Agriculture in nature is a risky business. Most of these risks are brought on by natural disasters. If you’re a producer, you need to routinely manage the production, marketing, financial, human resource and even legal risks.
You are not only helping farmers and ranchers deal with unexpected events, same with individual producers but rural communities that rely on agriculture as well. Eventually, strong and great rural producers help create powerful rural economies, which forms a tough economic foundation and gives enhanced access to credit for the next generation of farmers and ranchers who are just starting.
In the US, the 2014 Farm Bill has enlarged the importance of crop insurance for agriculture by offering more options for insurance that farms and ranches can benefit from, this is according to the U.S. Department of Agriculture.
This is because farms are one of the most influential and significant industries in the United States. There are about 2.2 million farms on America and these farms employ more than 20 million American workers, according to Trusted Choice, an insurance company that caters independent insurance agents.
Purpose of Rural Insurance
The method of having rural insurance is you are transferring risk to provide economic protection against the losses that are caused by crop failure, death of cattle, floods, calamities or any type of economic losses, according to IOSR Journal of Business and Management.
Although the loss of risk may really happen during the operative time of the contract of insurance, people still choose to have insurance solely for the reasons of uncertainties in life. It gives people the assurance, comfort in reducing tensions, as it improves the quality of being efficient when the tensions and fears of rural people involving the risks are transferred to the insurer. Plus, farmers and other rural people will not be affected financially by the losses caused by the risks insured.
Significance of Rural Insurance
Our world today has a future that’s highly unsure, unpredictable and indeterminable. This is why it’s just plain to see that there are risks for farmers as well as other rural communities. Insurance is universally accepted since it’s considered to be the most significant mechanism of dealing with different kinds of risks.
This type of insurance offers protection against uncertain events such as loss due to drought, floods, crop failure, rain, and etc. If you would think of it, it’s actually a device that can help eliminate risks and sharing the losses.
Benefits of Rural Insurance
If your firm or farm business is insured, you can be sure that you will have normal expected profits because you won’t be required to allocate funds for future contingencies. All types of insurance have a common benefit, and that is not needing to maintain huge reserves to meet unforeseen or unpredictable occurrence of losses. It is greatly beneficial for improving the credit standing of farmers as insured crops and any other agriculture assets are simply accepted as securities for loans by commercial banks and other financial institutions.
Here are some of the common products of rural insurance:
- Health Insurance
- Crop Insurance
- Liability Insurance
- Property Insurance
- Cattle Insurance
- Earthquake Insurance
- Flood Insurance
- Home Insurance
- Personal Accident Insurance
- Tractor/ Commercial Vehicle/ Motor/ Farm Inputs Insurance
Rural insurance is necessary for a flourishing economy to have a strong insurance sector. It provides economic protection against the losses that may be incurred caused by uncertain occurrences. It will proffer you peace of mind out of tensions. It’s not only important that you have an insurance policy, life, or car, but even crop and cattle insurance as well makes your farmers resilient during tough times of losses.
Ivandrea Ollero is a daytime writer for Insurance Advisernet NZ, one of the largest and most respected General Insurance businesses in New Zealand providing high-quality risk advice that business owners can trust.