Insuring for the Rising Costs of Farm Businesses

With the general inflation rate increasing rapidly, and the cost of farm inputs rising even faster, insurance for farming businesses is more important than ever. 

As farm insurance specialists, Farm and General are highly experienced in business interruption insurance for farmers and growers, and we understand the impact of inflation. There have been an increased number of claims for storm damage and fires this year, so it is vital to make sure your farm is protected. 

Farm Input Costs

Farm input costs are increasing at a far faster rate than inflation. For example, there have been huge increases in price for feed, nitrogen, and red diesel, as shown in the below data from Farmers Weekly.


Cost 25/03/2021

Cost 25/03/2022

% Increase

Feed wheat




Feed barley




Red diesel

£0.52p per litre

£109.20 per litre



£300 per tonne*

£1000 per tonne*



*Estimated by Farm & General

This is not helped by the fact that the supply chain is in a poor state. It can take a while to find a suitable supplier and then months to obtain commodities.

The Impact on Farming Business Insurance

Typically, the sum insured for business interruption is set by estimating the next year’s income. This is difficult at the best of times with the impact of the weather and changing prices, but more so with rampant inflation. 

Almost all insurance policies include a standard method of increasing sums insured in line with an index, and insurers draw on several sources for their figures. However, the major problem is that these indexes are non-specific to farming, so the rising cost of farm inputs may not be considered.

How to Stay Protected

One of the first actions you should take is to review your farming business insurance policy and arrange that all sums insured are reassessed, taking the unprecedented inflation rate into account. You should do this as soon as possible, and not wait until renewal.

In addition, your basis of business interruption should be immediately reassessed from a ‘sum insured’ to an ‘estimated’ basis. Traditionally, this means an annual formal declaration at the end of a policy year, which might just lead to a modest additional charge. The advantage of this is huge. With most insurers, it removes the under-insurance risk caused by inflation, and they may be able to build in a 33.3% buffer or remove this entirely, depending on the policy wording. 

Talk to Farm and General

At Farm and General, we know that insurance is not always the most interesting or easily understood subject. Please don’t leave it on the ‘important, but not urgent’ pile for too long. A few minutes spent now could remove hours of heartache later.

Simply get in touch by phone, email, or via our contact form if you would like to discuss farming business insurance in the UK.