PEKIN, Ill. — When Raber’s Packing Co. was destroyed by fire in November 2018, one of the first question employees had was if they would still have a job — and a paycheck.
Owner Buddy Courdt had made sure of that when he took over the family business.
“My mom asked me that night, are all the employees getting paid, and I said as far as I know, they are. We pretty much got confirmation of that the next day, and we knew that everything was probably going to be OK,” Courdt said.
Courdt did an extensive review of his business’s insurance when he took over as owner. While the building that housed the meat processing business was over 60 years old, Courdt wanted to make sure that the insurance coverage would allow him to replace it if anything happened.
“I went over our insurance the first year really diligently because, at my age, I wanted to be able to rebuild and I wanted to be able to pay my employees while I rebuilt and that was really only all I asked the insurance about, was to be able to rebuild and I want to be able to pay the employees,” Courdt said.
Courdt’s example is a good one to follow for other business owners, including farmers, said Tony Laesch, Illinois Valley agency manager for Country Financial.
Country Financial isn’t Courdt’s insurance agency, but Laesch offered some tips about how and when to do a review of your insurance coverage and what to consider.
“One of our goals is to offer all of our customers an annual review. Do it once a year. I would say at the minimum every two to three years. I wouldn’t go any longer than three years,” Laesch said.
The insurance that Courdt had included insuring against business interruption.
“People will buy commercial policies or business owners will buy extra coverage for business interruption, meaning if their business gets interrupted because of a claim, a fire or vandalism, tornado, things like that, the policy will pay for the interrupted business. When they don’t have revenues coming in, the policy will help make up those revenues,” Laesch said.
When homeowners and farm owners make changes and updates to their property, whether it’s updating a kitchen, adding a family room or building a new machine shed or barn, that means it’s time to review the insurance coverage.
“Those types of things should definitely trigger a ‘let’s sit down and review’ because your current coverage probably isn’t going to be adequate,” Laesch said.
For farmers, that also includes when they purchase new or newer equipment but older and depreciating equipment also can impact insurance coverage and premiums.
“It’s going through that farm personal property inventory and making sure we have right values. Whether we’ve got equipment that’s depreciated down some or you haven’t bought any equipment, so we can lower some insurance or we need to raise some insurance because you’ve added equipment or livestock,” Laesch said.
A review also can help guard that there is enough coverage and that losses won’t be penalized due to inadequate coverage.
“On the farm policy, like on a lot of commercial policies, if you don’t insure to a certain percentage, there are some co-insurance penalties that can come in. What the co-insurance acts is like a larger deductible. If you are not insurance 80% to value, what I mean by that is that we add up all your farm and personal property and it adds up to a million dollars, but you are only insuring it at $700,000. You have a large loss and we see that you insured it for $700,000. One hundred percent would have been $1 million. There could be a co-insurance penalty that applies and that co-insurance penalty is basically like an extra deductible that they have to pay or a deduction from their payment,” Laesch said.
A review can help farmers understand the rules that apply to co-insurance.
“The key is to be cognizant of any co-insurance rules and that goes also for commercial buildings, because a lot of commercial policies have co-insurance rules,” Laesch said.