Serious global disease outbreaks are nothing new to the great British farmer.

Over the decades, they have managed their way through devastating outbreaks of illnesses such as foot-and-mouth and bovine tuberculosis.

Coronavirus is different, due to the extent of its impact on humans, but despite day-to-day farming being largely unaffected, some farmers are counting the cost of disruption.

The biggest impact has been on those with diversified businesses, who have seen demand for B&Bs or weddings substantially decrease. When farmers turned to their insurers, expectant that their loss of income was covered by standard business interruption insurance, they were disappointed.

According to the Association of British Insurers, standard business interruption insurance does not include forced closure by the authorities but instead provides cover for physical damage to property or farms caused by events such as fire or storms.

Over the summer, the Financial Conduct Authority (FCA) brought a test case to the High Court to determine whether the losses related to coronavirus should be covered. The High Court ruled in the FCA’s favour, but insurers appealed the decision, and a final hearing took place in November. Whatever the outcome, it seems an opportune time for farmers to re-evaluate their insurance cover in many areas of their business.

It may be that farmers will eventually be able to get cover for coronavirus or a future pandemic under their business interruption policies. The insurance industry is discussing a government-supported insurance solution for future pandemics, Pandemic Re.

In the meantime, farmers should check exactly what their business interruption insurance does cover, such as non-property damage and notifiable human diseases.

Some farmers have seized opportunities created by lockdown restrictions – for instance, a renewed demand for local produce prompted many to launch direct-to-consumer services such as home deliveries of cheese or meat.

“If you diversify, you need to ensure your declared business description still covers exactly what you are doing,” says Phil Wilson, agricultural broker at global insurance firm Gallagher. “Contact your broker or insurers if you are in any doubt, to ensure your policy continues to afford you cover and protection.”

The farm’s motor insurance policy may have to be amended if the business use – such as meat retailing – on the policy changes. If workers use personal vehicles to make deliveries, they need to get cover under their own policy.

And keep a careful eye on an adequate public liability indemnity limit, as large claims have been made by people injured in connection with agri-businesses. It should be a minimum of £10m.

Demand from people isolating or working from home, and from supermarkets desperate to keep shelves full, has been a boon for farmers. But they have also had to deal with a fall in demand from other key sectors. Pub closures and the knock-on effect on whisky and beer sales has seen a drop in demand for barley, for instance. Similarly, restrictions on restaurants and fast-food outlets have resulted in reduced demand for certain ingredients that farmers have had to store, which can be expensive.

Farmers with higher inventories or surplus produce should check whether the value of stored products has increased. If the value of crops in storage has increased, then it is likely the insurance premium will increase, too.

Cover is available for deterioration of frozen or refrigerated stock, but it can be an expensive option. This means farmers should get insurance to cover missed collections of more perishable produce such as milk and eggs.

“If we have a hard winter, milk tankers may not be able to collect milk from farms. With limited milk storage capacities, missed collections will lead to loss of milk that some milk collectors will not cover, leaving the farmer out of pocket if they are not adequately insured,” says Wilson.

Price fluctuations

The market price of some crops has dropped this year, including barley, because of too much supply and weaker demand. Farmers can get specialist insurance to cover commodity-price fluctuations.

Weather

Climate change and more extreme weather in the UK such as drought is a growing concern. Farmers can get cover for crop insurance from hail and accidental fire and get compensation for production shortfalls from volatile weather. Expect more cover to come in the next few years. Many experts believe climate change represents a far bigger threat to agriculture than coronavirus.

Employee matters

Farmers may have to take on volunteer workers during coronavirus and any Brexit disruption. They will need to be covered by employers’ liability.

“Farmers also need to retain their focus on health and safety,” says Roddy McLean, director of agriculture at NatWest. “This means keeping up regular inspections of machinery and equipment, and looking at personal accident insurance for themselves and key workers during the crisis and beyond. If you are a dairy farm, losing your herdsman for four weeks could be devastating.”

Security

“Given the increased use of robotics, drones, and data in the agriculture sector, cyber-security insurance is another consideration,” McLean adds. “Farmers are busy people and, as farming businesses are mainly SMEs, they may not have the resources to put robust cyber-security systems in place. But with data-dependent smart machinery and large supply chains, agri-businesses have significant vulnerabilities that they might wish to insure against.”