February, 2008
Summary: The mobile agricultural machinery and equipment coverage form FP 00 30 09 03 provides coverage for mobile agricultural machinery and equipment, as defined on the form: “mobile devices used in the everyday operation of the farm including: a) accessories, whether or not attached; and b) tools and spare parts that are specifically designed and intended for use in the maintenance and operation of the mobile devices.” The discussion that follows refers to the 09 03 edition. Significant changes from the 01 98 edition are indicated.
Introduction
The mobile agricultural machinery and equipment coverage form may be used on a monoline basis (with common policy conditions IL 00 17 11 98 and declarations) or combined with other forms of the farm program in a multi-line policy. This coverage may be written for an owner or tenant having an insurable interest. It may not be used if coverage for mobile agricultural machinery and equipment is provided through coverage form FP 00 13 01 09 03, scheduled or unscheduled farm personal property. (Note: the old farm coverage form FP 00 10 09 94 was broken into six separate coverage parts: Farm Property – Farm Dwellings, Appurtenant Structures And Household Personal Property Coverage Form FP 00 12, Farm Property – Farm Personal Property Coverage Form FP 00 13, Farm Property – Barns, Outbuildings And Other Farm Structures Coverage Form FP 00 14, Livestock Coverage Form FP 00 40, Farm Liability Coverage Form FL 00 20 and Mobile Agricultural Machinery And Equipment Coverage Form FP 00 30. Under FP 00 13 there is no coverage for threshing machines, tractors, combines, corn pickers, hay balers, harvesters, peanut diggers, potato diggers and pickers, cotton pickers, crop driers or sawmill equipment. , Coverage may be added on a scheduled basis while on or away from the insured location. However, there is no coverage when the property is in the custody of a common carrier(including cotton pickers and combines) with the option to cover related articles on a blanket basis, or on a blanket basis (except for cotton pickers and combines).
Coverage
A. Coverage
We will pay for direct physical loss of or damage to Covered Property from any of the Covered Causes of Loss.
1. Covered Property, as used in this Coverage Form, means the following:
a. All “mobile agricultural machinery and equipment” if a single Limit of Insurance is shown in the Declarations; or
b. Each item of “mobile agricultural machinery and equipment” that is specifically described in the Declarations and for which an individual Limit of Insurance is shown; including property in your care, custody or control that you have borrowed or rented, whether or not under a written contract, except while on the premises of its owner; and at your option, other “mobile agricultural machinery and equipment” not specifically described in the Declarations (such as harness, saddlery, liveries and blankets), for which a single Limit of Insurance is shown in the Declarations.
2. Property Not Covered
Covered Property does not include:
a. Aircraft, watercraft, their equipment or parts; automobiles; dealers' demonstration equipment, machinery and vehicles; dirt bikes, house trailers, mobile homes, mopeds, motorcycles, motorized bicycles or tricycles, snowmobiles, trucks, vehicles primarily designed and licensed for road use (other than wagons and trailers designed for farming purposes and used principally on the insured location);
b. Barn cleaners, boilers, bulk feed tanks or bins, bulk milk tanks, pasteurizers or any permanent fixtures attached to or within a building;
c. Cotton pickers, harvester-thresher combines and four-wheel all-terrain vehicles not specifically declared and described in the Declarations with a Limit of Insurance for each item;
d. Irrigation equipment;
e. Contraband, or property in the course of illegal transportation or trade.
3. Covered Causes of Loss
Covered Causes of Loss means Risks Of Direct Physical Loss to Covered Property except those causes of loss listed in the Exclusions.
Analysis
The mobile agricultural machinery and equipment coverage form agrees to pay for direct physical loss of or damage to covered property from any of the covered causes of loss, except for those excluded in the coverage form. The form makes it clear that certain classes of property, such as air and watercraft, autos or trucks, certain barn items like cleaners and feed tanks, and irrigation equipment, cannot be covered under this form. Note that, while combines and cotton pickers may be specifically described and covered under this form, those used for hire are not eligible.
The 09 03 edition includes coverage for nonowned property unless it is still in the care, custody or control of its owner.
Note also that this form is not designed for the dealer in farm equipment. The dealer in agricultural implements may be covered under inland marine form CM 00 22 09 00. For a discussion, see Equipment Dealers Coverage.
