Summary: The Insurance Services Office (ISO) has revised the farm program. In the prior program, the causes of loss were contained in the farm property coverage form. Since that form has been restructured into five separate forms, the causes of loss are now found in the causes of loss form—farm property, FP 10 60 01 98.
The particular level of coverage is triggered for each item by showing “basic,” “broad,” or “special” in the “covered causes of loss” column on the “coverages provided” or schedule section of the farm property declarations. The insured may elect any of the three levels of coverage for each item of coverage, except that the special coverage may not be used for livestock, other animals, poultry, bees, fish, or worms.
Following is a discussion of the form.
Covered Causes of Loss
A. COVERED CAUSES OF LOSS
Covered Causes of Loss means the causes as described and limited under either B. or C. or D. below in accordance with a corresponding entry of either BASIC or BROAD or SPECIAL, respectively, on the Declarations opposite each Coverage or property to which this insurance applies. Covered Causes of Loss are also limited by the Exclusions in Section E.
However, certain property is covered only for particular causes of loss, as listed under the following items: the Coverage Extensions to Coverages A; 1.b., 1.c.(2), 1.e., 1.k., 1.l., 1.m., 1.n.. and 1.o. of Coverage E Covered Property; 1.b.(2) of Coverage F Covered Property; F. of the Coverage Extensions to Coverage F; and B. of the Coverage Extensions to Coverage G.
Analysis
This portion of the form clarifies that the causes of loss in this form do not apply to all farm property. The coverage forms themselves must be referred to. For example, 1.b. of coverage E—scheduled farm personal property (on farm property—farm personal property coverage form FP 00 13 01 98) states that the following is covered property: “grain in stacks, shocks, swathes or piles in the open, but for this property fire and lightning, vandalism, vehicles and theft are the only covered causes of loss.”
Basic Causes of Loss
B. Covered Causes of Loss—BASIC
Subject to the provisions in Section A., when BASIC is shown in the Declarations, Covered Causes of Loss means the following:
1. Fire or Lightning
We will not pay for loss of or damage to buildings, or contents usual to a tobacco barn, if that loss or damage:
a. Results from the use of open fire for curing or drying tobacco in the barn; and
b. Occurs during, or within the five-day period following, open-fire curing or drying.
2. Windstorm or Hail, but not including:
a. Frost or cold weather;
b. Ice (other than hail), snow or sleet, whether driven by wind or not; or
c. Loss of or damage to:
(1) The interior of any building or structure, or the property inside a building or structure, caused by rain, snow, sleet, sand or dust, whether driven by wind or not, unless the building or structure first sustains wind or hail damage to its roof or walls through which the rain, snow, sleet, sand or dust enters; or
(2) Watercraft or their trailers, furnishings, equipment or outboard motors unless within a fully enclosed building.
(3) Under Coverage E or Coverage F:
(a) ”Livestock” or “poultry” when caused by running into streams, ponds or ditches, or against fences or other objects; or from smothering; or resulting directly or indirectly from fright;
(b) ”Livestock” or “poultry” when caused by freezing or smothering in blizzards or snowstorms; or
(c) Dairy or farm products in the open other than hay, straw or fodder.
3. Explosion, including the explosion of gases or fuel within the furnace of any fired vessel or within the flues or passages of such a vessel from which the gases of combustion pass.
But under Coverages E, F and G this cause of loss does not include loss or damage caused by or resulting from:
a. Explosion of alcohol stills, steam boilers, steam pipes, steam engines or steam turbines owned or leased by you, or operated under your control;
b. Electric arcing;
c. Rupture or bursting of water pipes;
d. Rupture, bursting or operation of pressure relief devices; and
e. Rupture or bursting due to expansion or swelling of the contents of any building or structure caused by or resulting from water.
4. Riot Or Civil Commotion, including:
a. Acts of striking employees while occupying the “insured location”; and
b. Looting occurring at the time and place of a riot or civil commotion.
5. Aircraft meaning only loss or damage caused by or resulting from:
a. Contact of an aircraft, spacecraft or self-propelled missile with Covered Property or with a building or structure containing Covered Property; or
b. Objects falling from aircraft.
6. Vehicles, meaning only loss or damage caused by contact of a vehicle, or of an object thrown up by a vehicle, with Covered Property or with a building or structure containing Covered Property.
This cause of loss does not include loss or damage to
a. ”Livestock”; or
b. a fence, driveway or walk.
However, we will provide coverage under this cause of loss if the fence, driveway or walk is appurtenant to a covered “dwelling” and the vehicle that caused the loss or damage was not owned or operated by a resident of the “dwelling.”
7. Smoke, causing sudden and accidental loss or damage.
This cause of loss does not include loss or damage by smoke from agricultural smudging or industrial operations.
