The quick increase in used equipment prices means the farm equipment coverage for that harvester you bought last year may not be enough to purchase a comparable used machines should yours be totaled in an accident. This relatively recent phenomenon has left many farmers paying out of pocket because their policy limits have not changed to account for the higher replacement value.
Here’s a look at what’s happening and how to best protect your operation.
Scarcity and rising costs
At the root of the problem are rapidly rising new farm equipment prices, driven by higher manufacturing costs, including:
- Semiconductor shortages
- New tariffs on key inputs like steel, aluminum and imported parts
- Surging freight costs
- Supply chain problems that interrupt production and create parts scarcity
A recent study by Associate Professor Brian Mills of the University of Mississippi’s Department of Agricultural Economics found that major machinery prices have climbed well above inflation between 2019 and 2025:
- A 200–249 horsepower tractor increased from about $191,000 to $327,000, while per-acre costs rose from $27.24 to $41.11, assuming 2,000 acres of use.
- Cotton picker prices climbed from $777,000 to $1.1 million, pushing costs from $126.35 to $189.34 per acre.
- The price of a 12-row planter rose from $76,800 to $123,600, increasing per-acre costs from $12.26 to $19.76.
As a result, more operators have gravitated toward used farm equipment. But many are surprised by persistently high prices for older machinery, which can be a rude awakening when they need to buy replacement equipment.
Much of this equipment is made in batches, meaning supply does not always meet demand. During these lulls in new equipment availability, prices for comparable used equipment rise, sometimes exceeding the price of new machines.
Insurance implications
Higher used equipment prices can leave farms in a bind if they file a claim and find that a machine’s replacement cost exceeds their policy limits.
With that in mind, it’s important to meet with us before renewal to better estimate replacement costs. Two important pitfalls to avoid are:
- The coinsurance trap. Most policies require you to insure your equipment up to a specific percentage of its true value, typically 80%. If inflation pushes up the market value of your used tractor but your policy limits remain low, your insurer may pay only a proportionate share of the loss or revert to an actual cash value settlement.
- Actual cash value shortfalls. An ACV policy pays the replacement cost minus depreciation. If used equipment prices are heavily inflated, your payout may fall far short of what it costs to buy an equivalent used machine today.
To protect your cash flow and safeguard your operation against sudden equipment losses, start by taking an inventory of your equipment and obtaining current values of similarly aged and used machinery from equipment auctions and other sources.
Work with us to establish the most protective payout structure. You have three coverage options:
- Replacement cost — Covers the exact cost of buying a comparable new machine with no deductions for age or wear.
- Agreed value policies —Ideal for specialized or vintage equipment. You and your carrier lock in a specific value upfront, bypassing standard depreciation limits.
- Actual cash value — Pays what the equipment is worth at the time of loss, minus depreciation. If a 10-year-old tractor is destroyed, you will receive only its depreciated market value rather than what it costs to buy a new one. This may not be enough given the rise in used equipment prices.