Additional Coverages
4. Additional Coverages
a. Collapse
(1) With respect to buildings:
(a) Collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose;
(b) A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse;
(c) A part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building;
(d) A building that is standing or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.
(2) We will pay for direct physical loss or damage to covered property caused by collapse of a building or any part of a building if the collapse is caused by one or more of the following:
(a) The “specified causes of loss” or breakage of building glass, all only as insured against in this Coverage Form;
(b) Decay that is hidden from view, unless the presence of such decay is known to an “insured” prior to collapse;
(c) Insect or vermin damage that is hidden from view, unless the presence of such damage is known to an “insured” prior to collapse;
(d) Weight of people or personal property;
(e) Weight of rain that collects on a roof;
(f) Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation. However, if the collapse occurs after construction, remodeling or renovation is complete and is caused in part by a cause of loss listed in Paragraphs a.(2)(a) through a.(2)(e), we will pay for the loss or damage even if use of defective material or methods, in construction, remodeling or renovation, contributes to the collapse.
The criteria set forth in Paragraphs a.(1)(a) through a.(1)(d) do not limit the coverage otherwise provided under this Coverage Form for the causes of loss listed in Paragraphs a.(2)(a), a.(2)(d) and a.(2)(e).
This Additional Coverage will not increase the Limits of Insurance provided in this Coverage Part.
Analysis
The 09 03 edition expands the definition of collapse, to clarify that an abrupt falling down or caving in of a building or any part of a building has to occur and that the part of the building that has collapsed cannot be occupied. A building that is standing, even if the walls are cracking, bulging, sagging, bending, leaning, or settling has not collapsed. Only direct physical loss caused by the actual collapse of a building is covered. No consequential loss, such as loss of income resulting from inability to retrieve farm machinery from underneath a collapsed building, is covered. In earlier versions, collapse resulting from use of defective methods or materials was not covered unless the collapse occurred during the course of construction, remodeling or renovation. Now, however, if collapse occurs after the construction is complete, but is caused in part by a listed cause of loss, there will be coverage even if defective methods or materials contribute to the loss.
Hidden decay is only covered if it was not previously known to the insured.
b. Damage to Property Removed for Safekeeping
We will pay for loss to Covered Property damaged by any cause during or up to 30 days after its removal from a building endangered by a Covered Cause of Loss.
Payment under this Additional Coverage will be subject to, not in addition to, the Limit of Insurance applying to the property being removed.
c. Debris Removal
(1) We will pay your expense to remove debris of Covered Property caused by or resulting from a Covered Cause of Loss that occurs during the policy period. The expenses will be paid only if they are reported to us in writing within 180 days of the date of direct physical loss or damage.
(2) Except as provided in 4.c.(4) below, the most we will pay under this Additional Coverage is 25% of:
(a) The amount we pay for the direct physical loss of or damage to Covered Property; plus
(b) The deductible in this policy applicable to that loss or damage.
(3) This Additional Coverage does not apply to costs to:
(a) Extract “pollutants” from land or water; or
(b) Remove, restore or replace polluted land or water.
(4) Debris removal expense is included in the Limit of Insurance applying to the damaged property. But if:
(a) The amount payable for the sum of direct physical loss or damage and debris removal expense exceeds the applicable Limit of Insurance; or
(b) The debris removal expense exceeds the amount payable under the 25% limitation in 4.c.(2) above;
an additional 5% of the Limit of Insurance applying to the damaged property will be available to cover debris removal expense.
d. Extra Expense
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.
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 or replacement of Covered Property.
No deductible applies to this Additional Coverage.
e. Fire Department Service Charge
We will pay the liability you have assumed by contract or agreement for fire department charges incurred when the fire department is called to save or protect Covered Property from a Covered Cause of Loss. But we will not pay fire department service charges if the property is located within the limits of the city, municipality or protection district furnishing the fire department response.
The amount we pay under this Additional Coverage will be in addition to any Limit of Insurance that applies under this Coverage Form.
No deductible applies to this Additional Coverage.
f. Reasonable Repairs
We will pay the reasonable cost to make necessary repairs to protect Covered Property from further damage after a loss insured against has occurred.
Payment under this Additional Coverage will be subject to, not in addition to, the Limit of Insurance applying to the property being repaired.