8. Vandalism
This cause of loss does not include loss of or damage to:
a. A building or structure, or its contents, if the building or structure has been “vacant” for more than thirty consecutive days immediately before the loss.
b. Any device or instrument, for the transmitting, recording, receiving or reproduction of sound or pictures, that is operated by power from the electrical system of a motor vehicle or mobile agricultural vehicle, unless it is:
(1) Covered Property; and
(2) Permanently installed in the motor vehicle or mobile agricultural vehicle.
c. While in or upon a motor vehicle or mobile agricultural vehicle, any tape, wire, record, disc or other medium for use with any device or instrument that transmits, records, receives or reproduces sound or pictures and that is operated by power from the electrical system of the motor vehicle or mobile agricultural vehicle.
Analysis
The restrictive language used in conjunction with the causes of loss tailor coverage to the farm situation. For example, damage caused by “fire or lightning” is covered, except for loss caused by open fire drying of tobacco, a highly flammable substance. There is no coverage under the “windstorm or hail” cause of loss for livestock or poultry when caused by running into water (however, damage to livestock caused by flood is covered—see the exclusions, below) or fences or other objects, or when caused by freezing or smothering in blizzards or snowstorms. Dairy or other farm products in the open (other than hay, straw, or fodder) are not covered when damaged by windstorm or hail.
The “explosion” cause of loss includes explosion of gases or fuel within the furnace of any fired vessel, or within the flues or passages of such a vessel. However, there is no coverage for loss to property under coverages E (scheduled farm personal property), F (unscheduled farm personal property), or G (farm property—barns, outbuildings, and other structures) under this cause of loss when loss or damage is caused by explosion of alcohol stills, steam boilers, steam pipes or steam turbines whether owned, leased by, or under the control of the insured. There is no coverage for damage caused by electric arcing, rupture or bursting of water pipes or pressure relief devices, or by expansion of contents of any building or structure resulting from water. Though this might seem a strange limitation, one need only remember the nature of grain or grain dust to see the reason behind the limitation of coverage.
Note that the “aircraft” cause of loss is limited to loss caused by contact of the aircraft with covered property, or with a structure containing covered property, or to objects falling from the aircraft. So, if a sonic boom caused covered livestock to panic and run into a body of water, there would be no coverage under this cause of loss. It is conceivable such a loss could be covered under “explosion”; however, the use of the descriptive language following the cause of loss could be viewed as limiting coverage to damage caused by explosion of gasses or fuel. Compare the wording with the equivalent named peril of the homeowners form, which simply states “explosion” with no qualifying language.
The “vehicles” cause of loss is the same as “aircraft” in that direct contact must be made, except that there is no coverage for loss to livestock. (Loss to livestock caused by vehicle collision or overturn is covered under named peril 12., collision.) The current form has been changed so that if a vehicle not owned or operated by a resident of the dwelling damages a fence, driveway, or walk that is appurtenant to a covered dwelling, there is coverage that is otherwise excluded.
Coverage for damage caused by vandalism is not covered if the damaged building, structure or contents has been vacant (a defined term—see Farm Property—Other Provisions FP 00 90) for more than thirty consecutive days. Nor is there coverage for such items as CD players or TVs if not covered property and permanently installed in motor vehicles or mobile agricultural equipment, or tapes, CD's, etc., in or upon such a vehicle.
9. Theft, including attempted theft and loss of property from a known location when it is likely that the property has been stolen.
This cause of loss does not include loss caused by or resulting from theft:
a. Due to unauthorized instructions to transfer property to any person or to any place;
b. Under Coverage A, B or G:
In or from a building or structure under construction, or of materials and supplies for use in such construction, until the building or structure is completed and occupied;
c. Under Coverage A, B or C:
(1) from that part of your principal residence, including its grounds and appurtenant structures, which you rent to someone who is not an “insured”;
(2) With respect to household personal property away from the “insured location”, of:
(a) Property at any residence owned by, rented to, or occupied by, an “insured”, except while an “insured”, is temporarily residing there.
But property of a student who is an “insured” is covered at a residence away from home provided the student has been there at any time during the forty-five days immediately preceding the loss;
(b) Any watercraft, its furnishings, equipment or outboard motors; or
(c) Trailers or campers.
d. Under Coverage E or F:
(1) Discovered on taking inventory;
(2) Due to wrongful conversion or embezzlement;
(3) Due to disappearance of any “farm personal property” unless there is evidence that the property was stolen;
(4) Due to acceptance of counterfeit money, fraudulent post office or express money orders, or checks or promissory notes not paid upon presentation.
e. Of any device or instrument for the transmitting, recording, receiving or reproduction of sound or pictures, that is operated by power from the electrical system of a motor vehicle or mobile agricultural vehicle, unless it is:
(1) Covered Property; and
(2) Permanently installed in the motor vehicle or mobile agricultural vehicle.
f. While in or upon a motor vehicle or mobile agricultural vehicle, of any tape, wire, record, disc or other medium for use with any device or instrument that transmits, records, receives or reproduces sound or pictures and that is operated by power from the electrical system of the motor vehicle or mobile agricultural vehicle.
