Got insurance? Are you sure?

Narrator: We are grateful that you are joining us for another episode of the Ag View Pitch, as we know that your time is very valuable. Our team at Ag View Solutions is always here for you for any questions or comments that you may have. Please feel free to reach out to us at cbarron@agviewsolutions.com. And now here is your host, Chris Barron.

Chris

Barron: Welcome everybody to another episode of the Ag View Pitch, and today we're going to have a conversation around insurance. We've got this one titled, Got Insurance? Or are you sure? And so this is one of those things where, um, a lot of times when we work with clients, we find gaps, we find challenges and levels of coverage, and sometimes maybe don't always have the right type of insurance and some of those things that we need to think about. And so today we have with us a special guest, Adam Brickley, and he is with PDCM outta Waterloo, Iowa. They have several offices in Eastern Iowa. And so I've worked with Adam and had a lot of good experiences so far in understanding insurance and some So Adam, welcome to the Ag View Pitch.

Adam

Brickley: Appreciate being here, Chris, and, uh, thank you on behalf of your entire PDCM team.

Chris

Barron: Yeah, it's good to have you here. And so get— I guess what I want to start out with is a question I told you offline this too, and I— and my first question is, is why is it important to have a good agent?

Adam

Brickley: And I appreciate you giving me about 7 seconds to think about that, but, uh The quick answer, as I'm going to say, is at the end of the day, we all call experts when there's a, when there's a problem, whether it be a combine goes down, whether it be all of a sudden your change oil light comes on, or if you just need someone to be a sounding board when it comes to how do I protect the things that are more important, most important to me at this time. And a lot of times that's through insurance and Luckily, we are able to partner with clients and help them strategically find a way to not only from a cost standpoint cover what's important, but then look to the future.

Narrator: Mm-hmm.

Chris

Barron: Okay, well, that's a good answer. We'll continue to pick on you on that one now. I appreciate it. But so let's start out with one of the challenges that I see, and then you can bring some up too, and we'll kind of dialogue back and forth here. One of the things that we, that Shay and I see a lot when we're working with clients is gaps in coverage. In other words, you know, they're doing some things in the operation that maybe the insurance company might not know about, or maybe it's something that they haven't even thought about. And so I'll give you an example and you can give me some examples and we can talk about it as well.

Narrator: But—

Chris

Barron: Sure. You know, all of a sudden, you know, you, you purchase a couple new pieces of equipment and you forget to tell the agent that you have them, and you go for half a year and you have them. Or, you know, you are partnering with somebody, you've got your tractor hooked on to their implement, and you're running all over the place doing some things and haven't really had a conversation with anybody about, okay, we're, we're, um, we have an alliance here and we're working together on some things. And, you know, or maybe the their employees are coming over, you know, you got somebody else's employees coming over and helping you. Or another one, and then I'll, I'll be quiet for a second, but another one that we see a lot of times is you have third-party contractors coming on your operation to do some service work that maybe be under— they may be underinsured.

And so asking for proof of insurance when you have a third-party contractor come on to your, onto your farm or your business to do some things and maybe they aren't sufficiently covered. And those are a few, and I could go on and on and on. So I'm going to shut up for a second and I'm going to have you tell me, you know, how do we manage these gaps in coverage and what are some other ones that I'm not mentioning?

Adam

Brickley: I think one of the most important words that you touched on was partnership. And a lot of times we see that specifically you reference, you know, a partnership that you might have with another farming operation. We want to see your relationship with your insurance agent and your carrier as a true partnership. And I always say, you know, shoot me straight, tell me exactly what you're doing, and then we're going to find a way to communicate this to the insurance company. Because at the end of the day, we want the insurance company to be aware of everything that you're doing with your operation, whether that be partnering with somebody else, whether that be having a third-party contractor come on site. The biggest thing is insurance shouldn't be just something that you look at once a year and then just put it away and hope that nothing happens.

