Most farm dwellings are underinsured by 20 to 30 percent. The reason is simple: replacement costs have climbed sharply over the last five years, and most policies have not kept pace.
Here's what to check before seeding starts.
What "underinsured" actually means on a farm
Your policy covers your farmhouse at the limit listed on your policy. That number was set when you first took out coverage and updated, if at all, at renewal. Rural construction costs have jumped: framing lumber alone is up well above where it sat in 2019, and concrete, labour, and the logistics of building in a rural location have all followed.
If your farmhouse burned to the ground today and you needed to rebuild from scratch, the payout from an undervalued policy will not cover the full cost. You make up the difference out of pocket, often tens of thousands of dollars.
Four things to review before seeding
- Dwelling replacement value. When was it last reviewed against current construction costs for your square footage, finishes, and rural location? If the answer is "years ago" or "never," that is the place to start.
- Detached structures. The shop behind the house, the woodshed, are these in your dwelling coverage or your farm buildings coverage? There is often a gap where neither policy clearly covers them.
- Sewer backup and overland water. Spring runoff on the prairies is unpredictable. Both endorsements are typically add-ons, not standard inclusions. Confirm yours are in place before the melt.
- Fire department charges. In rural Saskatchewan, when one or more departments respond to a fire they bill you directly. Many farm policies include fire department charges, but the default limit is frequently too low. Confirm yours is on the policy and that the limit reflects your area.
The 15-minute conversation worth having
A Cherry broker can walk you through your farm dwelling review. It takes about 15 minutes and costs nothing. Finding out your coverage is short after a loss is considerably more expensive.