On Wednesday 10 December 2025, the Victorian Government announced the introduction of regulations allowing farmers across the state to adopt virtual fencing and herding technology. With Victoria now formally enabling the use of this technology, NSW and South Australia are expected to move quickly, while QLD, WA and Tasmania already permit commercial use.
Virtual fencing has rapidly become one of the most discussed innovations in Australian agriculture. Proponents of the technology say it promises safer stock movement, reduced labour requirements, improved land utilisation and potentially meaningful cost savings.
At a national level, the Federal Government’s Animal Welfare Task Group (AWTG) is also 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 here).
However, while regulation is progressing quickly, insurance treatment is not necessarily keeping pace. This gap between physical rollout and insurer readiness presents real risk for farmers.
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 this space.
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.
Breakwater has approached several major farm insurers for formal guidance on virtual fencing will be treated in relation to property, livestock and liability cover. So far, insurers have been unable to commit to clear positions. 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 Breakwater Insurance Brokers 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
Transmission towers that form part of a virtual fencing system appear likely to fall under the same farm property sections used for other freestanding infrastructure such as solar panels, wind turbines or poles.
One emerging consideration is the risk of impact from low-flying agricultural aircraft where pilots have not been notified of tower placement, an issue highlighted in NZ reporting.
If towers are scheduled as farm property, cover for aircraft impact may apply depending on the insurer and policy wording. Because no insurer has yet issued a formal stance, this must be reviewed individually.
LIVESTOCK INSURANCE IMPLICATIONS
Many farmers are asking how livestock cover responds if an animal is injured due to a virtual fencing failure.
While insurers have not issued formal guidance, one point is clear: injuries caused directly by the collar, such as physical irritation or shock-related effects, 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. 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.
Breakwater Insurance Broker’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.
FOR DAIRY FARMS: MILK CONTAMINATION & VIRTUAL FENCING FAILURES
A specific question raised by dairy operations is whether milk contamination cover would respond if virtual fencing failure leads to cows grazing in a restricted or chemically treated area and then being milked. Or if the herding technology fails and cows treated with antibiotics are accidentally milked.
If milk contamination cover exists, Breakwater would review the policy wording to understand how the insurer defines contamination. For example, CGU’s PDS refers to “introduction of foreign material into milk” without specifying how the contamination must occur. On that basis, if foreign material is present, we would lodge the claim and advocate that the cause, being technology failure, should not exclude the claim (unless it was deliberate).
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 FARMERS?
Virtual fencing is advancing faster than insurance frameworks are adapting. Even with Victoria’s regulatory approval now in place, early adopters will be navigating a period of uncertainty where traditional policy wordings may not neatly contemplate virtual fencing systems.
This is precisely where the team at Breakwater Insurance Brokers comes in. We will help you navigate these insurance complexities while at the same time embracing innovations within the agriculture industry.
OUR APPROACH AT BREAKWATER
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
- 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 aspect of 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.
Your Breakwater broker will:
- know where insurer thinking is heading in relation to virtual fencing
- 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 represents the future of stock management. Our role is to ensure your insurance keeps pace with that future.
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