Analysis
Theft of materials or supplies from a building under construction or for use in such construction, until the building is completed and occupied, is excluded. Note that, unlike the similar ISO homeowners provision, this exclusion does not apply to personal property in the building other than materials or supplies for use in such construction. Therefore, theft of furnishings moved into the building before it is completed is not excluded from the farm coverage as it is under the homeowners form.
Theft from a part of the principal residence rented to someone who is not an insured is excluded, as it is under the homeowners. Similarly, the farm coverage form excludes theft from a secondary residence except while an insured is temporarily living there. Property of a student is covered if the student has been at the other residence at any time within the forty-five days immediately preceding the loss.
Many of the provisions governing theft coverage reflect the business nature of the farm. For example, there is no coverage under the scheduled or unscheduled farm personal property forms for theft discovered upon taking inventory, or for disappearance of any farm personal property unless there is evidence that the property was stolen. Application of exclusion d.(1) to actual losses may prove troublesome. The intent is to exclude losses where the only evidence of theft is a shortage discovered by taking inventory. But as written, it might also be interpreted by some as applying to any loss first discovered on taking inventory even where subsequent investigation discloses that a theft has in fact occurred. Commercial property causes of loss special form CP 10 30 10 91 expresses the intent of the inventory discovery exclusion more clearly in excluding “property that is missing but there is no physical evidence to show what happened to it, such as shortage disclosed on inventory.” As it stands, the insured who, upon taking inventory finds a loss with clear evidence indicating theft has occurred has good grounds for coverage.
10. Sinkhole Collapse, means loss or damage caused by the sudden sinking or collapse of land into underground empty spaces created by the action of water on limestone or dolomite. This cause of loss does not include:
a. the cost of filling sinkholes; or
f. sinking or collapse of land into man-made underground cavities.
11. Volcanic Action, meaning direct loss or damage resulting from the eruption of a volcano when the loss or damage is caused by:
a. Airborne volcanic blast or airborne shock waves;
b. Ash, dust or particulate matter; or
c. Lava flow.
All volcanic eruptions that occur within any 168-hour period will constitute a single occurrence.
This cause of loss does not include the cost to remove ash, dust or particulate matter that does not cause direct physical loss or damage to the Covered Property.
12. Collision – Coverages E and F Only
a. Causing Damage To Covered Farm Machinery
We will pay for loss of or damage to covered farm machinery caused by collision or overturn of that machinery. Collision means accidental contact of the farm machinery with another vehicle or object.
Under this cause of loss we will not pay for loss or damage:
(1) To tires or tubes unless the damage is coincidental with other damage to the farm machinery or implement;
(2) Caused by contact between a tractor and implement during towing, hitching or unhitching;
(3) Caused by foreign objects taken into any farm machine or mechanical harvester; or
(4) Caused by contact of farm machinery with the roadbed or ground.
b. Causing Death of Covered Livestock
We will pay for loss of covered “livestock” caused by:
(1) Collision or overturn of a vehicle on which the “livestock” are being transported. Collision means accidental contact of that vehicle with another vehicle or object; or
(2) ”Livestock” running into or being struck by a vehicle while the “livestock” are crossing, moving along or standing in a public road.
But we will not pay for loss if a vehicle owned or operated by an “insured:”
(1) Collides with the vehicle on which the “livestock” are being transported; or
(2) Strikes “livestock” crossing, moving along or standing in a public road.
c. Causing Damage to Other Farm Personal Property
We will pay for loss of or damage to covered “farm personal property” (other than that described in (1) or (2) above) in or upon a motor vehicle, caused by collision or overturn of that vehicle. Collision means accidental contact of the motor vehicle with another vehicle or object.
13. Earthquake Loss to “Livestock”
14. Flood Loss to “Livestock”, meaning only loss or damage caused by or resulting from flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not.
Analysis
The coverage for sinkhole collapse applies only to sudden sinking or collapse of land into underground empty spaces created by the action of water on limestone or similar rock formations. It does not include the cost of filling sinkholes. Nor does it apply to other types of land subsidence, such as mine subsidence, beach or hillside erosion, or the effects of broken water mains.
Coverage for loss caused by volcanic action is limited to the direct loss or damage resulting from volcanic eruption, caused only by airborne volcanic blast or shock waves; ash, dust, or particulate matter; or lava flow. Cost of removal of ash, dust, or particulate matter that does not cause direct physical loss or damage to covered property is not covered, nor is any earthquake or wave wash (tsunami) damage that might accompany a volcanic eruption. All eruptions within any 168-hour period are a single occurrence.