Analysis
The mobile agricultural machinery form provides six Additional Coverages: (1) collapse, (2) damage to property removed for safekeeping, (3) debris removal, (4) extra expense, (5) fire department service charge, and (6) reasonable repairs. Of these, only the fire department service charge is in addition to the limits of coverage. Further, the coverage for extra expense is, in fact, an optional coverage, and has its own limit of insurance. Although the extra expense coverage is not subject to the policy's expiration, it is subject to the period required for repair or replacement of covered property. In event of covered loss or damage, therefore, it would be prudent to work with the insurer so that all parties agree on the amount of time required.
The additional coverage for debris removal is similar to that of the commercial property form. The most payable is 25 percent of the amount paid for direct physical loss or damage, plus the deductible applicable to the loss or damage. This amount is included in the limit of insurance, but if the amount payable for the sum of the direct physical loss and the debris removal expense exceeds the limit of insurance, or the debris removal expense exceeds the limitation in 4.c.(2), then an additional 5 percent of the limit of insurance is available.
Coverage Extensions
5. Coverage Extensions
a. Additional Acquired Property – Newly Purchased
(1) If this Coverage Form covers property specifically declared and described in the Declarations and if during the policy period you acquire additional newly purchased “mobile agricultural machinery and equipment”, we will cover such property.
(2) The most we will pay under this Coverage Extension is $100,000 for loss of or damage to all such “mobile agricultural machinery and equipment”.
This $100,000 limit is part of, not in addition to, the applicable Limit of Insurance.
(3) When values for Newly Purchased “mobile agricultural machinery and equipment” are reported under this Coverage Extension, additional premium for these values will be due and payable from the date of purchase.
(4) Any “mobile agricultural machinery and equipment” purchased as replacements of such property are not covered by this Coverage Extension
(5) This Coverage Extension will end:
(a) 30 days after the date of acquisition of the additional item; or
(b) When this policy expires;
whichever coves first.
A newly purchased item of “mobile agricultural machinery or equipment” is covered under this Coverage Extension only to the extent that it is not covered under another Coverage Part or under any other policy of the “insured.”
b. Additional Acquired Property – Replacement
A Special Limit of Insurance equal to $75,000 plus the corresponding limit shown in the Declarations for individually declared and described items of “mobile agricultural machinery and equipment” applies to any item of property purchased as a replacement of such machinery, vehicle or equipment.
We will determine the value of such a replacement item in the event of loss or damage at actual cash value as of time of loss.
The additional $75,000 coverage will end:
(1) 30 days after the date of purchase of the replacement item; or
(2) When this policy expires;
whichever comes first.
A replacement item of “mobile agricultural machinery or equipment” is covered under this Coverage Extension only to the extent that it is not covered under another Coverage Part or under any other policy of the “insured”.
c. Thirty-Day Additional Limit On Borrowed Or Rented ” Mobile Agricultural Machinery And Equipment”
This Coverage Extension applies to property described in Paragraph A.1.b.
(1) The Limit of Insurance, if any, shown in the Declarations for “Mobile Agricultural Machinery And Equipment” Borrowed Or Rented With Or Without A Written Contract will be increased by $10,000, which will apply in any one occurrence to loss of or damage only to such items, as described and limited in Paragraph 1.b. of Paragraph A. Coverage, that you borrow or rent after the beginning of the policy period. However, if a higher additional Limit of Insurance is specified in the Declarations, the higher Limit will apply.
(2) Insurance under this Coverage Extension will end:
(a) Thirty days after the Covered Property is borrowed or rented; or
(b) When this policy expires;
whichever comes first.
(3) If any property covered under this Coverage Extension remains in your possession for a period of more than thirty days, you must report value for it, and additional premium will be due and payable from the thirty-first day after you took possession.
Analysis
When mobile agricultural machinery or equipment is specifically scheduled, there are two coverage extensions that apply regarding additionally acquired property. Coverage under both extensions applies for 30 days after the property is acquired (or until the policy expires) but only to the extent that the new property is not covered under another coverage part or under any other policy of the insured. Values for the new property must be reported to the insurer at which time additional premium is payable for the added coverage from the date of purchase.
The first extension provides newly purchased machinery or equipment with up to $100,000 of coverage. The $100,000 is not an additional limit of insurance. Instead it is part of the total limit of insurance that applies to all the mobile agricultural machinery and equipment insured by the form.
