Summary: The mobile agricultural machinery and equipment coverage form FP 00 30 01 98 provides open perils 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 01 98 edition. Significant changes from the 09 94 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. It may not be used if coverage for mobile agricultural machinery and equipment is provided through coverage form FP 00 13 01 98, scheduled or unscheduled farm personal property. (Note: the farm coverage form FP 00 10 09 94 has been restructured into five new separate forms. FP 00 13 is one of them; however, there is no coverage under that form for combines or cotton pickers.) Certain types of property—self-propelled harvester-thresher combines and mechanical cotton pickers used for hire; portable sawmills; irrigation equipment, machinery used in logging operations; and lug boxes (receptacles used to bring picked fruit in from orchards)—are not eligible. Coverage may be on a scheduled basis (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; 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.
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 07 90. For a discussion, see Equipment Dealers Coverage.
Additional Coverages
4. Additional Coverages
a. Collapse
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:
(1) The “specified causes of loss” or breakage of building glass, all only as insured against in this Coverage Form;
(2) Hidden decay;
(3) Hidden insect or vermin damage;
(4) Weight of people or personal property;
(5) Weight of rain that collects on a roof;
(6) 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 a.(1) through a.(5), 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.
Collapse does not include settling, cracking, shrinkage, bulging or expansion.
This Additional Coverage will not increase the Limits of Insurance provided in this Coverage Part.
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. 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% 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% of the limit of insurance is available.
The current form includes a change in the coverage for collapse. This form makes it clear that only direct physical loss caused by 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 the prior form, 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.
Coverage Extensions
1. 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 of under any other policy of the “insured.”
b. Additional Acquired Property – Replacement
A special Limit of Insurance equal to $50,000 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 $50,000 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”.
Analysis
The prior form, in extension a., stated that the words “you” and “your” throughout the form included the named insured's spouse if a resident of the same household. This provision has, in an editorial change, been moved into the introductory language preceding the body of the coverage form. Coverage extension a. is now newly purchased additional acquired property.
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 $50,000 over the limit scheduled for that item. This additional limit allows for the fact that the scheduled value of a 10 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.
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) Any earth movement (other than sinkhole collapse or earthquake), such as 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 if earth movement results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.
(2) 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 flows.
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 committed:
(1) By or at the direction of any “insured”' and
(2) With the intent to cause a 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. The failure of power or other utility service supplied to the described premises, however caused, if the failure occurs away from the described premises.
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 H.(1) through (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
There are changes in the current form that significantly impact coverage. The first of these is the wording of the earth movement exclusion. 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. The prior wording, including, as it did, events such as landslide and earth sinking, 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.
A new exclusion—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 insurer can now 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 set of 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 leases employees), but it does apply to employee (including leased employee) theft.
h. Any cause included in the following list 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) Contact between a tractor and an implement during towing, hitching or unhitching operations.
(3) Foreign objects being taken into any “mobile agricultural machinery and equipment”.
(4) Contact of a vehicle with the roadbed or ground, causing loss of or damage to “mobile agricultural machinery and equipment”, unless:
(a) The incident causing the loss or damage occurs on land other than a roadway, highway or other paved or graveled surface; and
(b) The amount of loss or damage in any one occurrence exceeds the deductible.
If both (4)(a) and (b) apply, we will then pay the amount of loss or damage in excess of the deductible, up to the applicable Limit of Insurance. The deductible for such loss or damage is the applicable deductible shown in the Declarations, or $500, whichever is greater.
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; and
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 causes 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 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. But if loss or damage by a Covered Cause of Loss results, we will pay for that resulting loss or damage.
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, 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 described premises.
Analysis
Many of the changes in these exclusions are editorial in nature. See, for example, the exception to the exclusions following exclusion 2.t. The prior wording: ” if loss or damage by the 'specified causes of loss' or building glass breakage results, we will pay for that resulting loss or damage” left the intent of the exception open to interpretation. The current wording clarifies that an excluded peril may cause a “ specified cause of loss” to occur, which in turn damages covered property. The resulting damage to the covered property is covered. So, for example, wear and tear of wiring is excluded, but if the worn wire leads to a fire which damages a piece of covered equipment, that damage is covered.
Two changes are particularly noteworthy. The first of these is the addition of “leased employees” to the exclusion for loss caused by dishonest or criminal acts (2.g.). Before this addition, it could be argued that a leased employee was actually an employee of the leasing organization, and therefore outside the exclusion.
The second change is in exclusion 2.n. Whereas the prior form excluded loss caused by birds, vermin, rodents, insects or domestic animals, the current form excludes loss caused by nesting or infestation. Under the prior 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 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 covered under Section A.1.b.(2) is $2,000.
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 $2,000 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.
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 Lossa. You must see that the following are done in the event of loss or damage to Covered Property:
(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 property for inspection, testing and analysis, and permit us to make copies from your books and records.
(7) Send us a signed, sworn statement 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.
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 statement 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
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.
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
The wording of loss condition 3.(4), duties in event of loss, has been changed. The prior language required the insured, in event of a loss, to “take all reasonable steps to protect the Covered Property from further damage by a Covered Cause of Loss” The new language 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.
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.
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 $2,000 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 $2,000 per item, as described above.
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; 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, or
(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.
c. Water damage means accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any part of a system or appliance 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, for example, commonly used tools such as pliers and screwdrivers are not covered under this form.
The “specified causes of loss” are 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.
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