Um, from a communication standpoint, the biggest thing is just communicating what you're doing. So often we see— we get a call from someone who says, well, hey, we've got a situation, did you know about it? And a lot of time we can only ask so many questions unless you just tell us exactly what doing. I would say that from a gap in coverage standpoint, a lot of times it just, it's easy to look at something and say, oh, nothing will ever happen to that, or, you know, I wouldn't replace that, or we would do it a different way. But a lot of times we're not thinking about, okay, what would really happen if the straight line wind came through and we had to choose right now what we're going to do and how that affects the bottom line?

Chris

Barron: Okay, so we're— we'll come back to gaps and coverage. You brought something up that I want to hit on, which is level of coverage. And so, you know, I know the dust has literally settled from the derecho that we— that a lot of the Iowa producers saw last year. And there were— and I'm sure there's a ton of things that you guys learned from an insurance perspective. And I'm sure, unfortunately, there was probably a lot of things that your customers learned, right? That, geez, maybe I was underinsured and this, that, and the other thing. So in terms of levels of coverage, what things or what areas do you see there being gaps in those levels of coverage where they should have, you know, or where we should as producers make sure that we're telling you this is the value of item A or whatever?

Adam

Brickley: Levels of coverage are huge because a lot of times producers and business owners see that by lowering your level of coverage, you're going to lower your premium. And we all know that if you lower coverage, your premium is going to go down. The problem with that is nothing in the marketplace goes up— or I'm sorry, goes down. Yeah, everything. And we're seeing now, I mean, lumber, every material, every type of product to replace that is going up. Unfortunately, we have seen several people will say, well, gosh, you know, I'm underinsured. A lot of times those numbers are just kind of pulled out of a hat. Say the producer says, you know, I've had that tractor for 10 years, my accountant depreciates it every year, so, you know, I want to depreciate that out. That's definitely an option.

But lots of times we say, well, what would you do if that tractor wasn't able to be up in production for the next 6 months? A lot of times it's just a— it's looking at all of your equipment, it's looking at all of the buildings and saying, okay, How would we protect ourselves if that tractor went down? And lots of times the cost to increase the values of those items to an adequate replacement cost is pennies on the dollar. There's no right or wrong answer. It's just what you would do if you didn't have those in your production.

Chris

Barron: Well, and is that, you know, that I guess is what we see from Ag View from our perspective a lot of times is some apparent risk that is on the table that sometimes we don't see. So for example, you've got a farmstead, you've got it full of machinery. It's pretty easy to have $7, $8, $9 million worth of total assets sitting there. Absolutely. And then if you have them insured for, you know, current value versus replacement value and you have a catastrophic loss where, you know, whether it's a tornado or whatever goes through, and produces a catastrophic loss, a lot of times that gap in coverage or that $2 or $3 million that you're not insuring because you're saving a premium is something that can really set you back for, for years to come.

Adam

Brickley: Yeah, the, the, the, the amount of years that would have to go by for you to ever save enough premium to make up the difference on that million-dollar gap would be unheard of. And so the idea of having either an insurance carrier or another third party do an inventory for the producer, for the business owner every year. We have some producers who do it 2 times a year. Mm-hmm. Because at the end of the day, we don't want surprises just like you don't.

Chris

Barron: Mm-hmm.

Adam

Brickley: And there might be items where you say, you know what, we've been talking about taking that out of our production or out of our fleet for years. And sometimes that risk is a good risk. Sometimes it's okay to say, you know what, if something happened to that, we wouldn't replace it. If that's the case, there's no point in paying premium on it. But if you've got $2 million worth of equipment, there's no point in depreciating that out every year knowing full well that you're going to need that come harvest or come planting season.

Chris

Barron: And, and do you appreciate it though? Because one of the things we look at a lot as we analyze stuff with clients is we look at inflation component. And for example, I mean, um, We had a Gator just burn up here in our own operation here a couple weeks ago as we record this. And, you know, that's the last thing that we expected there. I mean, combines burn up, Gators don't burn up, you know, a utility vehicle, how could that ever happen, you know? And so luckily we were insured well, but, you know, sometimes those totally unexpected things can happen.