The second extension states that additionally acquired property purchased as a replacement for an insured item of machinery or equipment is covered for up to $75,000 over the limit scheduled for that item. This additional limit allows for the fact that the scheduled value of a ten-year-old piece of equipment, for instance, will not reflect its current replacement value. In case of loss to such a replacement item, its value is determined based on its actual cash value at the time of loss. Previous editions only allowed $50,000 over the scheduled limit of insurance.
The 09 03 edition adds a thirty-day extension of coverage for borrowed or rented mobile agricultural machinery or equipment. A written contract is not required. Under this extension, the limit of insurance is increased by up to $10,000 for loss of or damage to mobile agricultural machinery or equipment borrowed or rented for 30 days or less. The borrowed or rented machinery or equipment must be added to the policy for coverage to apply when held 31 days or longer. This coverage automatically expires thirty days after acquisition or on the policy expiration date, whichever occurs first.
Exclusions
B. Exclusions
1. 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.
a. Earth Movement
(1) Landslide, including any earth sinking, rising or shifting related to such event;
(2) Mine subsidence, meaning subsidence of a man-made mine, whether or not mining activity has ceased;
(3) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions that cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.
This exclusion applies whether the Earth Movement, as described in Paragraphs (1) through (3) above, is caused by human or animal forces or any act of nature. But if Earth Movement, as described in Paragraphs (1) through (3) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.
If loss or damage to “mobile agricultural machinery and equipment” is caused by earthquake, this Earth Movement exclusion does not apply to such loss or damage.
(4) Volcanic eruption, explosion or effusion. But if 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:
(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.
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.
b. 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.
c. Intentional Loss
We will not pay for loss or damage arising out of any act an “insured” commits or conspires to commit with the intent to cause a loss.
In the event of such loss, no “insured” is entitled to coverage, even “insureds” who did not commit or conspire to commit the act causing the loss.
d. 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.
e. Utility Services
The failure of power or other utility service supplied to the described premises, however caused, if the failure occurs away from the described premises. Failure includes lack of sufficient capacity and reduction in supply.
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.
f. 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.
g. War and Military Action
(1) War, including undeclared or civil war;
(2) 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
(3) Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these.
h. Water
(1) Mudslide or mudflow;
(2) Water that backs up from a sewer or drain; or
(3) Water under the ground surface pressing on, or flowing or seeping through:
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or
(c) Doors, windows or other openings.
But if Water, as described in Paragraphs h.(1) through h.(3) above, results in fire, explosion or sprinkler leakage, we will pay for the loss or damage caused by that fire, explosion or sprinkler leakage.
Exclusions B.1.a. through B.1.h. apply whether or not the loss event results in widespread damage or affects a substantial area.
Analysis
The 09 03 edition rewords the definition of earth movement. Landslide and mine subsidence are now defined, rather than listed types of earth movement. Earth sinking has also been added as a type of earth movement. As in the previous edition, the exclusion applies (except for sinkhole collapse or earthquake) whether the earth movement is caused by human or animal forces or any act of nature. However, the policy will cover any resulting fire or explosion which occurs as a result of the earth movement. Earlier versions of this form allowed for the interpretation that only naturally occurring earth movement was excluded. So if construction crews accidentally caused a landslide that damaged property, there would be coverage. (For a discussion of this interpretation, see Earth Movement Exclusion; for print subscribers, page M.30 and following.) The changed wording eliminates this interpretation.
The current version of this form expands the intentional loss exclusion. Coverage is excluded to any insured who “commits or conspires to commit with the intent to cause a loss.” The exclusion also applies to those insureds who were not involved in the intentional loss.
The exclusion of neglect appears in this form. Compare the wording to loss condition 3.(4), which states the insured must “take all reasonable steps to protect the Covered Property…” The exclusion requires the insured to maintain the property prior to loss and allows the insurer to cite the exclusion, rather than attempting to make a case for failure to carry out one of the duties in event of loss, should the insured not take all reasonable means to protect covered property.
An interesting addition to this coverage form is the sentence that the exclusions “apply whether or not the loss event results in widespread damage or affects a substantial area.” Since many of the excluded events—nuclear hazard, war, and volcanic action, for example—cause widespread damage, it is difficult to see the necessity for the addition.
