery which in part has been fuelled by the devaluation of sterling.
“Machinery depreciation can be significant drain on farmers’ finances, accounting for a considerable portion of input costs.
“Lycetts’ new GAP cover will help provide a level of protection for farmers, so that they are fully compensated in the event of a claim.”
According to Defra's Farm Business Survey (FBS), farms in England spent a total of £1.9billion on machinery in 2017/18.
When averaged across all farms, the average expenditure on machinery was £36,200 per farm.
In 2017/18, just under three quarters of farm businesses (74 percent) bought at least one piece of machinery.
Over the last three years, nearly all farms (94 percent) have invested in machinery.
In the last recorded year, one in four (25 percent) farms bought a tractor – at an average cost of £64,300 per vehicle.
Fifteen percent of farms bought harvesting equipment, spending an average of £33,700 per farm, and £14,500 was spent on cultivating equipment on average per farm.
“It is clear that farmers are investing heavily in agricultural machinery, evidenced by the hundreds of millions of pounds spent on machinery in the past year,” added Mr Hay.
“Machinery is essential to the running of farming businesses and farmers’ livelihoods are dependent on a smooth operation so if vehicles are irreparably damaged or stolen, it can have a huge impact.
“Anything that can provide a sense of security, such as Lycetts’ new GAP cover, can not only soften the financial blow but give farmers peace of mind.”