But the thing that I'm getting at here that we really learned though is, that just since the beginning of the year, and as we, we record this here at the front end of, of, you know, close to July, from last December, from December of 2020 to, to as we record this now in the middle of 2021, we've seen an inflationary component on used equipment by the tune of 5 to 7% depending on, on who you talk to and how you analyze that. So now all of a sudden our used equipment, if your used equipment fleet is valued at your $2 million number and it goes up by 6 or 7% just in 6 months, that's a huge, you know, talking point or a discussion or a conversation, I think, to have with your agent, isn't it?

Adam

Brickley: Absolutely. And what we can do, there's a couple of different things. And aside from just reviewing those items on an annual and maybe 2 times semiannual a year, But some insurance policies allow us to have an inflation guard. Typically, people see this on their home or their buildings where the insurance company says, you know what, here's the dollar amount that we think will replace this building. But at the end of the day, Chris, you and I could sit here until we're blue in the face and not really know what inflation's going to do, right? An endorsement or an insurance policy that allows us to put in an inflation guard might increase the value of those items. 4 to 6% every year. Now with that said, this year is kind of, uh, uncanny when it comes to what the cost to replace items is. And so that inflation guard probably isn't enough.

And without the open communication with yourself, the other producer, and probably a third party who's telling you, you know, this is what I can get for a John Deere Gator, we as the insurance agent we rely on you to give us the price. And so if that price is low, lots of times we can push back and say, you know, have we looked outside to see what these cost? But ultimately, as the business owner and the producer, you guys set the values. So having someone else be able to assess those values is a huge win from a, a producer standpoint.

Chris

Barron: One thing that brings up a question I think that a lot of producers would be thinking right now too is, okay, what happens if, and what kind of coverage should I have in the event that I have a machine go down? So let's say it's a combine or a tractor that goes down and it's loss of use. And like right now, one of the big issues that we're starting to see is because new equipment is in such high demand with limited supply because of computer chips and all these other things that are occurring right now, right? It's making, it's putting a whole bunch of pressure on used stuff even, and all kinds of parts. So from an insurance perspective on loss of use, what do you, what do you recommend there that people think about to, to make sure you're covered in that arena?

Adam

Brickley: So you're going to want to have a policy that reacts for the loss of use or business income interruption. And most the time with an insurance policy, that's also going to include extra expense. And so while that piece of equipment is down, You want coverage to be triggered so that you have a replacement there when you need it. That extra expense might be to go out and find a piece of equipment that's not in the state of Iowa. Maybe it's something that has to be shipped in. You want to be able to identify almost a, a chain of supply for those items that could potentially go down and how you could replace them so you're not halted from an operations standpoint.

Chris

Barron: Okay, um, another question, and I don't mean to be jumping around here, so we'll circle back a few things, but as these questions come to mind, but you know, um, there's a lot of operations that are wrapping up but have been and still will be in the field spraying, doing their crop protection stuff and everything, and you're on the highway and you're in the field and there's off-target risk and all those things, and there's a thing called errors and omissions. You know, you make a mistake or you screw something up, um, you know, you have herbicide drift or whatever it is. What's your recommendation there? What type of communication conversation should we be having with insurance agents with regard to that kind of stuff?

Adam

Brickley: Those, those type of risks, those inherent risks that you take on as a producer are, are definitely coverages that you would want to talk to your insurance agent about because you can purchase coverage for those things. Um, I would have no problem if you came to me and you said, you know, we've got a dilapidated building and we don't want to insure that. But at the end of the day, you, you don't know when your spray is going to overdrift into someone else's property. Those are coverages that you have to have for those risks that you, you honestly don't know when they're going to happen, but you're doing the activity almost on a daily base that could produce a loss. And without the right insurance company, you're, you're basically self-insuring against something that you know happen and no will have a negative effect.

Chris

Barron: So when you cause an issue to someone, so again, um, let's, let's just use the sprayer example. The sprayer is going down the road, um, and we have a lot of highway travel. A lot of, um, a lot of our clients are up and down the road long distances with machinery and equipment. We have a loss on the highway the motorist is either uninsured, underinsured. A lot of times it feels like we're the ones that, that carry the most risk and have to have them insured as well. Talk a little bit about that.