Other Exclusions
The following exclusions are contained under B. Exclusions discussed above. The first group, however, discussed above, are preceded by concurrent causation language. The following Other Exclusions do not contain this language.
2. Other Exclusions
We will not pay for loss or damage caused by or resulting from:
a. Collapse, except as provided in the Additional Coverage entitled Collapse. But if collapse results in a Covered Cause of Loss at the described location, we will pay for the loss or damage caused by that Covered Cause of Loss.
b. Rain, snow, ice or sleet to property in the open;
c. Any of the following:
(1) Explosion of alcohol stills, steam boilers, steam pipes or steam engines, if you own, lease or operate them;
(2) Rupture, bursting or operation of pressure relief devices; or
(3) 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.
d. Disappearance of any property unless there is evidence that the property was stolen;
e. Unauthorized instructions to transfer property to any person or to any place;
f. 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;
g. 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 others; 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;
h. Any cause included in Paragraphs h. (1) and h. (2) if that loss or damage is sustained by covered property:
(1) Collision, upset or overturn of “mobile agricultural machinery and 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) Foreign objects being taken into any “mobile agricultural machinery and equipment”.
Analysis
Coverage for collision is expanded in the current edition by deleting the contact exclusions. Previously contact between a tractor and an implement being towed and contact of the vehicle with the roadbed or ground were excluded.
i. Artificially generated electric current, including electric arcing, that disturbs electrical devices, appliances or wires.
But if artificially generated electric current results in fire, we will pay for the loss or damage caused by that fire.
j. Smoke, vapor or gas from agricultural smudging or industrial operations;
k. Wear and tear;
l. Rust, corrosion, fungus, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself;
m. Smog;
n. Nesting or infestation, or discharge or release of waste products or secretions, by birds, vermin, rodents, insects or domestic animals;
o. Mechanical breakdown, including rupture or bursting caused by centrifugal force;
p. Dampness or dryness of atmosphere;
q. Changes in temperature or extremes of heat or cold, including freezing;
r. Marring or scratching;
s. Theft 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 “mobile agricultural machinery and equipment”, unless it is:
(a) Covered Property; and
(b) Permanently installed in the “mobile agricultural machinery and equipment”.
(2) 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 from the electrical system of “mobile agricultural machinery and equipment”;
t. Discharge, dispersal, seepage, migration, release or escape of “pollutants” unless the 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 that “specified cause of loss”.
But if an excluded cause of loss that is listed in Paragraphs 2.j. through 2.r 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.
3. We will not pay for loss or damage caused by or resulting from any of the following, Paragraphs 3.a. through 3.c. But if an excluded cause of loss that is listed in Paragraphs 3.a. through 3.c. results in a Covered Cause of Loss results, 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 Paragraph B.1. above 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, citing;
(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 described premises.
Analysis
Collapse is listed as both an Additional Coverage and an Other Exclusion, emphasizing the very limited nature of the coverage provided.
The Exclusion for intentional loss is echoed by the Other Exclusion for dishonest or criminal acts committed by the insured, partners or employees, except striking employees.
Under earlier versions of this form, loss caused by a single animal—say, a bird somehow getting into an engine causing it to malfunction—would not be covered. Under the current form, the language makes clear that “nesting or infestation” is intended. With the exception of “nesting,” large numbers of animals or insects must be present to cause an “infestation.” Interestingly, the form is silent as to bats, which are neither birds nor domestic animals, and yet can be a major source of “waste products.”
Note that Other Exclusions 2.j. through 2.r. are things that happen over time, and are therefore uninsurable. However, if these result in one of the “specified causes of loss,” there is coverage for the resulting damage. So, for example, if wear and tear causes wiring insulation to deteriorate causing a fire, the damage done by the resulting fire is covered.
Limits of Insurance and Deductible
C. Limits Of Insurance
The most we will pay for loss or damage in any one occurrence is the applicable Limit of Insurance shown in the Declarations.
The Limit of Insurance for any one item of “mobile agricultural machinery or equipment” covered in accordance with the single limit option described in Section A.1.b. is $3,000.
D. Deductible
We will not pay for loss, damage or expense in any one occurrence until the amount of loss, damage or expense exceeds the Deductible shown in the Declarations. We will then pay the amount of loss, damage or expense in excess of the Deductible, up to the applicable Limit of Insurance or Special Limit of Insurance.
