Timber Crop Insurance (NOT an endorsement)

Don Staples dstaples at livingston.net
Thu Feb 26 10:20:04 EST 1998

One of our readers asked about timber insurance in light of the recent
disasters across the
country.  The following was received and forwarded with comment.  This
is a straight copy of the sales flyer received.

    How TIMBERPLUS (tm) Coverage Works

TIMBERPLUS (tm) is a new, low-cost insurance product that recognizes
timber as an
agribusiness commodity crop with the same perils and risks as
traditional agricultureal commodity
crops.  It' insurance that protects timber owners from loss due toperils
such as wind, ice and fire.

TIMBERPLUS premiums are based on the amount of protection selected, the
level of coverage
chosen and the location of the timber.  Growers can also earn scheduled
credits wen they have a
fire protection plan in place, when the utilize effective pest
management practices and if they have
a professional forester managing the timber.  Coverage can be further
customized for specific tree
types and growing systems.  The policy also features automatic
adjustments to insurance limits. 
And our professional forestry staff monitors shifts in market conditions
to ensure that you are
insured at appropriate levels.

TIMBERPLUS is a continuous policy which automatically remains in effect
for each calendar
year following the original policy purchase unless canceled.

If a loss occurs, indemnities are calculated by simply taking the
difference between the value of
the crop prior to the loss and the value after the loss.  And our
experienced staff of insurance and
forest professionals means claims will be paid quickly and accurately.

Claim Example:  A Mississippi lumber mill owns 100 acres of southern
pine valued at $2000 per
acre ($200,000 total value).  The director of risk management insures 70
percent of the value
($140,000) with TIMBERPLUS insurance.

A lightning strike causes a fire which destroys 50 percent of the
stand.  The amount of the loss is
$100,000 but your were able to salvage half of the damaged timber, so
the insurable loss was
$50,000.  Seventy percent coverage equals $35,000, less the 10 percent
deductible ($14,000), so
the final payable loss is $21,000.

MY COMMENTS:  Interesting enough there was no premium schedule
attached.  Also no tables as to loss rates.  No history in the
business.  But crop insurance for timber?  Interesting.
Don Staples
UIN 4653335

My Ego Stroke:  http://www.livingston.net/dstaples/

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