Collision, applying only to farm personal property coverages E and F, has three subparts, further defining or limiting coverage as to: collision causing damage to covered farm machinery; collision causing death of covered livestock; and collision causing damage to other farm personal property. This cause of loss, while seeming to apply to all farm personal property, contains the several provisions applying to farm machinery and livestock.
For covered livestock, coverage applies to death caused by collision or overturn of the vehicle on which the livestock are being transported. Livestock are also covered for running into or being struck by a vehicle while crossing, moving along, or standing in a public road. Not covered is loss if caused by a vehicle owned or operated by an insured.
Loss or damage caused by collision or overturn of a motor vehicle to covered property (other than farm machinery or livestock) while in or upon that vehicle is covered.
C. COVERED CAUSES OF LOSS—BROAD
Subject to the provisions in Section A., when BROAD is shown in the Declarations, Covered Causes of Loss means the Covered Causes of Loss under Section B. Covered Causes of Loss – BASIC, plus the following:
15. Electrocution of Covered Livestock.
16. Attacks on Covered Livestock by Dogs Or Wild Animals.
This cause of loss does not include loss or damage:
a. To sheep; or
b. Caused by dogs or wild animals owned by you, your employees or other persons residing on the “insured location.”
17. Accidental Shooting of Covered Livestock.
This cause of loss does not include loss or damage caused by you, any other “insured,” your employees, or other persons residing on the “insured location.”
18. Drowning of Covered Livestock from external causes.
This cause of loss does not include loss resulting from the drowning of swine under thirty days old.
19. Loading/Unloading Accidents, meaning sudden, unforeseen and unintended events causing or necessitating death of covered “livestock” and occurring while they are being unloaded from or loaded onto vehicles used or to be used to transport them.
This cause of loss does not include loss caused by or resulting from disease.
20. Breakage of Glass or Safety Glazing Material that is part of a building or structure, storm door or storm window.
Under this cause of loss, we will not pay for loss if the building or structure which contained the glass, including door or window glass, has been “vacant” for more than thirty consecutive days immediately before the loss.
21. Falling Objects
But we will not pay for loss or damage to:
a. Personal property in the open;
b. The interior of a building or structure, or property inside a building or structure, unless the roof or an outside wall of the building or structure is first damaged by a falling object; or
c. The falling object itself.
22. Weight of Ice, Snow or Sleet causing damage to a building or to any property inside a building.
But under this cause of loss we will not pay for loss by pressure or weight of water in any form, whether driven by wind or not, to any:
a. Foundation or retaining wall;
b. Pavement or patio;
c. Awning;
d. Fence;
e. Outdoor equipment;
f. Swimming pool; or
g. Bulkhead, dock, pier or wharf.
23. Sudden and Accidental Tearing Apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective system, or an appliance for heating water.
Under this cause of loss we will not pay for loss or damage caused by or resulting from freezing.
24. Accidental Discharge or Leakage of Water or Steam from within a plumbing, heating, air conditioning or other system or appliance that is located on the “insured location” and contains water or steam.
Under this cause of loss we will pay for loss of or damage to covered personal property provided that BROAD is shown in the Declarations for the coverage applicable to that personal property. If any part of a building or structure to which Coverage A, B or G applies must be torn out and replaced so that repairs can be made to the damaged system or appliance, we will also pay the necessary costs involved, provided that BROAD is shown in the Declarations for the coverage applying to that building or structure.
We will not pay:
a. For loss or damage caused by discharge or leakage from a sump or related equipment and parts, including overflow due to sump pump failure or excessive volume of water;
b. The cost to repair any defect that caused the loss or damage;
c. For loss or damage caused by discharge or leakage in a building or structure “vacant” for more than thirty consecutive days immediately before the loss.
d. For loss or damage caused by or resulting from freezing.
25. Freezing of a plumbing, heating, air conditioning or automatic fire protective system or of a household appliance.
Under this cause of loss, we will not pay for loss or damage which occurs while a building or structure is “vacant”, “unoccupied” or being constructed, unless you have used reasonable care to:
a. Maintain heat in the building or structure; or
b. Shut off the water supply and drain the system or appliance of water.
26. Sudden And Accidental Damage from artificially generated electrical current – Applicable Only to Coverages A, B, C and D.
This cause of loss does not include loss of or damage to tubes, transistors or similar electronic components.
Analysis
When the insured elects the broad covered causes of loss, twelve causes of loss are added to the fourteen basic causes of loss. Coverage for livestock is broadened so that electrocution, attacks by dogs or wild animals (to other than sheep), and accidental shooting (except when caused by an insured, employee, or resident) is covered. Note that under the basic causes of loss, if a low-flying aircraft panicked cattle so that they ran into a river and drowned there was no coverage. Under the broad causes of loss, however, drowning from any external cause is covered, except for pigs under thirty days old. The broad causes coverage also adds loss caused by loading and unloading accidents to livestock.