Analysis
Note that the limit of insurance of $3,000 for “any one item covered under Section A.1.b.(2)” is intended to apply to “other 'mobile agricultural machinery and equipment' not specifically described in the Declarations (such as harness, saddlery, liveries and blankets for which a single Limit of Insurance is shown in the Declarations.” Section A.1.b.(2), however, no longer exists in the current form, as it has been incorporated into A.1.b. Until a correction is made, this wording renders the limit meaningless. Prior versions of this form allowed only $2,000 'mobile agricultural machinery and equipment' not specifically described in the Declarations.
Unlike other marine and property forms, FP 00 30 applies the deductible to “the amount of loss, damage or expense in any one occurrence.” Note that loss condition 3.a.(4) requires the insured to take steps to protect the covered property from further damage, and to keep a record of the necessary expenses. This amount does not increase the limit of insurance.
Farm Inland Marine Conditions
E. Farm Inland Marine Conditions
The following conditions apply in addition to the Common Policy Conditions:
LOSS CONDITIONS
1. Abandonment
There can be no abandonment of any property to us.
2. Appraisal
If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their difference to the umpire. A decision agreed to by any two will be binding. Each party will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal and umpire equally.
If there is an appraisal, we will still retain our right to deny the claim.
3. Duties in the Event of Loss
a. In the event of loss or damage to Covered Property, we have no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us. These duties must be performed either by you, an “insured” seeking coverage, or a representative of either:
(1) Notify the police if a law may have been broken.
(2) Give us prompt notice of the loss or damage. Include a description of the property involved.
(3) As soon as possible, give us a description of how, when and where the loss or damage occurred.
(4) Take all reasonable steps to protect the Covered Property from further damage and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for any subsequent loss or damage resulting from a cause of loss that is not a Covered Cause of Loss. Also, if feasible, set the damaged property aside and in the best possible order for examination.
(5) At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed.
(6) As often as may be reasonably required, permit us to inspect the property proving the loss or damage and examine your books and records.
Also permit us to take samples of damaged and undamaged property for inspection, testing and analysis, and permit us to make copies from your books and records.
(7) Send us a signed, sworn proof of loss containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms.
(8) Cooperate with us in the investigation or settlement of the claim.
b. We may examine any “insured” under oath, while not in the presence of any other “insured” and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an “insured's” books and records. In the event of an examination, an “insured's” answers must be signed.
4. Insurance Under Two or More Coverages
If two or more of this policy's coverages apply to the same loss or damage, we will not pay more than the actual amount of the loss or damage.
5. Loss Payment
a. In the event of loss or damage covered by this Coverage Form, at our option we will either:
(1) Pay the value of lost or damaged property;
(2) Pay the cost of repairing or replacing the lost or damaged property;
(3) Take all or any part of the property at an agreed or appraised value; or
(4) Repair, rebuild or replace the property with other property of like kind and quality.
We will determine the value of lost or damaged property, or the cost of its repair or replacement, in accordance with the applicable terms of the Valuation Condition in the Coverage Form or any applicable provision that amends or supersedes the Valuation Condition.
b. We will not pay you more than your financial interest in the Covered Property.
c. We will give notice of our intentions within 30 days after we receive the sworn proof of loss.
d. We may adjust losses with the owners of lost or damaged property if other than you. Our payment for such losses will only be for the owners' account. If we pay the owners, such payments will satisfy your claims against us for the owners' property. We will not pay the owners more than their financial interest in the Covered Property.
e. We may elect to defend you against suits arising from claims of owners of property. We will do this at our expense.
f. We will pay for covered loss or damage within 30 days after we receive the sworn proof of loss, provided you have complied with all of the terms of this Coverage Form, and
(1) We have reached agreement with you on the amount of loss; or
(2) An appraisal award has been made.
