Farm Property q. The webinar will begin shortly. q. There is no audio at this time. q. This presentation is being recorded for your viewing pleasure at a future date. q 100% Participation in Polling Questions is required to receive credit for this class. Even if you do not intend to receive credit, please participate in the polls. 1 q. The attendance and proctor forms are available under ‘Materials’ in the Webinar’s Console to the right. q. The Power. Point presentation is also available under ‘Materials’. q. You will receive the course number for your state near the end of class. q. Use the ‘chat’ window for questions on the content. Insurance Community University www. Insurance. Community. University. com
Farm Property Your Instructor Today Casey Roberts, CIC, AFIS, ACSR President, Laurus Insurance Consulting Insurance Community University www. Insurance. Community. University. com
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; Insurance Community University www. Insurance. Community. University. com
Course Objectives • Review Farm Disruption Coverage • Review Farm Property Endorsements Insurance Community University 4 www. Insurance. Community. University. com
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. Insurance Community University 5 www. Insurance. Community. University. com
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 Insurance Community University 6 www. Insurance. Community. University. com
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 Insurance Community University 7 www. Insurance. Community. University. com
Farm Operations • Each insurance company will have their own underwriting criteria as relates acceptability and rates: – Type and size of the farm operation Insurance Community University 8 www. Insurance. Community. University. com
Review of the Farm Property Coverage Forms Highlighting the Uniqueness of the Farm Property Policy Insurance Community University 9 www. Insurance. Community. University. com
Farm Property Insurance Set Up Farm Property Application Common Policy Declarations/Conditions Farm Provisions Form Additional Coverages, Conditions, Definitions Farm Declarations Farm Property Forms Cause of Loss Insurance Community University Endorsements 10 www. Insurance. Community. University. com
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 Insurance Community University 11 www. Insurance. Community. University. com
Common Policy Conditions “same” as Property Forms • Cancellation • Changes • Examination of Your Books and Records • Inspections and Surveys Insurance Community University • Premiums • Transfer of Your Rights and Duties Under the policy • First Named Insured 12 www. Insurance. Community. University. com
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 Insurance Community University 13 www. Insurance. Community. University. com
Farm Forms in the ISO Series FP 00 12 • Farm Property Coverage Form (A-D) • Farm Dwelling, Appurtenant Structures and Household Personal Property FP 00 13 • Farm Property Coverage Form (E) • Farm Personal Property FP 00 14 • Farm Property Coverage Form (G) • Barns, Outbuildings and Other Farm Structures Insurance Community University 14 www. Insurance. Community. University. com
Farm Forms in the ISO Series FP 00 30 • Mobile Agricultural Machinery and Equipment FP 00 40 • Livestock Coverage Form FP 10 60 • Cause of Loss Form Insurance Community University 15 www. Insurance. Community. University. com
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? ” Insurance Community University 16 www. Insurance. Community. University. com
Farm Property Form FP 0012 Insurance Community University 17 www. Insurance. Community. University. com
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 Insurance Community University 18 www. Insurance. Community. University. com
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” Insurance Community University 19 www. Insurance. Community. University. com
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; Insurance Community University 20 www. Insurance. Community. University. com
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 Insurance Community University 21 www. Insurance. Community. University. com
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 Insurance Community University 22 www. Insurance. Community. University. com
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 Insurance Community University 23 www. Insurance. Community. University. com
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 Insurance Community University 24 www. Insurance. Community. University. com
Additional “unique” provisions • Extensions – Refrigerated Products—Not “Farm Personal Property” $500. 00 Insurance Community University 25 www. Insurance. Community. University. com
Farm Personal Property Coverage Form FP 00 13 Insurance Community University 26 www. Insurance. Community. University. com
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? Insurance Community University 27 www. Insurance. Community. University. com
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? Insurance Community University 28 www. Insurance. Community. University. com
Farm Personal Property Coverage “E” and “F” • In the FP 0012 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 Insurance Community University 29 www. Insurance. Community. University. com
Farm Personal Property Coverage “E” and “F” • Coverage E - Scheduled Farm Personal Property Coverage • Coverage F - Unscheduled Farm Personal Property Coverage Insurance Community University 30 www. Insurance. Community. University. com