The current broad causes of loss has both broadened and limited the coverage for loss resulting from accidental discharge or leakage of water or steam. The prior form specified the accidental discharge had to be the “direct result of the breaking or cracking of any part of a system or appliance,” while the current form states the accidental discharge can be “from within a plumbing…system or appliance.” Now, if a valve is loosened accidentally, there is coverage, whereas before the system had to actually rupture.
The current form adds the exclusion of coverage for loss or damage resulting from sump pump discharge, leakage, or overflow due to sump pump failure or excessive volume of water. The insured may purchase coverage for loss caused by sump pump overflow (see Farm Property Endorsements).
The preclusion of coverage for loss caused by continuous or repeated seepage or leakage over a period of weeks, months or years is deleted from the current form. Although this can be viewed as a broadening of coverage, the current form includes an exclusion for “neglect” (see below) so that, if the insured does not take all reasonable precautions to save and protect covered property at the time of a loss, the insurer can deny coverage. So, once water damage becomes visible, the insured is obligated to preserve the covered property from further loss or risk having the claim denied.
Special Covered Causes of Loss
D. Covered Causes of Loss—SPECIAL
Subject to the provisions in Section A., when SPECIAL is shown in the Declarations, Covered Causes of Loss means RISKS OF DIRECT PHYSICAL LOSS unless the loss is excluded in the following paragraphs or in Section E. Exclusions.
1. We will not pay for loss or damage caused by or resulting from:
a. Fire, if that loss or damage is sustained by buildings or contents usual to tobacco barns as the result of using open fire for curing or drying tobacco in the barn, and occurs:
(1) While tobacco is being fired; or
(2) Within the five-day period following tobacco firing in the barn.
b. Collapse, except as provided in the Additional Coverage entitled Collapse. But if collapse results in a Covered Cause of Loss at the “insured location”, we will pay for the loss or damage caused by that covered Cause of loss.
c. Windstorm or hail to:
(1) Dairy or farm products in the open;
(2) Watercraft or their trailers, furnishings, equipment or outboard motors, unless within a fully enclosed building.
d. Rain, snow, ice or sleet to personal property in the open;
e. Rain, snow, sleet, sand or dust, whether driven by wind or not, to the interior of any building or structure or the property inside a building or structure, unless the building or structure first sustains wind or hail damage to its roof or walls through which the rain, snow, sleet, sand or dust enters;
f. Freezing, thawing, or pressure or weight of water or ice whether or not driven by wind, to any:
(1) Foundation or retaining wall;
(2) Pavement or patio;
(3) Fence;
(4) Swimming pool; or
(5) Bulkhead, dock, pier or wharf.
g. Discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective system or from within a household appliance:
(1) That occurs on the “insured location”, but is caused by discharge that takes place off the “insured location”; Caused by or resulting from freezing, and occurring in a building or structure that is “vacant”, “unoccupied”, or being constructed, unless you have used reasonable care to:
(a) Maintain heat in the building or structure; or
(b) Shut off the water supply and drain the system or appliance of water.
(3) Due to any cause other than freezing and occurring in a building or structure “vacant” for more than thirty consecutive days immediately before the loss.
Analysis
Many of the above exclusions are common to the basic, broad, and special covered causes of loss, and reflect the nature of the common perils found in farming — windstorm or hail loss to crops, for example. Such losses are better insured elsewhere. The exclusions in the current form are similar to the prior form, except that they are preceded by letters rather than numbers. There are, however, some changes of importance.
In keeping with the deletion in the broad form of the preclusion of coverage for damage caused by continuous or repeated seepage or leakage, such preclusion of coverage has been removed from the special covered causes of loss. Also, the exclusionary language in the prior form pertaining to loss or damage caused by discharge or overflow to the extent that the system from which the water escaped was defective has been removed. This is in keeping with the introduction of the additional coverage in forms FP 00 12 01 98 (Farm Property—Dwellings, Appurtenant Structures and Household Personal property Coverage Form) and FP 00 14 01 98 (Farm Property—Barns, Outbuildings and Other Farm Structures Coverage Form), which excludes the cost to repair any such defect, but covers the cost to gain access to the defective system. So, for example, if a worn pipe begins to leak, the cost to tear out any portion of a covered building to gain access to repair the damage is covered, although repair of the pipe is not.
h. Any of the following occurrences, if they take place in buildings or structures covered under Coverage G or if the property destroyed or damaged is “farm personal property”:
(1) Explosion of alcohol stills, steam boilers, steam pipes or steam engines, if you own, lease or operate them;
(2) Conditions or events (other than explosions) inside hot water boilers or other heating equipment, to the extent that they cause loss or damage to these boilers or equipment;
(3) Rupture, bursting or operating of pressure relief devices; or
(4) Rupture or bursting due to expansion of the contents of any building or structure, if the expansion is caused by or results from water.