Adam

Brickley: And you're, you're exactly right. That goes back to, from an auto standpoint, making sure that you've got un- and underinsured motorist coverage, which is going to protect your entity, your operation for when there is a situation where that person doesn't carry insurance. Or doesn't have the limits that they need to. The other thing too, from going back to your spraying example, is you, you have to be able to say, you know, how much are we doing, how often are we doing it, and what's a sufficient limit for something like this. Again, these are all things, coverage that you can purchase from the insurance company. But if you're not talking to your agent, lots of times you and the agent might be talking about things that seem important But we're not talking about the sprayer that's going down the gravel as we sit here and do this podcast, right?

Chris

Barron: And the level of coverage with regard to that too, I think, is subject to discussion and decision-making from both the recommendation that the insurance company might give, but then what the producer or the customer says. Well, that's enough. That, you know, should I have $2 million? Should I have $5 million? Well, what's the, the premium difference between $5 million and $10 million? You know, We'll shift the piece of equipment from a sprayer to a semi for a minute. We have a lot of clients with semis on the road, you know, more heavily in the fall, you know, so we can talk about seasonal coverage and that kind of stuff in a minute. But, you know, if we've got a semi on the road, there's a lot of risk there, right? There's a lot of weight moving, and if we have a loss on the highway, usually we're at fault again, especially with semis.

Any, any suggestions there on levels of coverage? I'm going to hit you on another question on the semis in a minute, but, you know, levels of coverage, you know, I hear some people say, well, I got a million, some people got $5 million, some people got $10 million. I think it depends a little bit on how much you're on the highway, the, you know, where you're at. If you're in North Dakota or if you're right next to St. Louis or next to Chicago where your farm's at and you have significantly more traffic, I think it warrants higher levels of coverage, but I'll have you talk to that.

Adam

Brickley: I would agree with that. And with that said, no matter which metropolitan or geographic area you're in, the one thing that we can't argue is that $1 million just doesn't go that far.

Chris

Barron: Doesn't go very far.

Adam

Brickley: Doesn't go very far at all. And in the state of Iowa and other states, as a producer, as an owner of a fleet, lower limits are available. Um, PDCM, we say that, you know, a standard million-dollar auto liability is a starting point. That liability is going to cover bodily injury and property damage caused by your operation. Then in addition to that, again, with a million dollars not going as far as it could 6 months ago, um, You can purchase an umbrella over the top of that. That umbrella is going to not only protect your auto, but it's going to protect other areas of your operation from a liability standpoint. And so that umbrella is something that you can, you can purchase usually with the same insurance company with a higher limit.

So when your semi is going down 380 to deliver corn to Cedar Rapids with your bright shiny sign and namesake on the side of it, and unfortunately you smoke a family of 4, You want your umbrella limit to obviously react to be able to take, to take into effect how many people are in that accident. The umbrella limit lots of times is, like you said, Chris, it's chosen by seeing how many units you have out in the road, on the road, and ultimately how many assets you have there to protect. Because at the end of the day, you want to have enough layers of protection for the insurance company to protect you if one of those semis, or if any, even if one of your just, you know, Chevy Silverados is in a situation where they're in a bodily injury or property damage accident. So from a recommendation standpoint, a million is a starting point. Lots of times we see, um, $5 million, $10 million.

Um, we're not going to let you become a client without getting several different options when it comes from umbrella liability. Because in the whole scheme of things, the cost to, one, have the umbrella, and two, have increased umbrella limits, really is minimal for the potential damage that your operation could cause.

Narrator: This is Alyssa with the Ag View Solutions team. Here at Ag View Solutions, we work with farms and ag businesses all across the country on cost of production, business decision-making, collaboration opportunities, farm and ag business structuring, and transition planning. We work with operations of all sizes to help you with the important decisions that need to be made in your business. If you have questions or would like to learn more about how we can help your farm and business, please email us at cbarron@agviewsolutions.com, and thank you for listening.

Chris

Barron: Let's stay on this for a minute here too, on the semis, and I want to talk structure for a minute. So one of the things, and you're familiar, familiar with our structure, and it's the similar structure that we use with many of our clients where we take the semis and we get the semis in the named individuals. We try to, to get the trucks in the youngest portion of the generation to own the trucks. We, we, we segregate the farm operation as an operating entity. We have the machinery and equipment in a separate company, in a separate LLC, that's a legitimate profit center, a legitimate business. It's not just a cover, it's actually operated as a legitimate profit center, as a business. It has its owners. The trucking company has its owners. It's a legitimate business. It bills the operating entity just like it would if it was Joe Blow down the street. It's a legitimate business.

