Farm Property
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Disclaimer
Insurance forms and endorsements vary based on insurance
company; changes in edition dates; regulations; court decisions;
and state jurisdiction. This instructional materials provided by
Insight is intended as a general guideline and any interpretations
provided by Insight do not modify or revise insurance policy
language. The authors of these materials, Insight Insurance
Consultants is a division of Insight Consulting and Management
Inc. In providing these materials, Insight assumes neither liability
nor responsibility to any person or business with respect to any
loss that is alleged to be caused directly or indirectly as a result
of the instructional materials provided.
Copyright 2010 – 2011 All Rights Reserved
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Laurie: 714.803.5830 laurie@insurancecommunitycenter.com
Marjorie: 714.206.9583
Marjorie@insurancecommunitycenter.com
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Farm Property
Your Instructor Today
Casey Roberts, CIC, AFIS, ACSR
President, Laurus Insurance Consulting
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Course Objectives
• Review of the “farm operation” to
identify unique property exposures
• Review of the Farm Property Coverage
Forms:
– Farm Property Form;
– Farm Personal Property Form;
– Farm Property Barns, Outbuildings;
– Cause of Loss Forms;
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Course Objectives
• Review Farm Disruption
Coverage
• Review Farm Property
Endorsements
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Farm Operations
• The topic is going to be the property risk
for the farm/agricultural industries.
• The property exposures are varied and
numerous based on the “type” of risk
that is being insured.
• The Farm Property Forms which are
designed primarily for “on premises”
types of exposures.
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Farm Operations
• The farm policy is designed to cover
exposures normally assumed to be part
of a “farming” operation
• By use of the word normal, the broad
definition of farming operation would
be utilizing the farm property for
agricultural purposes
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Farm Operations
• Farm operations typically involve
– Cultivation and usage of farm property for:
• Growing crops
• Raising livestock
• The “Incidental” business of selling farm
products ONLY produced on the farm.
Example: roadside operations
– Other retail operation directly relating to
the “farm operation”
– Processing of farm product
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Farm Operations
• Each insurance company will have their
own underwriting criteria as relates
acceptability and rates:
– Type and size of the farm operation
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Review of the Farm Property
Coverage Forms
Highlighting the Uniqueness of the
Farm Property Policy
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Farm Property Insurance Set Up
Farm Property Application
Common Policy Declarations/Conditions
Farm Provisions Form
Farm
Declarations
Farm
Property
Forms
Additional Coverages,
Conditions, Definitions
Cause
of Loss
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Endorsements
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Application and Declaration
• The application IS the framework for the
policy
• Declarations is the “evidence” that the
coverages and limits requested are
declared correctly
• The policy forms refer back to the
Declarations Page
• Coverages are DEC driven
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Common Policy Conditions
“same” as Property Forms
• Cancellation
• Changes
• Examination of
Your Books and
Records
• Inspections and
Surveys
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• Premiums
• Transfer of Your Rights
and Duties Under the
policy
• First Named Insured
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Common—First Named
Insured
• Caution: If the insureds to the contract
are NOT named they will not be covered
on the policy
– Verify and name the insured(s) correctly
and completely
– Name the various parties as their interest
may appear
• Mortgagees/Loss Payees/Lenders Loss Payables
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Farm Forms in the ISO Series
FP00 12
• Farm Property Coverage Form (A-D)
• Farm Dwelling, Appurtenant Structures
and Household Personal Property
FP00 13
• Farm Property Coverage Form (E)
• Farm Personal Property
FP00 14
• Farm Property Coverage Form (G)
• Barns, Outbuildings and Other Farm
Structures
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Farm Forms in the ISO Series
FP00 30
• Mobile Agricultural
Machinery and Equipment
FP00 40
• Livestock Coverage Form
FP10 60
• Cause of Loss Form
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Polling Question #1
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Druker’s Farm
• Sam Drucker owns Drucker’s Poultry
Farm.
• They have a home on the property;
outbuildings to store feed and
machinery and a building to store the
poultry.
