SA Grain June 2017

Product information

Junie 2017

Comprehensive silo insurance

critical for the modern producer

he silo has become an integral component of a grain stor-

age management system for the modern producer and this

necessitates the need for comprehensive insurance of the

asset for any eventuality, either for weather-related events

or other unexpected accidents.

According to Santam, failure of silos and bins happens more often

than that of almost any other industrial structure and equipment,

and silo failure, therefore, can be very costly to producers. The

major causes of silo failure are design errors, construction errors

and just basic operation errors, which will not be covered under the

standard insurance contract.

As with any structure a silo must be properly maintained if it is to

have a long, useful and safe life.

The maintenance of a silo is the responsibility of the producer and

must not be neglected. The maintenance work includes the repair

of the walls and/or inner liner used to promote flow. Periodic inspec-

tion of roof vents, level probes, feeders, dischargers and gates are

also a requirement.

It is imperative that producers are covered against losses, which

can be very high if large silos, bins and equipment are damaged.

Insurance is critical and comprehensive cover that extends be-

yond weather-related events is crucial as unexpected accidents

can happen.

All silo facilities are equipped to receive grain; and store and dis-

charge it effectively. Drying and cleaning facilities are all part of the

operations of grain storage. Grain dryer fires are one of the most

significant risks a grain handling operation can face. The devastat-

ing results of fire can include death, serious injury, financial loss,

property damage, business interruption and production downtime.

Dust explosions are a frequent hazard in grain elevators or oxygen-

limiting silos. The force generated by such an explosion is sufficient

to damage heavy structural members and propel heavy objects

great distances.

The SANS Hazardous Area Classification and SANS 10108 certifi-

cation are integral parts of regulating and managing hazardous ar-

eas and their electrical installations. They are especially important

in safeguarding employees and equipment through the prevention

of electrical fires and explosions. Special attention should be given

to this regulation.

Santam statistics show that cutting, welding and other hot work op-

erations conducted on an unsupervised basis have been responsible

for many large fire losses due to the heat source igniting combusti-

ble materials in agriculture. It is advised to ensure proper control of

cutting, welding and other hot work; farm management must estab-

lish a comprehensive Cutting – Welding-Grinding – Hot Work Permit

programme.

This programme must be applicable to both in-house maintenance/

technical staff and external contractors. By applying a formal hot

work programme, the potential of a fire loss to property as a result of

hot work will be significantly reduced.

Other factors that must be noted in the risk management of silos

are the importance of effective management of grain storage as

grain can rapidly deteriorate, as well as the risk of severe damage

from lightning strikes as silos are generally the tallest structures

on the farm. While lightning rod protection systems can prevent

damage to the structure, damage and fire can still result if lightning

strikes hit the facility’s electrical system.

Loading or unloading belts, pulleys, shafts, and other mechanical

apparatus in silos are also subject to mechanical failure and over-

heating. New motors used in silos and feed rooms have safety de-

vices, but many older electrical motors have been modified; and

supporting wiring and circuitry may be substandard. Older or misap-

plied units such as these are prone to arcing and overheating.

In addition, silo bags and bunkers should be insured for the contents

and the bag/bunker. This is becoming an increasingly important

form of insurance as more producers are making use of silo bags

and bunkers on their farms. Silo bags are more cost effective to set

up, but often the risk is greater as there are stipulations in terms of

setting up, storage, clearing of the area around the bag and creating

drainage for water to avoid flooding. Producers must spread their

risk by not setting up all the silo bags in the same area, provided

that this is practical given the layout of the farm.

Ultimately it is vital that the producer undertakes a proper needs

analysis, in close co-operation with a broker to ensure all the risk

factors are taken into consideration.

Santam believes choosing the right insurance partner with effec-

tive risk management is key to protecting your agricultural assets.

We remain committed to assist the entire farming community in

managing the risks endangering the sustainability of the agricultural

sector. As the oldest insurer in the sector we have over 86 years

of extensive experience in dealing with the highs and lows of agri-

culture. We want producers to know that we understand their re-

quirements, that we value their contribution to the economy and

sustainable food production and above all that we share their pas-

sion for farming.

Santam’s agri insurance products were developed around the spe-

cific needs of the producer and our cover is specific to the unique

risks and requirements of the agricultural sector. Their specialist

solutions ranging from pivot irrigation systems to livestock have

been designed to suit the individual producers’ needs.

FOCUS

Grain handling chain

Special

HANLIE KROESE,

Santam