Top Five Rural Insurance Risks

Insurance must constantly adapt to the changing needs of clients in different risk environments. Fire and flood are no longer the only risks to our rural communities.

The growing risk of cyber crime, and new statutory requirements for farmers as employers and business people, have changed the outlook for rural insurance. 

New Zealand’s leading rural insurers have listed the top five rural insurance risks:

  • Statutory Liability;

  • Business Interruption;

  • Underinsurance;

  • Farm theft; and

  • Cyber crime. 


The Health and Safety at Work Act 2015 and the Resource Management Act 1991 impact the way New Zealand farmers now work their farms and work with their employees. Statutory liability insurance and adequate sum insureds are more important than ever in the current environment.

Insurers can cover both legal defence and fines under breaches of the Resource Management Act, but they are legally prevented from covering a fine under the health and safety legislation. Insurance can, however, cover the legal defence of a health and safety breach and any reparations the court may award. The following examples show why it’s important to get it right.

(a) Health and Safety at Work Act – failure to risk assess

In December 2016, a farm worker was driving a tractor and towing a trailer carrying two bales of bailage. The tractor lost traction and jack-knifed, resulting in it rolling and fatally injuring the driver.

WorkSafe’s investigation found systemic failures by the farmer to do a risk assessment of the farm and work tasks. It also found that the farmer had failed to identify the need to maintain effective roll-over protection on the tractor after it was found to be severely corroded.

The farmer was fined $70,000 and ordered to pay $130,000 in reparation.

(b) Health and Safety at Work Act – failure to manage employee fatigue

In October 2016, a farm worker crashed a tractor at 2.45am and died as a result of his injuries.

WorkSafe’s investigation found that the worker had worked 197.25 hours in the two weeks leading up to the incident. Fatigue was identified as the most likely cause of the accident. The worker was also not wearing his seatbelt.

The company had a health and safety document prepared for them in January 2016. It identified fatigue as a high-rating hazard and outlined management steps including the monitoring of work hours and break times. This document had not been reviewed or implemented.

The court indicated that a fine of $325,000 would have been appropriate in the circumstances, but actually imposed a fine of $10,000. The farmer was ordered to pay reparation of $80,000 and court costs of $2,656.50.

(c) Resource Management Act – failure to manage effluent

In June 2019. three companies were fined for discharges of effluent and silage that leached into a tributary of the Mangatete Stream at Ōkato. The discharges arose from carelessness in the way the effluent treatment system and the silage pit were managed and operated. 

The fines were to the farm owner ($86,250), the farm manager ($75,000), and the farm’s share-milker ($42,750).

(d) Resource Management Act – failure to manage effluent

In October 2016, an effluent irrigator failed and discharged into a nearby drain. A Council Compliance Officer carrying out a dairy inspection at the property took a water sample from the drain and found the water had a high faecal coliform reading of 64,000 per 100ml (640 times higher than the recommended maximum level for safe stock drinking water). 

The farm manager and senior farm assistant were fined $24,700 and paid reparations of $30,000.


The loss of a dairy or wool shed can seriously affect a farmer’s business. Business Interruption insurance for this type of loss is especially important if you operate with high debt levels. 

For example, if, due to the destruction of your milking shed, you are unable to milk for a sustained period of time, your cows may need to be dried off early, leaving you with less profit for the year; or perhaps the herd needs to be moved to another farm for grazing and milking, which could cost a significant amount.

Sheep farms also have exposure. If your shearing shed is damaged, you may have to temporarily convert another shed for shearing, or perhaps incur additional costs to transport sheep to a neighbouring farm and pay hireage costs for use of their facilities.


There are two ways to insure your property: full replacement or dollar value. If your farm sheds are insured for full replacement, you shouldn’t have an underinsurance issue (if they have been measured correctly). If your farm buildings are insured to a dollar value, however, you need to be aware of rising building and compliance costs, and review the sum insured regularly to keep pace with inflation.

A salutary lesson: an Aon broker met with a client and recommended they increase the sum insured of their stable to $35,000 from $15,000.  The client elected to keep the sum insured at $15,000. The stable subsequently burnt down with a claim pay-out of $15,000, leaving a $20,000 shortfall to rebuild.


The days of leaving your house wide open and your keys in the car are now past, even in rural areas. Quad bike and trailer thefts from farms are on the increase. One Aon client recently parked his Ute at a livestock sale and had the trailer stolen off the back of his vehicle while he was at the sale.

So, take your insurer’s advice: remove keys from vehicles at night and lock your house when you are on the farm.


The most common cyber risks for the rural sector are Network Breach (information hacking) and general disruption. Below are two scenarios.

(a) Network Security – Hacking of Files/Information

A third party hacks your cellphone and accesses a crop rotation app on your phone. The resulting breach of network security leads to a loss of revenue.

(b) Social Engineering – Impersonation Fraud

A third party impersonates your power supplier, having intercepted your regular correspondence, and prompts you to pay an invoice to the hacker’s bank account.

How can Aon help?

Aon is the only broker in New Zealand that has the capability to provide a local service, no matter where you are. Our team of dedicated staff are on hand around the country to provide you with local, expert service. We have specialist rural brokers to help you navigate your way through farming specific insurance risks as mentioned above. If you would like some advice, please call 0800 266 276 to talk to your local broker.

This website contains general information only and does not take into account your individual needs or financial situation. It is important to note that limits, excesses, terms and conditions and exclusions apply to the products and services outlined on this website. Please refer to the relevant policy documents for details of cover, the provision of which is subject to the insurer’s underwriting criteria that apply at the time. Please contact us if you have any questions.