• Which type of coverage would Drucker
need to cover their risks as defined in
the example?”
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Farm Property Form
FP 0012
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Farm Property Form
• Similar to a Homeowners Policy
• Covers the residential exposure
associated with the farm under four
coverages referred to as coverage
A,B,C.D
A. Dwellings
B. Other Private Structures Appurtenant to
Dwellings
C. Household Personal Property
D. Loss of Use
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Coverage “A” Dwelling
• For eligibility purposes, a “Dwelling”
must be building used principally for
family residential purposes.
• “Dwelling” does not mean a building
used in such agricultural operations
such as:
– storage of farm machinery or production
– “livestock” or “poultry”
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Coverage “A” Dwelling
• Each dwelling owned by you (can be located
on or away from the “insured location”
• Replacement Cost subject to insurance to
value clause
• No Building Ordinance (Endorsement)
• Structures attached to covered “dwellings,”
except structures attached only by a fence,
utility line or similar connection;
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Coverage “B” Other Structures
• Coverage is provided for other structures
owned by the insured that are appurtenant to
(meaning “pertaining to) the dwelling.
• Separated from the dwelling by a clear space,
or
• Other structures NOT for agricultural purposes
• Can be increased with FP 0525
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Household Personal Property
Coverage C
• Covers “household” personal property
• Under Coverage Extensions (B) there is
coverage for personal property anywhere in
the world, provided it is owned or used by you
or members of your family ….” for 10% of the
limit of household personal property
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Household Personal Property
Coverage C
• Property NOT covered similar to
Homeowners:
– Trees, shrubs, plants….
– Animals, birds or fish
– Business Property except as provided
– “Farm personal property” other than office
fixtures, furniture and office equipment
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Loss of Use Coverage “D”
• Same as Homeowners Policy
– Your Additional Living Expense
– Fair Rental Value
– Loss and Expense Due to emergency
prohibition against occupancy
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Additional “unique”
provisions
• Extensions
– Refrigerated Products—Not “Farm Personal
Property” $500.00
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Farm Personal Property
Coverage Form
FP 00 13
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Polling Question #2
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The Farmer and the “Hay”
• Your insured grows hay for feed and for
sale. They store the hay on their farm in
a shed.
• Does the Farm Personal Property Form
cover the hay owned by the insured for
feed and for sale?
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Polling Question #3
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The Farmer and the “Hay”
• The farmer has moved the stacks of hay
into the fields for feed.
• There is a tornado that lands in the field
and literally destroys all the bailed hay.
• Is there coverage for this loss of stacks
due to windstorm in the fields?
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Farm Personal Property
Coverage “E” and “F”
• In the FP0012 there was only coverage
for “household personal property” with
exclusions for farm property.
• The Farm Property – Farm Personal
Property Coverage Form (FP 00 13) is
used to add in “Farm Property” on a:
– Scheduled basis
– Unscheduled (blanket) basis
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Farm Personal Property
Coverage “E” and “F”
• Coverage E - Scheduled Farm Personal
Property Coverage
• Coverage F - Unscheduled Farm
Personal Property Coverage
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Coverage “E” Scheduled
• Only covers categories if listed on the
Declarations
• Check the form carefully for specific
language on the categories
• Some categories are ONLY covered for
perils that are specified even though
Special Form may be attached as the
Cause of Loss form.
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Scheduled Categories
a. Rain, threshed
seeds/beans,
ground feed…
b. Grain in stacks,
shocks, swaths or
piles
c. Hay, straw and
fodder
d. Farm products,
materials and supplies
e. “Poultry”
– In the open
– In buildings designated
for poultry
• Excluding turkeys unless
specified
a. In buildings
b. In stacks…
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Scheduled Categories
f. Trays, boxes and
box shook
g. Computers and
software used as
aids in farm
management
h. Miscellaneous
equipment usual
to operations
–
See notes that
follow
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i. Farm machinery,
vehicles and
equipment borrowed
ore rented
j. Farm machinery,,
vehicles and
equipment which are
individually described
and specifically
covered
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Scheduled Categories
k. Livestock on or
away from the
insured
premises
l. Bees
m. Worms
n. Fish
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o. Other Animals
p. Portable Buildings and
structures
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Polling Question #4
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The Farmer and the “Hay”
• The Hay Farmer has decided to buy his
own tractor, mower, rake and baler.