We structure these businesses, but yet there's co-ownership among all of those, but we isolate them, number one, not just for liability, but number one, for accounting and for business purposes to do the right thing, to do a, to operate a good, sound, solid business. A side effect or a benefit to that is being able to isolate that out and know exactly, okay, this is how we need to insure. This is the type of insurance we need because of the structure.

You know, it's not that we're trying to get out of, of a liability protection or cheaper premiums necessarily, although it appears from what we see is that when we can get that real clean structure and we can communicate that with insurance companies and with our agent of exactly and precisely what we're doing with our business structure and how we're, how we're putting these things together, it makes your guys's life easier, and it makes it a lot easier for the insurance company to know what they've— what they're insuring, and to feel confident that, okay, this is a, this is a legitimate business that's doing everything from safety meetings— and, and we'll talk about that in a minute— but, you know, communicating with all of their employees and communicating with everybody, including you guys, um, what what needs to be done.

And so I guess my question is, with regard to structure, talk a little bit about the benefits of that as an insurance company, of having the trucks in an LLC, the machinery in an LLC, and the operating entity separated so that you can segment the, the coverage levels and kind of see what you're dealing with and what you're, what you're insuring.

Adam

Brickley: Sure. With that entity structure, um, The big thing is, like you said, Chris, the communication between yourself, the agent, and then ultimately the insurance company. By having those segments, you're able to purchase from the insurance carrier limits specific to those LLC and those entities. So instead of having $1 million of liability coverage that you're going to dilute or lessen because you've got these 3 entities, you're able to purchase them individually to provide more protection for each individual policyholder, right? So your trucking organization or Trucking LLC, that might be your highest exposure from a liability standpoint, and your comfort level with that might be less. And so you say, you know what, we need a much higher umbrella limit on the trucks. As long as that LLC is set up We can do that.

One of the most important things— and Chris, you and I have been working together now for a few years, but we've always preached the importance of trying when you can to have those entities structured like you do, but then to try to get those entities all insured with the same insurance company, right? To get the whiteboard out, to put the time into the research of saying, okay, Yes, these are the 3 entities. Yes, it kind of looks like just another farm operation, but at the end of the day, we're having different entities be able to purchase higher limits when we feel that that's necessary, but we're dealing with the same insurance company. That doesn't give the insurance company the opportunity to say, well, you know, actually we don't think that we were at fault for this and here's why, and we think that this insurance company should pay for it.

By having it all with one carrier, we know up front, we're saying, hey, insurance carrier, we might have these three entities, we might pay different premiums for these entities and have different limits, but at the end of the day, you're insuring all of them. So there's no finger-pointing at the time of a loss. If it wasn't your fault, by God, they're going— they're going to defend you. I mean, they're not going to just say, oh yeah, we're on it. But at the end of the day, they're not going to say, well, you know, there is some other issue here that we see. Maybe it's XYZ insurance policy instead. We've got the coverage with the same carrier for the entire organization across the board. And that's not always possible. But when it is, that's a crucial benefit for any operation. Yeah.

Chris

Barron: And I would say it needs to be always possible because, you know, we've seen that in, you know, a number of our clients are in collaborative ventures, and so they're farming with neighbors, kind of like we— I mean, we're, we're farming with multiple farm entities here, and we have a number of clients that are doing the same type of venture. And that's one of the very first things we talk about for a successful collaboration is making sure that you have one insurance company and that the insurance company understands what's going on. And that's what always scares me and what I kind of started the conversation with was that we see these farmers form alliances, you know. I mean, there's a lot of people baling hay right now and doing things, and, you know, you hook this guy's truck onto that guy's trailer and you go down the highway, and the trailer comes unhooked one time.