But this exclusion does not apply to loss or damage caused by explosion of gases or fuel within the furnace of any fired vessel or within the flues or passages through which the gases of combustion pass.
i. Under Coverage A, B or C, theft from that part of your principal residence, including its grounds and appurtenant structures, which you rent to someone who is not an “insured”;
j. Under Coverage B or G, theft in or from a building or structure under construction, or of materials and supplies for use in such construction until the building or structure is completed and occupied;
k. Under Coverage A, B or C, theft of the following property away from the “insured location”:
(1) Property at any residence owned by, rented to, or occupied by, an “insured”, except while an “insured” is temporarily residing there.
But we will pay for loss by theft of the property of a student who is an “insured” from a residence away from home, provided the student was there at any time during the forty-five days immediately preceding the loss.
(2) Any watercraft, its furnishings, equipment or outboard motors; or
(3) Trailers or campers;
l. Inventory shortage;
m. Disappearance of any “farm personal property” or portable building or structure unless there is evidence that the property was stolen;
n. Voluntary parting with any property by you or anyone else to whom you have entrusted the property if induced to do so by any fraudulent scheme, trick, device or false pretense;
o. Unauthorized instructions to transfer property to any person or to any place;
p. Theft of or vandalism to:
(1) Any device or instrument, for the transmitting, recording, receiving or reproduction of sound or pictures, that is operated by power from the electrical system of a motor vehicle or mobile agricultural vehicle, unless it is:
(a) Covered Property; and
(b) Permanently installed in the motor vehicle or mobile agricultural vehicle.
(2) While in or upon a motor vehicle or mobile agricultural vehicle, any tape, wire, record, disc or other medium for use with any device or instrument that transmits, records, receives or reproduces sound or pictures and that is operated by power from the electrical system of the motor vehicle or mobile agricultural vehicle.
q. Vandalism or breakage of glass or safety glazing material, if the building or structure was “vacant” for more than thirty consecutive days immediately before the loss.
r. Dishonest or criminal acts committed by you, any of your partners, employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose, regardless of whether;
(1) That person acts alone or in collusion with other; or
(2) The act is committed during the hours of employment.
This exclusion does not apply to loss by acts of destruction committed by your striking employees (including leased employees), but it does apply to employee (including leased employee) theft.
Analysis
Exclusion r. of the current form has added “leased employees” to the preclusion of coverage for dishonest acts committed by employees. An insured could not, therefore, argue that a leased employee was actually the employee of the leasing organization, and that any act committed by such a person should be covered.
s. Transport of “farm personal property”, except to the extent of the coverage afforded under Covered Causes of Loss – BASIC and BROAD.
t. Any cause included in the following list if that loss or damage is sustained by farm machinery:
(1) Collision, upset or overturn of farm machinery or equipment, to the extent of any loss of or damage to the tires or inner tubes of such machinery or equipment. But we will pay for the loss of or damage to the tires or inner tubes if the same accident causes other covered loss to the same machinery or equipment.
(2) Contact between a tractor and an implement during towing, hitching or unhitching operations.
(3) Foreign objects being taken into any farm machine or mechanical harvester.
(4) Contact of farm machinery with the roadbed or ground, causing loss of or damage to that machinery.
However, this Exclusion, (4), does not apply if:
(a) Contact with the roadbed or ground results from collision or overturn of covered farm machinery, or from collision or overturn of a vehicle on which the covered farm machinery is being transported. Collision means accidental contact of the farm machinery with another vehicle or with an object. For the purpose of this coverage, the roadbed or ground does not qualify as an object; or
(b) The incident causing the loss or damage to covered farm machinery occurs on land other than a roadway, highway or other paved or graveled surface. The deductible for such loss or damage is the applicable deductible shown in the Declarations, or $500, whichever is greater.
Covered farm machinery does not include farm machinery being transported by a common or contract carrier, except to the extent that coverage is provided under the Coverage E or Coverage F Coverage Extension for Property in the Custody of a Common or Contract Carrier.
Analysis
New in the current form is a broadening of coverage for farm machinery. There is coverage if contact with the roadbed or ground is a result of collision or overturn of the covered farm machinery, or from collision or overturn of a vehicle transporting such machinery. The prior form excluded coverage unless the incident causing the loss occurred on land other than a roadway or other paved or graveled surface, and the loss exceeded the deductible.
u. Artificially generated electric current, including electric arcing, that disturbs:
(1) Any electrical devices, appliances or wires;
(2) Under Coverages A, B, C and D, any tubes, transistors or similar electronic components.
But:
(1) Under Coverages A, B, C and D, we will pay for loss of or damage to electric devices, appliances or wires, provided the damage is sudden and accidental.
