AAIS Farm Program—Incidental Property Coverages
Dwelling and Personal Property
Reviewed December 10, 2009
Summary: The AAIS farm dwelling form offers certain “incidental property coverages.” Those are the subject of this treatment.
Topics covered:
Incidental property coverages
Emergency removal
Debris removal
Increased cost – ordinance or law
Fire department service charge
Credit card, forgery, and counterfeit money
Trees, plants, shrubs, or lawns
Grave markers
Collapse
Glass breakage
Outdoor antennas
Well pumps
Private power and light poles
Refrigerated food spoilage
Incidental Property Coverages
D INCIDENTAL PROPERTY COVERAGES
This form provides the following Incidental Property Coverages. They are subject to all of the “terms” of the applicable Coverages A, B, or C. These coverages provide additional insurance unless otherwise stated.
Analysis
Instead of differentiating between “additional coverages” and “coverage extensions,” AAIS calls these “incidental property coverages.” This terminology clarifies that these items are incidental to the coverages on the dwelling and personal property. The additional policy conditions form states that the deductible does not apply to the following: emergency removal; fire department service charge; credit card, forgery, and counterfeit money; grave markers; and refrigerated food spoilage.
Emergency Removal
1. Emergency Removal – This coverage does not increase the “limits” shown for the property being removed. “We” pay for loss to property covered under Coverages A, B, or C that is moved from a premises to prevent a loss from perils insured against. The property is covered for direct physical loss not excluded, for up to thirty days. This coverage does not extend past the date on which this policy expires. “We” pay up to $250 towing charge to move a covered mobile home that is in danger from a peril insured against.
Analysis
If property covered under A, B, or C faces danger from an insured peril, the insured receives open perils coverage for it for thirty days while he or she moves it elsewhere. For property removed, the AAIS form is somewhat broader in that it covers property removed from a “premises” rather than from a “building.” The AAIS form also covers the expense of moving a mobile home out of harm's way.
Debris Removal
2. Debris Removal – “We” pay for the cost to remove the debris of property covered under Coverages A, B, or C after an insured loss. This includes the cost to remove volcanic ash, dust, or particulate matter that causes direct physical loss to property covered under Coverages A, B, or C.
”You” may apply up to 25 percent of the “limit” that applies to the damaged property to cover debris removal. “We” will not pay more for direct physical loss to property and debris removal combined than the “limit” that applies to the damaged property. However, when the covered loss plus the cost of debris removal is more than the applicable “limit”, “we” will pay up to an extra 5 percent of the applicable “limit” to cover the cost of debris removal. This coverage does not include costs to extract “pollutants” from land or water; or remove, restore, or replace polluted land or water.
”We” also pay the cost to remove fallen trees which cause damage to property covered under Coverages A, B, or C if:
a. the falling of the tree is caused by any of the perils that apply to Coverage C; and
b. coverage is not provided elsewhere by this form.
Regardless of the number of fallen trees, the most “we” will pay is $500 per occurrence.
Analysis
After a covered loss, the insured may receive up to 25 percent of the applicable limit of liability for expenses to remove debris of covered property. If the amount of the direct loss and the debris removal exceeds the limit of liability, then the insured receives an additional 5 percent of the limit. For example:
Dwelling limit: $100,000
Direct loss: $50,000
Debris removal: up to $25,000
However, if the amount of the direct loss in the example were $85,000, the insured would have only up to $20,000 for debris removal expense. (Remainder of the limit of liability after the direct loss, $15,000 plus 5 percent of the limit).
The policy also provides coverage for removal of debris trees felled by a covered peril.
Increased Cost – Ordinance or Law
3. Increased Cost – Ordinance or Law – “We” pay for the increased cost which results from the enforcement of a code, ordinance, or law which regulates the use, construction, repair, or demolition of property or the removal of its debris when loss to property covered under Coverages A or B is caused by a peril insured against.
