Fire, adverse weather, disease and pests can all result in damaged or destroyed stock, and that is before factoring in animal damage, theft or any of the various economic risks related to forestry and woodland maintenance.
Although these risks cannot be eliminated, it is important that steps are taken to mitigate them, firstly through proper management processes and secondly through specialist insurance cover designed with the industry in mind. Lycetts has developed a specialist forestry policy written in conjunction with forestry owners to maximise the areas of cover. One of the biggest problems, however, is that many forestry businesses may be underinsured without even being aware there is a potential issue.
This isn’t a case of having the wrong type of cover – fire remains the most common claim and most policies should cover all the basics required for forestry – but is instead a case of failing to ensure policy details are kept up-to-date. In many cases, a policy is taken out and, for the purposes of the cover, an appropriate valuation is given to stock based on its market value.
However, the problem arises when this policy is then renewed on an annual basis, without the details being amended to reflect not only the changing value of timber but also further costs, such as fencing, site clearance and professional fees. According to the Forestry Commission’s Coniferous Standing Sales Price Index, timber has experienced a nominal price increase of 43.7% over the five years to September 2017.
So, if a policy was taken out in 2012 with an appropriate value given to the stock according to the market value at the time, this level of cover would be completely inadequate at today’s prices. Obviously, this means a forester could be left significantly out of pocket if they suffer a serious loss of stock, potentially throwing the future of their business into doubt. This underlines the importance of holding regular reviews with your insurance provider to ensure the level of cover reflects the actual value of stock.
Public liability cover
One of the other key considerations, particularly in Scotland, is public liability cover. The freedom to roam granted under the Land Reform (Scotland) Act 2003 increases the risk of a member of the public suffering injury while travelling through woodland in Scotland, so it is important for foresters to protect themselves against potentially damaging personal injury claims.
Such claims are still common, despite attempts to impose greater restrictions on ‘no win, no fee’ solicitors. This is set against the wider context of a litigious society, in which people have long been encouraged to pursue a claim in any scenario resulting in accident or injury.
Not only is there a high number of claims but the potential value of these claims has increased too, partly as a result of recent changes to the Ogden Rate, which is used by UK courts to determine how much lump sum compensation to award to claimants who have suffered life-changing injuries. As a result, the maximum compensation fee that can be paid to claimants is now higher than it was before the changes were introduced last year.
Public liability cover is often seen as an unnecessary extra but the reality is that it can offer peace of mind for a relatively small outlay. A standard policy will typically provide up to £5 million of cover.
Ultimately, foresters would be well advised to work with a trusted insurance partner willing to work with them on an ongoing basis to ensure the right policies in place and the level of cover provided is as comprehensive as possible.
Lycetts specialises in insurance for rural businesses and we have developed schemes to reflect the needs of the forestry industry. For example, allowing the policy-holder to keep any damaged stock after a claim while still paying out the full amount determined in the policy. Such benefits can be crucial in helping a business to get back on its feet after a devastating incident, such as a fire, and limiting the disruption to everyday operations.