(2) If artificially generated electric current results in fire, we will pay for the loss or damage caused by that fire.
v. Smoke, vapor or gas from agricultural smudging or industrial operations, to any building, structure or personal property.
w. The following causes of loss to any building, structure or personal property:
(1) Wear and tear;
(2) Rust, corrosion, fungus, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself;
(3) Smog;
(4) Settling, cracking, shrinking or expansion;
(5) Nesting or infestation, or discharge or release of waste products or secretions, by birds, vermin, rodents, insects or domestic animals;
(6) Mechanical breakdown, including rupture or bursting caused by centrifugal force;
(7) Dampness or dryness of atmosphere;
(8) Changes in temperature or extremes of heat or cold, including freezing. But this exclusion does not apply to freezing of a plumbing, heating, air conditioning or automatic fire protective system or freezing of a household appliance, if you have used reasonable care to:
(a) Maintain heat in the building or structure; or
(b) Shut off the water supply and drain the system or appliance of water;
(9) Marring or scratching.
But if an excluded cause of loss that is listed in w.(1) through w.(9) results in a “specified cause of loss” or building glass breakage, we will pay for the loss or damage caused by that “specified cause of loss” or building glass breakage.
Analysis
The special causes of loss form contains wording excluding coverage for those events that, over time, are bound to happen and are therefore uninsurable. These are exclusions w.(1) through w.(9). However, if any of these excluded losses results in one of the “specified causes of loss” (a defined term—see Farm Property—Other Provisions FP 00 90) or building glass breakage, then the loss or damage caused by the “specified cause of loss” or building glass breakage is covered. The wording of the exclusion for damage caused by “birds, vermin, rodents, insects or domestic animals” has been changed so that coverage is broadened. Now, for example, if a bird crashes through a picture window there is no question of coverage, since the one bird is not an “infestation.” Damage when caused by bats, which can be considerable, presumably is covered, since bats are mammals and not birds or domestic animals.
The prior form contained the provision of coverage for the necessary cost of tearing out and replacing part of a covered building or structure so that a damaged plumbing, heating, air conditioning, or automatic fire system could be repaired, in the event of water damage not otherwise excluded. Now, however, the additional coverage for water damage (as noted above) includes these costs, so the provision has been removed from the current form.
2. We will not pay for loss or damage caused by or resulting from any of the following, 2.a. through 2.c. But if an excluded cause of loss that is listed in 2.a. through 2.c. results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.
a. Weather conditions. But this exclusion applies only if weather conditions contribute in any way with a cause or event excluded in Section E. Exclusions below, to produce the loss or damage.
b. Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body.
c. Faulty, inadequate or defective:
(1) Planning, zoning, development, surveying, siting;
(2) Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction;
(3) Materials used in repair, construction, renovation or remodeling; or
(4) Maintenance;
of part or all of any property on or off the “insured location”.
3. We will not pay for loss or damage caused by or resulting from the release, discharge, dispersal, seepage, migration, release or escape of “pollutants” unless the release, discharge, dispersal, seepage, migration, release or escape is itself caused by any of the “specified causes of loss”. But if the discharge, dispersal, seepage, migration, release or escape of “pollutants” results in a “specified cause of loss,” we will pay for the loss or damage caused by the “specified cause of loss”.
Analysis
The prior form contained paragraph B.3. which listed properties not eligible for special causes of loss coverage. This paragraph, listing such farm property as livestock, poultry, bees, fish, worms, other animals, hay, straw, fodder, trees, shrubs, plants, and lawns, has been removed from the current form. The basic or broad covered causes of loss are the only covered causes of loss for livestock, poultry, bees, fish, worms, and other animals; the covered property subsections of coverages E and F now make reference to this. Reference to hay, straw or fodder in the open is limited to certain named perils under coverage E covered property, and coverage F coverage extensions. Coverage for trees, shrubs, plants and lawns is limited to certain named perils under section II coverage extensions in form FP 00 12, farm property — farm dwellings, appurtenant structures and household personal property.
Exclusions
E. EXCLUSIONS
The following Exclusions apply when any or all of the Covered Causes of Loss, BASIC, BROAD or SPECIAL, are specified in the Declarations:
We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
1. Ordinance or Law
The enforcement of any ordinance or law:
a. Regulating the construction, use or repair of any property; or
b. Requiring the tearing down of any property, including the cost of removing its debris.
This exclusion, Ordinance or law, applies whether the loss results from:
a. An ordinance or law that is enforced even if the property has not been damaged; or
b. The increased costs incurred to comply with an ordinance or law in the course of construction, repair, renovation, remodeling or demolition of property, or removal of its debris, following a physical loss to that property.
