Weighing the Cost

Airplane and Tornado

Last week a tornado ran for a half-mile through one of our fields, flattening a 200-yard wide strip of corn. What are the chances of that happening? It is a first for us in the 45 years we have farmed. This week, aerial applicators are spraying for aphids and white mold that are threatening north central Iowa soybeans. What are the chances of that happening?  Almost every year that it is wet.

Nearly every day, my husband is inspecting crops or livestock or grain in a bin, to ensure his investment of time, labor and money is insured or protected against accidents, extreme temperatures, weather, disease, mold or pests. The decision to spray, plant, vaccinate, buy, sell or insure is not made once and forgotten about.  He is always weighing the cost of action or inaction against the return on his investment.

The same is true for me on the home front. We purchased a used camper three years ago with the expectation we would use it for five year. Our decision to NOT insure the camper was based on how much five years of insurance would cost compared to the amount we paid for the camper.  The amount we saved in NOT purchasing insurance could easily replace the camper should something happen to it.  Basically, we SELF-INSURED the camper.

The same thought process is used for our vehicles. The nice, fully insured, used car we purchase for me to drive for work will eventually becomes the “farm” vehicle which we carry minimal insurance on. There is a very little chance of my husband having an accident driving down gravel roads between fields, whereas the number of miles I drive on highways for work greatly increases the chances I may have an accident and need to replace my car.

The Money Talk workbook discusses financial basics, insurance, investing, retirement planning, and planning for life events. This practical, clearly written guidebook is available through Iowa State University Extension should you like to learn more about financial basics including Insurance.

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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