Rural insurance broker Lycetts has launched a new guaranteed asset protection insurance (GAP insurance) product, specifically designed for agricultural machinery.
GAP insurance bridges the gap between the original amount paid for a vehicle or implement, and the amount an insurer will pay out, based on the value at the time of a claim.
In the event of a total loss, such as theft or a write-off, Lycetts’ new GAP insurance cover will help the farmer recover the agreed value, rather than the market value usually offered by insurers.
While widely offered for private vehicles, such as cars and vans, GAP insurance cover is limited in the agricultural machinery sector.
Andrew Hay, farm motor expert for Lycetts, said: “Farmers face increasing uncertainty of income in future, especially as farm support payments reduce.
“At a time when they are already feeling the pinch due to low commodity prices, farmers are having to contend with a significant increase in the cost of machinery which in part has been fuelled by the devaluation of sterling.
“Machinery depreciation can be significant drain on farmers’ finances, accounting for a considerable portion of input costs.
“Lycetts’ new GAP cover will help provide a level of protection for farmers, so that they are fully compensated in the event of a claim.”
According to Defra’s Farm Business Survey (FBS), farms in England spent a total of £1.9bn on machinery in 2017-18. When averaged across all farms, the average expenditure on machinery was £36,200 per farm.
Source: The Northern Farmer