Analysis
The current form clarifies that there is no coverage for any loss resulting from enforcement of ordinance or law, even if property is undamaged. For example, if an earthquake does no damage to covered property, but, as a result the local authorities decide every building must be retrofitted, the insured cannot look for coverage claiming the ordinance or law exclusion applies only in the event of physical damage.
2. Earth Movement
a. Any earth movement (other than sinkhole collapse), such as earthquake, landslide, mine subsidence or earth sinking, rising or shifting. This exclusion applies whether the earth movement is caused by human or animal forces or any act of nature.
But:
(1) If earth movement results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion; or
(2) If loss or damage to:
(a) Farm machinery, vehicles and equipment covered for the SPECIAL Causes of Loss; or
(b) ”Livestock”;
is caused by earthquake, this Earth Movement exclusion does not apply to such loss or damage.
Analysis
The current form contains new wording. Under the prior form, it could be argued that the earth movement exclusion applied only to naturally occurring phenomena, since earthquake, landslide, mine subsidence, or earth sinking, rising, or shifting were all events occurring in nature without man's intervention. Now, however, the form makes clear that any damage resulting from any earth movement is excluded. For example, if heavy equipment being moved on a slope causes the earth to give way, damaging buildings below, argument could be made for coverage under the prior wording. This possibility no longer exists.
b. Volcanic eruption, explosion or effusion. But volcanic eruption, explosion or effusion results in fire or Volcanic Action, we will pay for the loss or damage caused by that fire or Volcanic Action.
Volcanic action means direct loss or damage resulting from the eruption of a volcano when the loss or damage is caused by:
(1) Airborne volcanic blast or airborne shock waves;
(2) Ash, dust or particulate matter; or
(3) Lava flow.
All volcanic eruptions that occur within any 168-hour period will constitute a single occurrence.
Volcanic action does not include the cost to remove ash, dust or particulate matter that does not cause direct physical loss or damage to Covered Property.
3. Governmental Action
Seizure or destruction of property by order of governmental authority.
But we will pay for loss or damage caused by or resulting from acts of destruction ordered by governmental authority and taken at the time of a fire to prevent its spread, if the fire would be covered under this Coverage Form.
Analysis
The prior form referred to payment for “acts of destruction”; the current wording makes clear that the insurer will not pay for the governmental authority to carry out such acts, but rather for the resulting damage.
4. Intentional Loss
We will not pay for loss or damage arising out of any act committed:
a. By or at the direction of any “insured”; and
b. With the intent to cause a loss.
5. Nuclear Hazard
Nuclear reaction or radiation, or radioactive contamination, however caused.
But if nuclear reaction or radiation, or radioactive contamination, results in fire, we will pay for the loss or damage caused by that fire.
6. Utility Services
The failure of power or other utility service supplied to the “insured location”, however caused, if the failure occurs away from the “insured location”, except as provided under Coverage C.
But if the failure of power or other utility service results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.
7. Neglect
Neglect, meaning neglect of the “insured” to use all reasonable means to save and preserve property at and after the time of a loss.
Analysis
This exclusion of coverage—neglect—is new in the current form. As discussed above, the exclusion of coverage for loss or damage resulting from repeated seepage or leakage has been deleted; if the insured sees damage occurring to walls or ceiling from leaking plumbing, for example, and does nothing to mitigate the loss or prevent further damage, then the insurer may invoke this exclusion to deny coverage.
8. War and Military Action
a. War, including undeclared or civil war;
b. Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or
c. Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.
9. Water
a. Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not;
b. Mudslide or mudflow;
c. Water that backs up or overflows from a sewer, drain, or sump; or
d. Water under the ground surface pressing on, or flowing or seeping through:
(1) Foundations, walls, floors or paved surfaces;
(2) Basements, whether paved or not; or
(3) Doors, windows or other openings.
But:
(1) If water, as described in 9.a. through d. above, results in fire, explosion or sprinkler leakage, we will pay for the loss or damage caused by that fire, explosion or sprinkler leakage; or
(2) If loss or damage to:
(a) Farm machinery, vehicles and equipment covered for the SPECIAL Causes of Loss; or
(b) ”Livestock”;
is caused by water as described in 9.a. above, this Water exclusion does not apply to such loss or damage.
Exclusions E.1. through E.9. apply whether or not the loss event results in widespread damage or affects a substantial area.
Analysis
The current form excludes loss or damage caused by backup or overflow from a sump. Coverage is available on endorsement FP 04 02; see Farm Property Endorsements, for a brief description. Note that livestock or farm machinery, vehicles or equipment covered for the special causes of loss are exempt from the exclusion.
The current form adds the provision that exclusions E.1 through E.9. apply “whether or not the loss event results in widespread damage or affects a substantial area.” The wording clarifies that the exclusions are intended to apply to any of the described events, whether catastrophic or not. For example, any radioactive contamination, no matter from a small leaking container or from a nuclear detonation, will be deemed to fall within the wording of the exclusion.