Agriculture deals with the rearing of animals and the cultivation of crops for food and other needs of man. It has been known to be the main supply of food. It serves as the main source of food to different countries.
The purpose of agriculture is broadly classified into two: substantial and commercial purposes, for both purposes, insuring your farm produce is necessary as it sheds you from unforeseen loss.
If you practice substantial Agriculture (the practice of agriculture to sustain oneself and/or his family), there is need to acquire property insurance which covers your farm products against loss resulting from theft, fire, flood, pests, etc. Although this article focuses more on the concept Agricultural insurance, the need for “commercial farmers” to acquire Agricultural insurance plans and how to go about it.
Agricultural insurance can be defined as a form of insurance whereby a farmer (i.e. the insured) pays money (premium) for a particular period of time to an insurance company (i.e. the insurer) who guarantees the farmer to financially protect their agricultural businesses in times of unexpected loss.
Farm products cultivated or purchased by business men likely come in large quantities and are stored in warehouses or storehouses where they are subjected to natural disasters like fire, drought, wind, disease from pests, or even theft.
Generally, insurance improves one’s motive to do business, with an agricultural insurance plan there is no loss in your business, it either you make profit or retain the cost price of your goods (except if the causes of your failure in the business are not related to the perils mentioned earlier).
How Agricultural Insurance Works?
There are different types pf agricultural insurance and different companies offering such insurance policies, in order to enjoy the benefits of agricultural insurance you need to know which insurance plan best fits your needs, we have explained the types of agricultural insurance in subsequent sections of this article.
If you are a farmer who cultivates crops and you want them protected from natural hazards like drought or flood. You need to contact an insurance company offering such premiums.
A list of the best insurance companies offering agricultural insurance have been compiled in this article as you read along. The company you contact will now visit your farm to check the location, size of the farmland, scale of cultivated crops, the type of crops cultivated and other minor criteria that will determine the cost of your premium.
You will be offered higher premiums if your crops are located at the river banks for instance, where they are easily subjected to flood. If your farm is large, or expensive to cultivate, it will take the insurer a huge amount of money to pay when you eventually encounter any loss hence, you will be offered a costlier premium by the insurer or company.
Types of Agricultural Insurance
Agricultural insurance has many types depending on the type of farm practice: there are respective premiums for each type of insurance for farmers.
Premiums rate increase when a farmer acquires insurance policies with larger coverages; although this increase is not linear as most companies reduce the cost or offer special ads coverages for expensive insurance plans. The types of agricultural insurance include:
Animal Agricultural Insurance
This is a type of agricultural insurance practiced by farmers who rear livestock, fishes, birds, and other animals for food and other purposes.
The farmer buys the insurance plan for a particular period of time and may renew the plan after it expires. During this period, the insurance company offering the policy will take responsibility of any loss experienced by the farmers from perils like flood or fire.
Animal Agricultural insurance can be further divided into:
Fish Agricultural Insurance: It protects your fishes against death, thunder and lightning, disease, fire, poisoning, and theft. The insurer covers you (the farmer) against losses caused by damages or harm to your pond or fishes.
Poultry Agricultural Insurance: Protect against loss that result from injury or harm to a farmer’s livestock e.g. it is commonly practiced by farmers who rear chickens for sustaincial and commercial purposes.
Crop Agricultural Insurance
It deals with financial protection against loss that result from natural disasters which may bring harm to the farmer’s crop.
Farm produce and property agricultural insurance: it guarantees you the farmer of any loss you may experience on your farm, warehouse or storehouse, it also covers your farm properties against theft or damages.
Other types of agricultural insurance include:
- Farm equipment and property agricultural insurance
- Multi-peril crop agricultural insurance.
List Of Agricultural Insurance Companies in Nigeria
There are many companies offering agricultural insurance plans, below is the top five most efficient and trust worthy companies that offers such plans.
- Nigerian agricultural insurance scheme (NAIS)
- Nigerian agricultural insurance corporation (NAIC)
- Nem insurance Plc
- Prestige assurance Plc
- Leadway insurance company limited.