Yeah, I mean, you know, it just— these, these, um, informal alliances, not that they aren't going to have— they're going to happen, but it comes down to communication, doesn't it? As far as, okay, the Okay, Mr. Agent, these are some of the things we're going to do this year. Here's the list of things we're doing. Are we covered in this scenario? Are we covered in this scenario? And having those conversations instead of trying to hide it. Because when— and it's not a matter of if, it's just a matter of when— there's a loss, right? There, there's already been a conversation about an event that could happen, and you know, and then it's a lot easier to deal with.

Adam

Brickley: Well, and a lot of times too, I think business owners and operators look at the agent that might come in and point their finger at everything you're doing wrong. And sometimes those handshake agreements with other operators can look, look like something— well, I'm doing this wrong. We try to take it a step back and say, we know you're gonna do it. We know someone's gonna call and say, I need help. Or hey, could we partner up and you use my tractor, you use my trailer? The communication around that then tunnels up to the insurance carrier and we say, you know, every once in a while this operation is going to do this. Do you have a problem with it? The insurance carrier grows comfort by knowing exactly what you're doing. But with that said, they know there's going to be times where someone is going to call you and you're going to go I can't believe I'm just asked this question.

I don't know how to answer it. Are those situations going to be covered by insurance? It just depends on the policy. But the likelihood of an insurance carrier wanting and willing to work with you if they know and have been communicated what you're doing, that the odds are better in your favor. The other thing too is the insurance carrier, at the end of the day, they want to feel like they're a partner with your operation. They don't want to feel like they just get premium from you and they hope that the, the claim is covered at the time of a loss. So anytime that you can have the insurance carrier along with the insurance agent come in and meet the employees, meet the staff, meet the operators, that gives them more comfort. Ultimately, it usually helps from a pricing standpoint, and things just come up in conversation that aren't going to come up on a an insurance application.

Chris

Barron: So let's, let's continue down that thought a little bit more with regard to safety. So we've done this with a few clients that have a number of employees, and I think this is warranted with, you know, if you have one employee, but is to have annual or biannual safety meetings. And we like to do them in the spring and fall and just bring everybody in. And that's a great time to bring the insurance agent in and maybe somebody even from the company to watch what you're talking about from the standpoint of safety. Every single year we have a client somewhere in some state that has a loss. I mean, we've, we've unfortunately experienced some deaths, you know, with— sure— which are terrible. And, you know, other types of accidents that You know, can they be prevented?

I mean, you have these meetings, and if you prevent something, as Shay always says, you don't know if you, if you prevented something, but probably in all likelihood you do. And you definitely don't if you don't have these conversations. My question for you though is that by being involved in this and asking the companies to be involved, what the farmer's always thinking about is how do I lower my premium, you know? And it's not always about lowering. One way to lower your premium is not have not have a major loss like that, right? It's true. Um, but talk a little bit about, you know, what does that mean to the company when you can invite them in, you can have some safety protocols and that type of thing? Does that, you know, what, what's that look like from a company perspective?

Adam

Brickley: Great point. Um, and I can appreciate, uh, having a small family farm over in Winthrop. I'm sure my Grandpa Jake was always just looking at the, the premium every year, but, uh, You'll— as a policyholder, you're never going to see a line item that you saved $1,000 because you're being safe, right? Insurance companies, they know that you're doing basically everything you possibly can to be safe. But with that said, if you were an insurance company and one farm operation was holding safety meetings and the other farm operation who looks identical wasn't, Which one would you want to insure? Which one would you give better rates to? Would you give the operation who's doing additional safety and having their employees reach out for additional resources from a safety standpoint, or the one who's not?

That conversation is something that the, the operator, the agent, and the carrier have to negotiate with the insurance company on, because the insurance company wants you to have more skin in the game. If you are willing and able to have a safer operation, they're going to find a way to make your policy broader. They're going to make it so maybe those couple things that they're not happy that you're doing, maybe as long as we communicate with it and you're doing all these other things to safeguard the operation, you know, they're going to be okay with that. And so again, the partnership between the operator, the agent, and the carrier is crucial and the communication should just flow freely. And we know that those things and those operations are going to change.