6. Other Insurance And Service Agreement
a. You may have other insurance subject to the same plan, terms, conditions and provisions as the insurance under this Coverage Form. If you do, we will pay our share of the covered loss or damage. Our share is the proportion that the applicable Limit of Insurance under this Coverage Form bears to the limits of insurance of all insurance covering on the same basis.
b. If there is other insurance covering the same loss or damage other than that described in 6.a. above, we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not. But we will not pay more than the applicable Limit of Insurance.
c. In the settlement of loss or damage to property covered under Paragraph A.1.b. that you have borrowed or rented, Paragraph b. of this Condition will not apply.
d. If loss or damage is also covered by a service agreement, any amounts payable for such loss or damage under this Coverage Form will be excess over any amounts payable under any such agreement. Service agreement means a service plan, property restoration plan, home warranty or other similar service or warranty agreement, even if it is characterized as insurance.
7. Pair, Sets or Parts
a. Pair or Set.
In case of loss or damage to any part of a pair or set we may:
(1) Repair or replace any part to restore the pair or set to its value before the loss; or
(2) Pay the difference between the value of the pair or set before and after the loss.
b. Parts.
In case of loss of or damage to any part of Covered Property consisting of several parts when complete, we will only pay for the value of the lost or damaged part.
8. Recovered Property
If either you or we recover any property after loss settlement, that party must give the other prompt notice. At your option, the property will be returned to you. You must then return to us the amount we paid to you for the property. We will pay recovery expenses and the expenses to repair the recovered property, subject to the Limit of Insurance.
9. Transfer of Rights of Recovery Against Others to Us
If any person or organization to or for whom we make payment under this Coverage Form has rights to recover damages from another, those rights are transferred to us to the extent of our payment.
That person or organization must do everything necessary to secure our rights and must do nothing after loss to impair them. But you may waive your rights against another party in writing:
a. Prior to a loss to your Covered Property.
b. After a loss to your Covered Property only if, at time of loss, that party is one of the following:
(1) A business firm:
(a) Owned or controlled by you; or
(b) That owns or controls you; or
(2) Your tenant.
This will not restrict your insurance.
10. Valuation
In the event of loss of or damage to Covered Property, we will settle at actual cash value as of time of loss, but we will not pay more than the amount necessary for repair or replacement.
Analysis
In the event of a loss, the insured's duties are spelled out. This condition requires that steps be taken, in event of any loss, to protect the covered property and keep a record of those expenses. So, for example, the farmer could move the property out of the way of a mudslide (excluded) and the expenses to do so would be reimbursed. If, however, the move is to a building's lower level where the drain subsequently backs up, damaging the property, the damage will not be covered. Prior versions of this form only required the insured to “take all reasonable steps to protect the Covered Property from further damage by a Covered Cause of Loss.”
This edition specifies that the insurer will determine the value of damaged property in accordance with the terms of the Valuation Condition. In this case, that means the actual cash value as of time of loss, but not more than the amount necessary for repair or replacement.
The insurer, in this form, has the option, in event of a covered loss, of four methods of settling the loss: paying the value of the lost or damaged property; paying the cost of repairing or replacing the lost or damaged property; taking all or part of the property at an agreed or appraised value; or repairing, rebuilding or replacing the property with other property of like kind and quality. Although there is no mention of the insurer making the “lesser of” the different payments, it is likely the insurer will choose the least expensive method of loss settlement.
A newly added provision coordinates coverage with coverage provided by a separate service agreement. When a service agreement exists, coverage under the policy is excess over any amounts payable under such agreement. This prevents the insured from making a profit on a covered loss by collecting twice for the same damage.
Note that, in event of a loss to machinery or equipment that consists of several parts, the insurer will pay only the value of the lost or damaged part.
General Conditions
1. Coinsurance
This condition applies separately to:
a. ”Mobile agricultural machinery and equipment” that is not specifically declared and described in the Declarations and not included in b. below; and
b. ”Mobile agricultural machinery and equipment” that is not specifically declared and described in the Declarations and for which a Limit of Insurance is shown for coverage not exceeding $3,000 on any one item.
All Covered Property must be insured for at least 80% of its total value as of the time of loss or damage or you will incur a penalty.
The penalty is that we will pay only the proportion of any loss that the Limit of Insurance shown in the Declarations for all Covered Property at all locations bears to 80% of the total value of all property at all locations as of the time of loss.
2. Concealment, Misrepresentation Or Fraud
This Coverage Form is void in any case of fraud by you as it relates to this Coverage Form at any time. It is also void if you or any other “insured”, at any time, intentionally conceal or misrepresent a material fact concerning:
a. This Coverage Form;
b. The Covered Property;
c. Your interest in the Covered Property; or
d. A claim under this Coverage Form.
