At this time of year many AgriRisk clients become concerned about the insurance arrangements on uncommitted cotton stored in ginning organisation’s gin yards.
In many instances the ginning organisations don’t provide insurance cover over uncommitted cotton, leaving growers exposed to financial loss. Clearly the highest risk factor is fire and over the last few years we have seen a few gin yard fires with devastating impacts.
AgriRisk’s advises clients that the following options are the easiest:
1. Determine if the ginning organisation is prepared to provide insurance coverage for your modules or round bales
2. If the ginning organisation cannot provide this cover, investigate whether your existing farm insurer can provide cover
Growers will have difficulty in obtaining “stand alone” coverage for cotton modules in the ginner’s yard because the insurer doesn’t:
• Understand the risk at the specific location where the modules are stored
• Have knowledge of any risk management strategies adopted by the ginning organisation including fire preparedness or suppression capability
• Know how long your modules will be at risk
• Know if all your modules are located in the one area (and therefore could be destroyed by one event) or are spread out across the yard and therefore at a lower risk of being destroyed
• Have a good historical record of losses at the specific gin yard
Given these factors, it’s very difficult for the insurer to calculate a reasonable premium, so they will tend to avoid such risks as they are simply too complicated to underwrite for the relatively low premiums they could charge.