Virtual Fencing on Dairy Farms: The Insurance Questions Every Farmer Should be Asking
On Wednesday 10 December 2025 the Victorian Minister for Agriculture announced the new regulations that will give Victorian farmers access to virtual fencing and herding technology. It’s expected NSW and South Australia will be quick to follow, while QLD, WA and Tasmania already permit commercial use.
This momentum reflects how rapidly virtual fencing is becoming one of the most discussed innovations in Australian dairy farming. Farmers and technology providers point to its benefits - safer stock movement, reduced labour requirements, improved land utilisation and potentially meaningful cost savings.
At the national level, the Federal Government’s Animal Welfare Task Group (AWTG) is preparing a guide promoting optimal animal welfare outcomes with the use of virtual fencing, with a final report expected by the end of 2025.
NSW Farmers’ Animal Welfare Committee Chair Rob McIntosh has summarised the optimism from the farming community towards virtual fencing well:
“Across Australia and the world, virtual fencing is already proving its value… This technology can save lives by allowing stock to be moved safely during floods or bushfires, without risking human or animal welfare. It also offers enormous potential for cost savings and better land management” (read more here).
While the farming benefits may seem clear, the insurance implications are not, and that creates risk during this transition period.
Dairy Protect Brokers were fortunate to hear about Agriculture Victoria’s Ellinbank SmartFarm’s experience with virtual fencing in August this year.
WHY INSURANCE NEEDS TO BE CONSIDERED EARLY
Most conversations we’ve had with clients involve the Halter system, although Gallagher and others also operate in the market.
Under Halter’s model, farmers take legal ownership of the collars and transmission towers once the agreement begins. That makes them farm assets which may require explicit insurance cover.
We have put detailed questions to Australia's major farm insurers, which echo the concerns we are hearing from farmers. None are yet able to provide formalised guidance. Some are awaiting the release of AWTG guide before determining their underwriting approach, due to potential ESG issues.
So, for now, insurance needs must be reasoned through carefully, case by case and insurer by insurer.
Below is how Dairy Protect is approaching the current issues.
INSURING COLLARS AND TRANSMISSION TOWERS
Collars
If collars fail due to a system or manufacturing fault, we understand warranty arrangements apply with the supplier. But if collars are destroyed in an insurable event (e.g. a fire), that loss sits with the farmer.
Other collar technologies already exist, and our clients currently insure those collars as specified farm contents. We expect that the virtual fencing collars will be treated in the same way.
Transmission Towers
The transmission towers that form part of the Halter system are likely to sit in the farm property sections used to insure items such as freestanding solar panels, wind turbines, power poles etc.
There is also an emerging risk regarding low-flying agricultural aircraft colliding with towers where farmers have not notified pilots, as raised in NZ reporting.
If towers are insured as farm property as suggested above, cover may extend to aircraft impact, depending on insurer and policy wording. As we haven’t received any formal position from the insurers, this is unconfirmed and must be checked and tested individually.
LIVESTOCK INSURANCE IMPLICATIONS
Farmers are wondering how their livestock cover will apply if virtual fencing fails and livestock are injured.
Again, we have received no guidance from insurers on this, however we do know that any damage to the livestock caused solely by the collar (i.e. injuries from wearing the collar, shock etc.) are not covered.
More broadly, we need to look at how livestock cover typically works.
If you look to your Policy Disclosure Statement (PDS), it will set out for you the situations in which cover applies for loss, destruction of damage to your livestock (also see our articles on this here and here). The events that are typically covered are fire, explosion, lightning, impact, earthquake etc. The trigger for whether your livestock cover applies is whether one of those insured events caused the loss, not whether the collar performed correctly in helping you to avoid those risks. As the broker, we would be arguing that what caused the loss was the actual event, not how the event happened. Again, this is the advocacy role we would play in the absence of any current clarity on this.
If livestock loss is caused directly by collar malfunction, this becomes a legal liability issue between the farmer and the virtual fencing provider, not a livestock insurance matter.
Dairy Protect’s role is to:
understand the facts
query whether the loss may have been caused by an insured event
advocate for coverage where appropriate
COULD VIRTUAL FENCING REDUCE PREMIUMS OVER TIME?
Possibly, but it’s too early to tell.
Virtual fencing’s ability to move stock out of flood/fire danger could reduce insured losses, which may eventually influence premiums.
However:
Insurers have no data yet
As far as we know, no underwriting models in Australia include virtual fencing as a rating factor
Savings from reduced internal fence cover may be offset by the need to insure collars/towers
This is one of the areas we expect to evolve most over the next 3–5 years.
MILK CONTAMINATION & VIRTUAL FENCING FAILURES
Our Dairy Engagement Lead and former dairy farmer himself, Phill Bond, has asked this question:
“If your milk got contaminated because the virtual fencing system had failed and your cows grazed an area that had been sprayed with a chemical and has a milk withholding period…and that milk makes its way into a milk tanker or factory, would your business liability cover still cover you for the impacts of the contaminated milk in that situation?”
Again, we do not have a response from the major farm insurers on this question.
However, if you hold milk contamination cover, we would look to the wording of your specific cover to ascertain how the policy may apply in this specific scenario.
For example, if we look to CGU’s PDS, contamination wording covers “introduction of foreign material into milk,” with no requirement for how the contamination occurs (other than not being deliberate).
So if foreign material is present, we would lodge the claim on the basis of introduction of foreign material and advocate that the cause (e.g. collar malfunction) is irrelevant.
LIABILITY FOR ESCAPED ANIMALS
Virtual fencing does not replace the need for boundary fences and livestock owners will continue to be responsible for preventing their livestock from escaping and causing damage.
SO WHERE DOES THIS LEAVE DAIRY FARMERS?
Virtual fencing technology is moving quickly, but insurer positions are not.
Even with regulatory progress, early adopters will be operating in a period of insurance wording ambiguity, where decisions must be made without clear underwriting frameworks.
This is precisely why Dairy Protect exists – to help you navigate these insurance complexities while at the same time embracing innovations within the dairy industry.
OUR APPROACH AT DAIRY PROTECT
Until insurers formalise their positions, we will:
Use our expertise and knowledge of current insurance products to determine how collars and towers can be insured under current products;
Advocate on claims where policy wording supports it, regardless of the involvement of virtual fencing technology
Track state and federal regulatory developments
Maintain direct dialogue with all farm insurers on virtual fencing
FINAL WORD: IT’S A “WAIT AND SEE”, WHICH MAKES SPECIALIST BROKING ESSENTIAL
Virtual fencing is likely to transform dairy farming and, in time, transform farm insurance as well.
But right now, insurers haven’t caught up, leaving grey areas, potential gaps and wording ambiguities.
This is where having a dairy specialist broker matters.
Your Dairy Protect broker will:
understand how virtual fencing works in a dairy context
know where insurer thinking is heading
help you avoid cover gaps where possible during the transition
advocate strongly if a loss occurs
keep you informed as the underwriting landscape evolves
Virtual fencing is about the future. Our job is to make sure your insurance keeps up.
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