Insurance Community University Farm Property 1 The webinar will begin shortly. There is no audio at this time

Insurance Community University www.InsuranceCommunityUniversity.com

Farm Property

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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.


Welcome to your Insurance Community University

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Polling• Throughout the class we will be

conducting periodic polls • We need 100% participation on the polls• The polls are intended to check

participation but also to create discussion topics throughout the presentation

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Forms To Complete for CE• After class ends

– Return attendance form– Proctors – return your form to email

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• Email address is in chat window or in email sent to you today

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DOI Requirements• We will file your hours with the DOI

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Attendance/Completion by email. Please retain this for your records for five years.

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• This is a precautionary notice, only

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This class is being recorded• Available in the University• Does NOT qualify for CE if not taken

during a scheduled class


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

www.insurancecommunitycenter.comLaurie: 714.803.5830 [email protected]

Marjorie: 714.206.9583 [email protected]

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Farm PropertyYour Instructor Today

Casey Roberts, CIC, AFIS, ACSRPresident, Laurus Insurance Consulting


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;


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

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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

• 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

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Farm Forms in the ISO Series

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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.DA. DwellingsB. Other Private Structures Appurtenant to DwellingsC. Household Personal PropertyD. 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

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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

a. In buildingsb. In stacks…

d. Farm products, materials and supplies

e. “Poultry”– In the open– In buildings designated

for poultry• Excluding turkeys unless

specified

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Scheduled Categoriesf. Trays, boxes and

box shookg. Computers and

software used as aids in farm management

h. Miscellaneous equipment usual to operations

– See notes that follow

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. Beesm. Wormsn. Fish

o. Other Animalsp. 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 (Sub-limited)A. Property in the custody of a common

carrierB. Covered property away from the

premisesC. Replacement Machinery, Vehicles and

Equipment Newly PurchasedD. Additional Machinery, Vehicles and

Equipment Newly Purchased

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Coverage Extensions (Sub-limited)e. Additional Acquired Livestockf. 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 ExpenseC. 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

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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

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Insurance Community University Farm Property 1 The webinar will begin shortly. There is no audio at this time