”You” may apply up to 25 percent of the “limit” that applies to the damaged property to cover such increased costs. “We” will not pay more for direct physical loss to property and the increased costs combined than the “limit” that applies to the damaged property. However, when the covered loss plus the increased cost is more than the applicable “limit”, “we” will pay up to an extra 5 percent of the applicable “limit” to cover the increased cost which results from the enforcement of a code, ordinance, or law which regulates the use, construction, repair, or demolition of property or the removal of its debris.
This coverage does not include costs to extract “pollutants” from land or water; or remove, restore, or replace polluted land or water.
Analysis
The AAIS policy gives an extra 25 percent of the coverage A limit for any costs incurred as the result of the enforcement of a building code after a loss. This amount is included in the coverage A limit. If the amount of the direct property loss and the amount of ordinance loss exceeds the limit of liability, the insured may apply an extra 5 percent of the coverage A limit for this coverage.
Fire Department Service Charge
4. Fire Department Service Charge – “We” pay for charges assumed by “you” under a contract or agreement when a fire department is called to save or protect property covered under Coverages A, B, or C from a peril insured against.
The most “we” pay is $500 per occurrence unless a higher “limit” is shown on the “declarations”.
Analysis
The AAIS policy pays up to $500 for charges the insured assumes when contracting for fire protection service. Higher limits are available and are shown on the declarations.
Credit Card, Forgery, and Counterfeit Money
5. Credit Card, Forgery, and Counterfeit Money – “We” pay for loss if an “insured”:
a. by law must pay for the unauthorized use of credit or debit cards issued or registered in the name of an “insured”;
b. has a loss when checks, drafts, notes, or negotiable instruments are forged or altered; or
c. accepts in good faith counterfeit United States or Canadian paper money. The most “we” pay is $1,500 per occurrence unless a higher “limit” is shown on the “declarations”.
”We” do not pay for a loss if:
a. the “insured” has not complied with the rules under which the credit or debit card was issued;
b. the loss is caused by the dishonesty of an “insured”;
c. the loss results from the “business” of an “insured”; or
d. the loss occurs while a person who is not an “insured” has the credit or debit card with the consent of an “insured”.
Analysis
The AAIS policy pays up to $1,500 for charges against the insured for unauthorized use of his or her credit cards. Also covered is forgery of checks and the acceptance of counterfeit money. Higher limits are available and are shown on the declarations.
Trees, Plants, Shrubs, or Lawns
6. Trees, Plants, Shrubs, or Lawns – “We” pay for direct physical loss to trees, plants, shrubs, or lawns on the “insured premises” caused by:
a. fire or lightning, explosion, riot or civil commotion, aircraft, vandalism, theft; or
b. vehicles if not owned or operated by an occupant of the “insured premises”.
”You” may apply up to 10 percent of the Coverage C “limit” to cover trees, plants, shrubs, or lawns. “We” do not pay more than $500 for each tree, plant, or shrub. This includes the cost to remove the debris of the covered item.
”We” do not cover trees, plants, shrubs, or lawns grown for “business”.
”We” do not cover trees, plants, shrubs, or lawns located more than 250 feet from the “residence” covered under Coverage A.
Analysis
The AAIS farm dwelling policy provides coverage for these items equal to 10 percent of the coverage C limit, subject to a maximum of $500 for each item. It excludes coverage for items grown for business purposes. Also, as with the coverage for “related private structures” AAIS emphasizes the “personal” or “family” nature of this coverage by limiting it to trees, shrubs, etc. within 250 feet of the residence.
Grave Markers
7. Grave Markers – “We” pay up to $1,500 for direct physical loss to grave markers and mausoleums caused by a peril that applies to Coverage C.
Analysis
The AAIS form covers grave markers as personal property for up to $1,500.
