What does farm buildings insurance actually cover?
Farm buildings insurance pays to repair or rebuild the permanent structures on your holding after a fire, storm, flood, escape of water, or a small number of other insured events, such as impact damage from a vehicle or theft-related damage to a building itself. That typically includes the farmhouse, grain stores, livestock buildings, machinery sheds, workshops, silos, and sometimes fixed yards, gates, and fencing if they're specified in the policy document. The point of the cover is to put you back in the position you were in before the damage happened.
If a fire destroys your grain store, the policy should pay to rebuild it, but whether it pays what it costs to rebuild today, rather than what the building was worth when you insured it, depends on the basis of cover you hold. That distinction, between reinstatement and indemnity, is the single most important thing to understand before you ever need to make a claim, and it's covered in more detail in our insurance glossary.
Reinstatement versus indemnity
Reinstatement cover pays the cost of rebuilding the structure as new, using materials and labour at current prices, with no deduction for the building's age or condition. Indemnity cover, by contrast, pays only the building's value at the time of the loss, which for an older barn or a traditional stone building can be considerably less than the cost of putting up a replacement. Most farm buildings policies are written on a reinstatement basis, but it's worth checking which basis applies to each building on your schedule, because older or unusual structures are sometimes moved onto indemnity terms by the insurer.
Why the sum insured needs to reflect today's rebuild cost
The sum insured is the maximum amount the policy will pay out for a building, and it needs to match what it would actually cost to rebuild that structure now, including materials, labour, and any costs of clearing the site and meeting current building regulations. A grain store put up twenty years ago for a certain figure will cost more to replace today, and if the sum insured hasn't kept pace, you may find yourself facing underinsurance, where the insurer reduces the payout in proportion to the shortfall, even on a partial loss. Try our farm building rebuild cost estimator to see how this applies to your situation: it takes the building type, footprint, construction material and age, and gives an illustrative reinstatement cost range, which is a useful way to sense-check a sum insured that hasn't been looked at in a while. It produces an estimate only, not a formal valuation, and it can't tell you what a specific insurer would actually pay on a claim.
Some policies apply index-linking automatically, adjusting the sum insured each year in line with a construction cost index, so the figure doesn't quietly fall behind inflation. Others leave it to you to review and update the sum insured at renewal. Either way, it's worth checking your buildings schedule against current rebuild costs every year or two, particularly after any extension, conversion, or new build. Our Farm Building Rebuild Cost Estimator gives an illustrative figure to work from, though it produces an estimate only and isn't a substitute for a proper rebuild valuation from your insurer or a surveyor.
What's typically excluded from a farm buildings policy
No farm buildings policy covers everything, and knowing where the boundaries sit matters as much as knowing what's included. Exclusions vary between insurers, so the list below describes what's common rather than universal, and the actual policy document always governs.
- Wear and tear and gradual deterioration. A roof that fails because it's simply worn out generally isn't covered. Insurers distinguish between a sudden, insured event and the slow decline that comes from age and lack of maintenance.
- Poor maintenance. If a building has been left in a state of disrepair and that contributes to the damage, an insurer may decline the claim or reduce the payout, even where the immediate cause, such as a storm, would normally be covered.
- Buildings left unoccupied. Many policies impose conditions, or reduce cover, on buildings left empty for a set period, often 30 or 60 days. If you've mothballed an old dairy parlour or a redundant barn, tell your insurer, because an unnotified change in occupancy can affect a claim later.
- Subsidence, heave, and landslip. Some policies exclude these outright, others cover them subject to a higher excess. Given how many farm buildings sit on varied ground, this is worth checking.
- Flood, in some cases. Buildings on land with a known flood history sometimes carry restricted flood cover, or an increased excess for flood claims specifically. If your buildings sit in a flood plain, ask directly how flood is treated.
Non-standard and traditional construction
A building made from brick or block under a tiled or slated roof is what insurers mean by standard construction, and most policies price and cover on that assumption. Cob walls, thatch, corrugated asbestos sheeting, and timber-framed buildings are all treated as non-standard, and if they aren't declared to the insurer, cover can be reduced or a claim disputed on the basis that the risk wasn't properly presented. If your farm buildings include anything unusual, older barns, converted buildings, or structures with mixed materials, it's worth confirming in writing that the insurer knows about them.
What to check in the policy document before you rely on it
The policy document is what governs a claim. A handful of details are worth checking specifically, because they're the ones that cause disputes when a claim is actually made.
- Whether each building is insured on a reinstatement or indemnity basis, and whether that varies across the schedule.
- The excess that applies per building, per claim, and whether it differs for particular perils such as flood or subsidence.
- How the policy defines "buildings", since fixed fencing, hardstanding, grain dryers, and fuel tanks are sometimes covered separately, or not at all.
- Whether debris removal and site clearance costs are included in the sum insured, or paid separately, since clearing a collapsed building can itself run to a significant cost.
- Whether the policy includes cover for loss of rent or additional cost of working if a building you rely on for income, such as a let cottage or a storage unit, is put out of use. This overlaps with business interruption insurance for farms, which is usually a separate section of cover.
Questions worth asking a broker
A regulated broker who knows agricultural risk can talk through how a specific policy treats your buildings, something this site isn't authorised to do. A short list of questions tends to surface the details that matter most:
- Is each building on reinstatement or indemnity terms, and has that been reviewed recently?
- Does the sum insured index-link automatically, or is it left to me to update at renewal?
- How is an unoccupied building treated, and what do I need to tell you if one goes out of use?
- Are subsidence, flood, and escape of water covered as standard, or as optional extensions with a separate excess?
- Does the policy cover the cost of meeting current building regulations if I have to rebuild, which can add materially to a rebuild cost that older buildings weren't originally built to meet?
If you're not yet working with a broker, our guide on how to find a regulated farm insurance broker sets out what to look for and how to check a firm's authorisation.
If a claim doesn't go the way you expected
Buildings claims are among the more contested types of farm insurance claim, partly because rebuild costs and the reinstatement basis leave room for disagreement between a farmer and a loss adjuster. If an insurer disputes the sum insured, applies underinsurance, or offers a settlement that doesn't reflect current rebuild costs, you have the right to challenge that decision, first with the insurer directly and, if that doesn't resolve it, through the Financial Ombudsman Service. Our guide to farm insurance claims and your rights when a claim goes wrong sets out that process in more detail, and our claims and dispute guidance page covers the general steps to take when a claim stalls.