Chris

Barron: Mm-hmm. Okay. That's good to know because I think a lot of times it does come back to what we started the conversation with, with communication. Sometimes I think it's as humans, sometimes we feel like, well, we don't mention that, maybe it doesn't exist. You know, we don't talk about it, it might not happen, you know, and we got to get all these things out on the table. You know, especially when it comes to risk management, you know, we got to have these things out there.

Adam

Brickley: And from an underwriting standpoint, so every— just like every, every buyer right now in the marketplace, if the insurance company doesn't know or wants to find an answer on your farm operation, one of the first things they're going to do is Google it. And Google doesn't always have the best representation of your operation. That picture view that they— that underwriter might pull up, it might pull up the 3 dilapidated buildings and not pull up the fact that you've got this entire other portion of your operation that looks really nice from an insurance company. And so again, the conversations that need to be had, um, are so important for determining the limits, but then also trying to help from a premium standpoint.

Chris

Barron: I always tell our clients that, you know, when you have the agent come in, if you can get somebody from the company to come in with them, because it allows you guys to build relationship with the carrier, right? And it also allows the customer to get a little closer to the carrier. Any, any comments on who should come or what you should ask for from your agent with that?

Adam

Brickley: I would say that anytime your agent can get the, the farm or commercial underwriter or agribusiness, just depending on the title within that insurance company. That person is the one who determines the rates for your operation, right? As much as they want to turn to the manual and say, okay, we've got a bin that's this size and this is what it would cost to replace it, if the, if the underwriter can look at everything as a whole, that's a, that's a better deal for the insurance company, but ultimately for the operator, right? And so having that underwriter, and within your case we've had underwriters, uh, a couple different underwriters, not only at the same time but on an individual basis, come and look at it.

And the other nice thing, Chris, we all come up with ideas and talking points when we're in a partnership or we're just kind of spitballing and saying, you know what, we never thought about this. And those conversations are better had when there's—

Chris

Barron: on the front end, at the front end, at the kitchen table. Yeah, exactly. So the The last thing I want to get to here is, and, and we're just going to be real high level with this, but one of the gaps that we see as we talk gaps, levels, and types of coverage here, back to the gaps for a minute, is term life. And the, the specific example that always scares me is when we're in the midst of a transition from one generation to the next, and I'll just use a specific example Mom and Dad are transitioning over to one of the kids who's the most actively engaged in the business. There's some other kids involved in the operation who may or may not have some ownership. There's some stake in the game here, and so there's a lot going on there in the midst of this transition, and there's no or very little term life on the, the primary key person that it's being transitioned over to.

That's running the farm. And if something happens to that individual, let's say that, that half of those assets, half of that equity is transitioned over to that individual, and that individual, you know, something happens and, and they unfortunately get killed or ran over by a beer truck or whatever, and they're out of the picture. Now that family is in business with that spouse, and it can get really difficult to figure out, okay, does that spot— that spouse might not even want anything to do with that farm, and now all of a sudden has that equity.

Adam

Brickley: And so parents might say, we never wanted to do business with that spouse, right? Love that person, but we don't want them to farm this land.

Chris

Barron: And it might be a two-way street. The spouse wanted nothing to do the other way, now they're in business together. How do you, how do you balance that? And so the only way that we've seen in the midst of this transition that's super successful is to figure out what the value of that transition is at any given point in time. And typically you can buy pretty inexpensive relative to the risk value of term life insurance so that if something happens to that person, they can be bought out by the rest of the family almost immediately and they're not in business together.

Adam

Brickley: Exactly right. When you, when you are starting to think about and build your perpetuation plan for the family farm operation. You want to be able to, God forbid, at the time of a situation, be able to have that cash that allows you to buy back or buy out the person that you didn't initially want to go into business with. Um, a key man life insurance policy or key person life insurance policy is going to do that. Um, from a high-level standpoint, you want to identify who those people are. You want to identify what the dollar amount is going to need to be based on your operation. But then you also want to figure out who's going to pay the premiums on that, because a lot of times it's a premium that can be paid by the entity. The person who's getting the coverage is going, well, this is great, you know, I'm getting, I'm getting coverage if something happens to me.