Collapse
8. Collapse – “We” pay for direct physical loss to property covered under Coverages A, B, and C involving the collapse of a building or a part of a building caused by the following:
a. any of the perils insured against described under Coverage C;
b. hidden insect or vermin damage or hidden decay;
c. weight of contents or people;
d. weight of rain which collects on a roof; or
e. the use of defective materials or methods in construction or repair if the collapse occurs during the course of construction or repair.
Under b. through e. above, unless the loss is the direct result of the collapse of a building, “we” do not pay for loss to awnings; swimming pools; fences; patios; paved areas; retaining walls; bulkheads; foundations; wharves; docks; piers; underground pipes, flues, and drains; cesspools; and septic tanks.
Collapse does not mean settling, cracking, shrinking, bulging, or expanding. This coverage does not increase the “limits” shown for the property covered.
Analysis
The AAIS farm dwelling policy covers collapse from any of the coverage C perils or any of the following: hidden insect damage or decay; weight of contents or people; weight of rain collecting on a roof; use of defective methods or materials in the construction or repair of a building.
Glass Breakage
9. Glass Breakage – “We” pay for breakage of glass that is part of a structure covered under Coverages A or B. “We” also pay for loss to property covered under Coverages A, B, or C which is damaged by the breakage of glass that is part of a structure. However, “we” do not pay for loss if the “residence” is vacant for more than thirty days in a row just before the loss. A “residence” being built is not vacant.
This coverage does not increase the “limits” shown for the property covered.
Analysis
The policy covers glass that is part of a building covered under A or B. It also pays for damage done by breaking glass to property covered under A, B, or C. This coverage does not apply if the residence has been vacant for thirty days prior to the loss.
Outdoor Antennas
10. Outdoor Antennas – “We” pay for direct physical loss to outdoor antennas caused by a peril that applies to Coverage C. This includes satellite dish antennas and masts, towers, and lead-in wiring.
The most “we” pay is $1,500 per occurrence unless a higher “limit” is shown on the “declarations”.
Analysis
The AAIS policy pays up to $1,500 (higher limits are available) for damage to outdoor antennas. The damage must be caused by a coverage C peril.
Well Pumps
11. Well Pumps – “We” pay for direct physical loss to well pumps caused by a peril that applies to Coverage C. This includes pump switch boxes, fuse boxes, control boards, and any other equipment attached to the pump for its operation.
The most “we” pay is $1,500 per occurrence unless a higher “limit” is shown on the “declarations”.
Analysis
Like outdoor antennas, the policy covers damage to well pumps for up to $1,500 (higher limits are available). The damage must be caused by a coverage C peril.
Private Power and Light Poles
12. Private Power and Light Poles – “We” pay for direct physical loss to private power and light poles caused by a peril that applies to Coverage C. This includes outdoor electrical wiring, switch boxes, fuse boxes, and any other outdoor electrical equipment mounted on panels or poles.
The most “we” pay is $1,500 per occurrence unless a higher “limit” is shown on the “declarations”.
Analysis
Another item that the AAIS policy covers for damage from coverage C perils is private power and light poles. Again, the coverage is $1,500 with higher limits available.
Refrigerated Food Spoilage
13. Refrigerated Food Spoilage – “We” pay for spoilage of food in a freezer or refrigerated unit on the “insured premises”. The spoilage must be caused by change in temperature resulting from:
a. interruption of electrical service to refrigeration equipment caused by damage to the generating or transmission equipment; or
b. mechanical or electrical breakdown of the refrigeration equipment.
This coverage applies only to property intended for the personal use of an “insured”. It does not apply to farm personal property. “You” must maintain the refrigeration equipment in proper working order.
The most “we” pay is $500 per occurrence unless a higher “limit” is shown on the “declarations”.
Analysis
Sometimes called “consequential loss” coverage, the AAIS policy provides up to $500 for food that spoils in a refrigerator or freezer because the appliance stops working. The cause must be electrical failure caused by damage to transmission equipment, or mechanical breakdown of the appliance itself. Note that the coverage applies only to the insured's personal food.