• Up to this point he was borrowing the
equipment from his neighbor
• He is particularly concerned with the
tractor which is costing him $18,000
used.
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Misc Equipment NOT covered
• Misc. Equipment does NOT include:
– Threshing machines, tractors, combines,
corn pickers….
– Automobiles etc
– Liquefied petroleum or manufactured gas
or fuel
– Bulk milk tanks…
– Brooders
– Fences, windchargers, windmills or towers
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Misc Equipment NOT covered
• Irrigation Equipment
• Portable buildings and portable
structures
• Household Personal Property
• Specifically covered elsewhere
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Coverage F—Unscheduled
Farm Personal Property
• All items of “farm personal property” on
the “insured location” except if not
covered
• Specified categories of “farm personal
property” away from the premises
• Key to review “property NOT covered”
as relates solutions
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Polling Question #5
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The Farmer and the “Hay”
• The farmer’s truck has broken down and
he had to hire a common carrier to
deliver the hay to a customer.
• The value of the hay is $5,000
• Is there coverage for the hay while being
transported by a common carrier on the
Farm Property Form?
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Coverage Extensions (Sublimited)
A. Property in the custody of a common
carrier
B. Covered property away from the
premises
C. Replacement Machinery, Vehicles and
Equipment Newly Purchased
D. Additional Machinery, Vehicles and
Equipment Newly Purchased
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Coverage Extensions (Sublimited)
e. Additional Acquired Livestock
f. Thirty Day Additional Limit on
Borrowed or Rented Farm Machinery,
Vehicles, Equipment
g. Farm Produce in the Open
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Additional Coverages
A. Cost of Restoring Farm Operations
Records
B. Extra Expense
C. Other Additional Coverages
A. See Other Farm Provisions Form
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Extra Expense on Farm
Property
• This inclusion of Extra Expense in the
coverage form is somewhat unique as
normally this is written under a separate
policy. A limit MUST be shown in the
Declarations Page for the coverage to
apply.
• Cause of Loss
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Extra Expense on Farm
Property
• If a Limit of Insurance is shown in the
Declarations for Extra Expense Coverage, we
will pay, up to that Limit of Insurance, the
actual and necessary expenses you incur to
resume normal farming operations
interrupted as the result of direct physical loss
of or damage to Covered Property by a
Covered Cause of Loss.
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Extra Expense on Farm
Property
• Coverage for such extra expense is not
limited by the expiration of this policy.
But, we will not pay extra expense you
incur after the period required for
repair, rebuilding or replacement of
Covered Property. . .
• No deductible applies to this Additional
Coverage
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Barns, Outbuildings and
Other Farm Structures
Coverage Form Coverage G
FP 00 14
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Polling Question #6
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The farmer and the “fence”
• Your insured has operated a cattle for
some time and has over 500 acres of
land. They recently installed a new
pasture fence. During a hail storm a
large section of the fence was damaged
necessitating repair. Is there coverage
for the pasture fence on the Barns,
Outbuildings and Other Farm Structures
Form?
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Barns, Outbuildings and Other
Farm Property
• Farm Other Structures vs. Appurtenant
Structures
– Use of the structure
– Insured may have a private garage but if it
is being used to store grain it is now a Farm
Property Other Structure and must be
covered on an FP 00 14
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Barns, Outbuildings and Other Farm
Property: Covered Property
• Farm buildings and structures other
than “dwellings”, ( Coverage A) including
attached sheds and permanent fixtures;
• Silos individually described;
• Portable buildings and structures;
• Fences (except field and pasture fences),
corrals, pens, chutes and feed racks;
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Barns, Outbuildings and Other Farm
Property: Covered Property
• Outdoor radio and TV equipment;
• Improvements and betterments; and
– Use Interest
– See Loss Conditions
• Building materials and supplies.