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. Insurance Community University 31 www. Insurance. Community. University. com
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… Insurance Community University 32 www. Insurance. Community. University. com
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 Insurance Community University i. Farm machinery, vehicles and equipment borrowed ore rented j. Farm machinery, , vehicles and equipment which are individually described and specifically covered 33 www. Insurance. Community. University. com
Scheduled Categories k. Livestock on or away from the insured premises l. Bees m. Worms n. Fish Insurance Community University o. Other Animals p. Portable Buildings and structures 34 www. Insurance. Community. University. com
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. Insurance Community University 35 www. Insurance. Community. University. com
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 Insurance Community University 36 www. Insurance. Community. University. com
Misc Equipment NOT covered • Irrigation Equipment • Portable buildings and portable structures • Household Personal Property • Specifically covered elsewhere Insurance Community University 37 www. Insurance. Community. University. com
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 Insurance Community University 38 www. Insurance. Community. University. com
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? Insurance Community University 39 www. Insurance. Community. University. com
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 Insurance Community University 40 www. Insurance. Community. University. com
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 Insurance Community University 41 www. Insurance. Community. University. com
Additional Coverages A. Cost of Restoring Farm Operations Records B. Extra Expense C. Other Additional Coverages A. See Other Farm Provisions Form Insurance Community University 42 www. Insurance. Community. University. com
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 Insurance Community University 43 www. Insurance. Community. University. com
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. Insurance Community University 44 www. Insurance. Community. University. com
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 Insurance Community University 45 www. Insurance. Community. University. com
Barns, Outbuildings and Other Farm Structures Coverage Form Coverage G FP 00 14 Insurance Community University 46 www. Insurance. Community. University. com
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? Insurance Community University 47 www. Insurance. Community. University. com
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 Insurance Community University 48 www. Insurance. Community. University. com
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; Insurance Community University 49 www. Insurance. Community. University. com
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. Insurance Community University 50 www. Insurance. Community. University. com
Farm Property Other Farm Provisions FP 00 90 Insurance Community University 51 www. Insurance. Community. University. com
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 Insurance Community University 52 www. Insurance. Community. University. com
Farm Property-- Other Farm Provisions • • Collapse Pollutant Cleanup and Removal Abandonment Appraisal Loss Payment Liberalization Mortgage Holders Insurance Community University 53 www. Insurance. Community. University. com
Cause of Loss Form FP 1060 Insurance Community University 54 www. Insurance. Community. University. com
Cause of Loss Form—Farm Property • All inclusive form activated on the Declarations Page – Basic – Broad – Special Insurance Community University 55 www. Insurance. Community. University. com
“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 Insurance Community University 56 www. Insurance. Community. University. com
“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 Insurance Community University 57 www. Insurance. Community. University. com
“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 Insurance Community University 58 www. Insurance. Community. University. com
Farm Disruption Business Income for a Farm Operation Insurance Community University 59 www. Insurance. Community. University. com
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. Insurance Community University 60 www. Insurance. Community. University. com
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. Insurance Community University 61 www. Insurance. Community. University. com
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 Insurance Community University 62 www. Insurance. Community. University. com
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 Insurance Community University 63 www. Insurance. Community. University. com
Other Coverage Forms and Endorsements Insurance Community University 64 www. Insurance. Community. University. com
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. Insurance Community University 65 www. Insurance. Community. University. com
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 Insurance Community University 66 www. Insurance. Community. University. com
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 Insurance Community University 67 www. Insurance. Community. University. com
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 Insight Insurance Consulting © All Rights Reserved Copyright ISO© www. insurancecommunitycenter. com Insurance Community University 68 www. Insurance. Community. University. com
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