Tree Farm Insurance Program Case Study
Client – Avocado Plantation (West Coast)
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Background of Challenges for Tree Farms
Almost all farmers labor against the elements while land, material, labor, insurance, taxes and dozens of other important expense items keep rising. Our client is a third generation avocado farmer. Recent changes on the board of directors have presented new challenges for the expansion of their tree farm.
Wildfires in the West have farmers concerned for their tree farms. Reports indicate that wildfires wiped out 40% of existing avocado plantations in 2007-2008. Many will not recover from their losses, but with our tree wildfire insurance program, many will have the ability to start again.
Tree Farm Insurance Challenge
Our client had over $5,000,000 worth of avocado trees on his farm. The government subsidized insurance program, which costs the client only a few hundred dollars per year, will only provide coverage on a catastrophic basis. In the event of a total claim, the first $2.5M would be absorbed by the client. The remaining $2.5M would only result in 55% coverage by the government or $1.375M. While relying on this coverage, the client would have to pay the first $3,625,000.
Our client could not rally the support of his board for a recent investment in the company until this tree farm insurance issue was resolved.
Solution - Wildfire Insurance for Protecting the Avocado Plantation
The cost of the "buy up" option on the Government insurance program was expensive and still left a significant million dollar deductible! Live asset insurance gave our client’s board of directors the “protection” they needed to support expansion plans. We provided $5M of insurance coverage for live assets giving 100% coverage for trees. The government's crop insurance program will be used to cover the crops/avocados. Our low deductible of only $10,000 was the issue that put the Board’s collective mind at ease.
Our client was thrilled to finally have protection for his third generation plantation. They are now completely prepared should another batch of wildfires break out in the future.
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