Rising Insurance Premiums for Farm Machinery Amidst Increasing Extreme Weather Events

Ryan Milgate, a grain grower in western Victoria, noted that insurance costs have been rising steadily, stating, "Insurance bills have been rising for the past three or four years and, just looking at ours, we have more than doubled since pre-COVID levels." The escalating costs are attributed to the higher value of machinery and the increased risk associated with natural disasters.

In response to these rising costs, some farmers are considering reducing their insurance coverage, particularly for older or less valuable equipment. However, this approach carries significant risks, as leaving machinery uninsured can lead to substantial financial losses in the event of damage or loss.

The Insurance Council of Australia has acknowledged that erratic weather patterns are a contributing factor to the surge in premiums. A spokesperson stated, "Wherever you live or work in Australia, whether you're directly exposed to extreme weather impacts or not, premium prices are rising because of the escalating costs of natural disasters, the growing value of our assets making them more costly to replace, inflation driving up building and vehicle repair costs, and the increasing cost of capital for insurers."

Farmers are advised to work closely with insurance brokers to assess their coverage needs and explore options for managing costs without compromising essential protection. Additionally, implementing risk mitigation strategies, such as improving on-farm infrastructure and adopting climate-resilient practices, can help reduce exposure to extreme weather events and potentially lower insurance premiums.