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Farm Property Other Farm
Provisions
FP 00 90
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Farm Property-- Other Farm
Provisions
• Similar to Commercial Property
Conditions Form
• Conditions included
– Debris Removal
– Reasonable Repairs
– Damage to Property Removed for
Safekeeping
– Fire Department Service Charge
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Farm Property-- Other Farm
Provisions
•
•
•
•
•
•
•
Collapse
Pollutant Cleanup and Removal
Abandonment
Appraisal
Loss Payment
Liberalization
Mortgage Holders
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Cause of Loss Form
FP 1060
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Cause of Loss Form—Farm
Property
• All inclusive form activated on the
Declarations Page
– Basic
– Broad
– Special
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“Unique” language relating to
Farm Property
• Vehicles
– Cause of Loss does not include loss or
damage to: Livestock
• Collision
– Collision means accidental contact of the
farm machinery with another vehicle or
object
– Loss caused by foreign objects taken into
any farm machine or mechanical harvester
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“Unique” language relating to
Farm Property
– Livestock running into or being struck by a
vehicle while the livestock are crossing,
moving along or standing in a public road
• Earthquake loss to livestock
• Flood loss to livestock
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“Unique” language relating to
Farm Property
• Broad form additional perils
– Electrocution of Covered Livestock
– Attacks on Covered Livestock by dogs or
wild animals
– Accidental shooting of covered livestock
– Drowning of covered livestock from
external causes
– Loading/Unloading Accidents
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Farm Disruption
Business Income for a Farm Operation
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Farm Disruption
– FP 15 01 must be used in connection with
one of the direct loss farm property
coverage forms. It may be attached to and
used with
• The Farm Property - Farm Personal Property
Coverage Form FP 00 13,
• Farm Property - Barns, Outbuildings And Other
Farm Structures Coverage Form FP 00 14 or
• Mobile Agricultural Machinery And Equipment
Coverage Form FP 00 30.
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Farm Disruption
– Coverage applies for the interruption
(disruption) of operations, triggered by
damage to property at the insured location
by an insured peril.
– The Disruption of Operations is more
specific in defining the farming operations
to which the coverage will apply.
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Farm Disruption
• The endorsement Declarations makes
provision for the insured to indicate
– The "Insured Location" No(s). to which the
coverage applies.
– The specific farming operations to which
the coverage applies.
• The specific farm buildings, machinery,
supplies and equipment whose damage
or destruction will trigger coverage
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Farm Disruption
• The Declarations also includes
– Limit of Insurance for Disruption of Farming
Operations Coverage.
– Covered Causes of Loss applicable to
Disruption of Farming Operations
Coverage.
– Coinsurance percentage applicable.
– Extended Period of Indemnity Option days
selected
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Other Coverage Forms and
Endorsements
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Coverage Forms
• Mobile Agricultural Machinery and
Equipment
– All “mobile agricultural machinery and
equipment” if a single limit of insurance is
shown in the Declarations; or
– Each item of mobile agricultural machinery
and equipment” that is specifically descried
in the Declarations and for which an
individual limit of insurance is shown.
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Coverage Forms
• Livestock Coverage Form
– “Livestock” of a class shown in the
Declarations with a limit of insurance per
animal
– “Livestock” of a class shown in the
Declarations with a limit of insurance per
class with a sublimit allowed for individual
animals separately
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Unique Farm Endorsements
Dwelling and Farm
Building Replacement
Cost including Building
Ordinance
Farm Computer
Coverage
Spoilage Coverage
Perishable Farm
Personal Property
Coverage G—Barns,
Outbuildings and Other
Farm Structures
Blanket Insurance
Collision Resulting in
Death of Livestock
Functional Building
Functional Farm
Personal Property
machinery and
Equipment
Scheduled Farm
Personal Property
Away from the Insured
Location
Coverage G—Damage
to Below-Ground
Foundations of
Buildings or Structures
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Upcoming Classes
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9/12
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7/26
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