3. Control Of Property
Any act or neglect of any person other than you beyond your direction or control will not affect this insurance.
The breach of any condition of this Coverage Form at any one or more locations will not affect coverage at any location where, at the time of loss or damage, the breach of condition does not exist.
4. Legal Action Against Us
No one may bring a legal action against us under this Coverage Form unless:
a. There has been full compliance with all the terms of this Coverage Form; and
b. The action is brought within 2 years after the date on which the direct physical loss or damage occurred.
5. Liberalization
If we adopt any revision that would broaden the coverage under this Coverage Form without additional premium within 45 days prior to or during the policy period, the broadened coverage will immediately apply to this Coverage Form.
6. No Benefit To Bailee
No person or organization, other than you, having custody of Covered Property, will benefit from this insurance.
7. Policy Period, Coverage Territory
Under this Coverage Form:
a. We cover loss or damage commencing:
(1) During the policy period shown in the Declarations; and
(2) Within the coverage territory.
b. The coverage territory is:
(1) The United States of America ;
(2) Puerto Rico; and
(3) Canada .
Analysis
The mobile agricultural machinery and equipment coverage form contains an 80% coinsurance condition. It applies separately to: a. blanketed property; and b. property not specifically scheduled, but covered up to $3,000 per item, as described above. Earlier editions of this form limited this coverage to $2,000.
The arrangement of the form leaves unclear whether or not the coinsurance condition applies to specifically scheduled equipment. The third paragraph does say that “all covered property must be insured for at least 80% of its total value.” The fourth paragraph describes the applicable penalty. However, those paragraphs are located directly below paragraphs “a and b,” giving the impression that they apply only to those items.
If the intent truly is to apply the coinsurance provision to “all covered property,” then paragraphs three and four should be moved out to the left margin; or, paragraph three should be designated as “c” with paragraph four moved to the left margin. As currently arranged, one could argue that the coinsurance clause applies only to “a” and “b” described above, thus not reaching any machinery written on a blanket basis.
The general conditions contain a provision that acts or neglect of any person beyond the insured's control does not affect the insurance.
Definitions
F. Definitions
1. ”Insured” means you and, if you are an individual, the following members of your household:
a. Your relatives;
b. Any other person under the age of 21 who is in the care of any person specified above.
2. ”Mobile agricultural machinery and equipment” means mobile devices used in the everyday operation of the farm including:
a. Accessories, whether or not attached; and
b. Tools and spare parts that are specifically designed and intended for use in the maintenance and operation of the mobile devices.
3. ”Pollutants” means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
4. ”Specified Causes of Loss” means the following: Fire; lightning; explosion; windstorm or hail; smoke; including the emission or puffback of smoke, soot, fumes or vapors from a boiler, furnace or related equipment; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage.
a. Sinkhole collapse means the sudden sinking or collapse of land into underground empty spaces created by the action of water on limestone or dolomite. It does not include:
(1) The cost of filling sinkholes; or
(2) Sinking or collapse of land into manmade underground cavities.
b. Falling objects does not include loss or damage to:
(1) Personal property in the open;
(2) 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
(3) The falling object itself.
c. Water damage means accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of a plumbing, heating, air conditioning or other system or appliance (other than a sump system including its related equipment and parts) containing water or steam.
Analysis
The definitions make clear that mobile agricultural machinery and equipment includes tools and spare parts specifically designed and intended for use in maintenance and operation of the equipment. So, commonly used tools such as pliers and screwdrivers are not covered under this form.
These are the causes of loss referred to in exclusion 2.t.—if the discharge or escape of pollutants results in a “specified cause of loss,” then that resulting damage is covered, and in exclusions 2.j. through 2.r., which are the kinds of loss that will happen over time, and are therefore uninsurable. However, as has been noted, if any of these result in one of the specified causes of loss, then that resulting loss or damage is covered. Newly added is the provision that clarifies that smoke includes the emission or puffback of smoke, soot, fumes or vapors from a boiler, furnace or related equipment.
The 09 03 edition clarifies that damage caused by a falling object does not include coverage for damage to the falling object. Additionally, this edition adds coverage for a sump system and its related parts.