I'm not paying the premium on it., but then it frees up liquid cash to be able to say to a spouse or another sibling, hey, we all knew that this was going to— that this could potentially happen. Here's the cash that we have available to buy this back, or to at least flush in cash to help a situation. Um, again, Chris, you nailed it. The whiteboard and open communication um, is huge. And I know that that is such a difficult conversation to have, but anybody who's thinking about taking over the farm or have a farm handed to them, they're going to appreciate knowing, hey, we did talk about this, we do have a policy in place. And you know, the whiteboard might look a little different now, but at least we've got some options than just going, well, I never wanted to be in business with this person, and now we have to be.

Chris

Barron: Yeah. And, and like you said, you know, those conversations are difficult, but do you map some of those strategies out and then everybody can have a little— you know, you've got the skin in the game, why not have some of the say in the game, you know, and, and have, have an opportunity to make sure everybody's kind of on the same page.

Adam

Brickley: So, and kind of that sleep better at night coverage, right? And I would say, going back real quick about your question regarding limits, those limits are going to make you sleep better at night. I hope to God the umbrella limit that you purchase is high and you never use it. You buy it for when the semi smokes the family of four. So when you're purchasing at your renewal or at your quarterly review with your insurance agent, try to think of those times where it's like, you know what, what would happen to the farm or to my kids or the grandkids who were thinking we'll take this over someday if we didn't have enough insurance limit, right?

Chris

Barron: Right. Yeah. And, and, uh, we get, we get what we pay for, you know. Sometimes you get, you get what, what you, uh, insure for. Um, is there anything, um, that I always do a last, last, so last, last question for you is, is there any key thing, and, and not to dwell on the derecho, but is there anything that you've learned last year that you say Wow, that is a big deal. That's something that, you know, as a company or as advice that I would give to people, and it's maybe something we've already talked about, so it can be, but just anything that you— that was like an aha moment after dealing with all of the loss that, that you guys— I mean, you were swamped for a long time with the massive amount of damage. Anything, any key thing that you learned there?

Adam

Brickley: The biggest thing that my biggest takeaway would be the fact that as an agent, you're now, you can't tell me till you're blue in the face that that building or that part of your operation doesn't matter. Because prior to that, a lot of the buildings that might have been taken out by a straight-line wind probably weren't damaged. Well, the derecho damaged those buildings. And often than not, we would see someone say, you know, it sure would have been nice for me not to decline, decline insurance coverage in that area.

Chris

Barron: Didn't realize I was using that that much.

Adam

Brickley: I didn't realize that I used that thing on a daily basis. I just thought it was kind of an eyesore that I should have fixed up. Yeah, we never want you to pay more for insurance coverage, but we want to partner with you and say what's important to you and what would it look like if half your operation didn't exist. And that's a really hard dollar amount. It's really hard to quantitate that because we— I mean, we— there's no crystal ball. But again, having the open communication, the premium is something that you're always going to be able to look at and say, that's just too expensive, and where can we— where can we adjust things? But I would say my biggest advice Go into the purchasing of your insurance policy thinking of it as a partnership with your agent and an extension to the insurance company that ultimately is there to keep you up and running.

That when a derecho, a small electrical fire happens, so that you're not saying, gosh, you know, I wish I wouldn't have signed that saying I don't want that coverage.

Chris

Barron: Awesome. So back to communication, kind of where we started. It's talk to each other and stay communicating. So I think this is a good place to wrap up here. Um, really appreciate you, Adam. Thank you for, for being here and having the conversation. Really appreciate it.

Adam

Brickley: Appreciate it, Chris. Um, so happy to be able to do this with you. And, um, just, just one other takeaway would be that at the end of the day, you want your insurance policy to feel good when you're buying it. You want to understand the coverage, and the more communication that you have with your agent and the carrier is going to be better in the long run.

Chris

Barron: Yep, that's right. And keep in mind, you know, ask yourself that question: got insurance? Are you sure? So the communication, kind of where we started, we're kind of where we're wrapping up. So again, Adam, thank you very much. And we like to thank everybody for listening. This again, we had Adam Brickley from PDCM in Waterloo, Iowa. And so again, everybody, thanks for listening. We will catch you again Next time on the Ag View Pitch.