Summary: In an attempt to simplify the farm program, ISO moved many items that were previously oft repeated and hard to find into one separate form, FP 00 90 09 03. Those items that apply to all farm property coverages are on this form.
Topics covered: Additional coverages
Limits of insurance and deductible
Additional Coverages
A.Additional Coverages
1.Debris Removal
a.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.
b.Except as provided in Paragraph d. below, the most we will pay under this Additional Coverage is 25 percent of:
(1)The amount we pay for the direct physical loss of or damage to Covered Property; plus
(2)The deductible in this policy applicable to that loss or damage.
c.This Additional Coverage does not apply to costs to:
(1)Extract “pollutants” from land or water; or
(2)Remove, restore or replace polluted land or water.
d.Debris removal expense is included in the Limit of Insurance applying to the damaged property. But if:
(1)The amount payable for the sum of direct physical loss or damage and debris removal expense exceeds the applicable Limit of Insurance; or
(2)The debris removal expense exceeds the amount payable under the 25 percent limitation in Paragraph b. above; an additional 5 percent of the Limit of Insurance applying to the damaged property will be available to cover debris removal expense.
2.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.
3.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.
4.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.
5.Collapse
The following Additional Coverage applies when BROAD or SPECIAL Covered Causes of Loss is specified in the Declarations:
a.With respect to buildings:
(1)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;
(2)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;
(3)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;
(4)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.
b.We will pay for direct physical loss or damage to Covered Property, caused by collapse of a building or any part of a building that is covered under a Farm Property Coverage Form or that contains property covered under a Farm Property Coverage Form, 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 Part;
(2)Decay that is hidden from view, unless the presence of such decay is known to an “insured” prior to collapse;
(3)Insect or vermin damage that is hidden from view, unless the presence of such decay is known to an “insured” prior to collapse;
(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 Paragraphs b(1) through b(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.
The criteria set forth in Paragraphs a.(1) through a.(4) do not limit the coverage otherwise provided under the Causes of Loss Form . Farm Property for the causes of loss listed in Paragraphs b.(1), b.(4) and b.(5).
c.With respect to the following property:
(1)Foundations and retaining walls;
(2)Underground pipes, flues and drains;
(3)Cesspools and septic tanks;
(4)Walks, roadways, patios and other paved surfaces;
(5)Awnings;
(6)Fences;
(7)Outdoor equipment including yard fixtures;
(8)Swimming pools; and
(9)Bulkheads, docks, piers and wharves;
if the collapse is caused by a cause of loss listed in Paragraphs b.(2) through b.(6), we will pay for loss or damage to that property only if:
(1)Such loss or damage is a direct result of the collapse of a building insured under a Farm Property Coverage Form; and
(2)The property is Covered Property under a Farm Property Coverage Form.
d.This Additional Coverage will not increase the Limits of Insurance provided in this Coverage Part.
6.Pollutant Clean Up and Removal
We will pay your expense to extract “pollutants” from land or water at the “insured location” if the discharge, dispersal, seepage, migration , release or escape of the “pollutants” is caused by or results 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 on which the Covered Cause of Loss occurs.
This additional Coverage does not apply to costs to test for, monitor or assess the existence, concentration, or effects of “pollutants”. But we will pay for testing which is performed in the course of extracting the “pollutants” from the land or water.
The most we will pay under this Additional Coverage, for each location listed in the Declarations as an “insured location,” is $10,000 for the sum of all such expenses arising out of Covered Causes of Loss occurring during each separate 12 month period of this policy.
Analysis
Debris removal. When a covered cause of loss results in debris of covered property, the policy covers the insured's expense to remove such debris from the insured location. This expense is included in the limit of insurance for the covered property. The limit of liability for this additional coverage is included in the limit of insurance applying to the damaged property (25 percent of the actual amount paid). If that limit does not suffice to cover the expense of debris removal, an additional 5 percent of the limit is also available to apply exclusively to debris removal. For example: With a dwelling insured for $200,000 that suffers a $40,000 fire loss, the amount available for debris removal would be $10,000. If that were not enough to cover the debris removal expense, the insured could apply an additional $10,000 (5 percent of $200,000)..
Two exclusions and a time limit on reporting should be noted:
1. The time to report such a loss is limited to 180 days from the date of the direct loss to the covered property.
2. It is also clarified that this coverage does not apply to costs to extract pollutants from land or water or to remove, restore, or replace polluted land or water.
Reasonable repairs. Within the limit of liability for the type of covered property, the policy covers the reasonable cost of necessary repairs to protect the property from further damage after an insured loss. Although using slightly different language, this clause provides essentially the same coverage as the reasonable repairs clause of the ISO homeowners policy.
Damage to property removed for safekeeping. Property removed from a building endangered by a covered cause of loss is covered against damage by any cause for up to thirty days after its removal. Payment under this additional coverage is subject to—not in addition to—the limit of insurance applying to the property being removed.
The language of this clause differs in one important way from the language of the similar clause in the ISO homeowners forms. The farm form provides coverage for “loss to covered property damaged by any cause,” rather than the homeowners coverage “against direct loss from any cause.” ISO gives no indication in their explanatory material for the farm property coverage form that it intends a narrower meaning for the farm than for the homeowners coverage, but losses such as theft and mysterious disappearance have in a few court decisions been construed as loss of—but not damage to—property.
Fire department service charge. The farm property form pays for charges made when fire department is called to save or protect covered property from a covered cause of loss. This coverage is subject to two prerequisites:
1. The insured must have a contract with the fire department agreeing to the charge. The policy does not specify that the contract or agreement must be in writing; and
2. The property may not be located within the limits of the city, municipality, or fire protection district furnishing the response.
This is additional coverage, not subject to the insurance limits or deductible for the property coverage, and — unlike the similar clause in the ISO homeowners policy, which has a $500 limit — this coverage has no specified limit.
Collapse. Section 5 provides additional coverage—collapse. This provides limited collapse coverage on all property for which either broad or special—but not basic—causes of loss coverage applies.
This coverage is similar to the collapse coverage of the ISO homeowners forms, with minor differences in language and arrangement. There is only one possible difference in coverage—the farm property form covers “collapse from weight of people or personal property” but does not mention animals; the homeowners policy covers collapse from “weight of contents, equipment, animals, or people.” But since farm animals are personal property, this difference in wording has little effect on the coverage provided. Additionally, the homeowners policy does not specifically allow for coverage due in part to defective materials when there is another covered cause of loss, as allowed by the farm property form.
Pollutant Clean Up and Removal. Under additional coverage 6, the policy pays for the expense incurred to extract pollutants from land or water at the insured location. However, the policy does not provide coverage unless the release, discharge, or dispersal of such pollutants is caused by or results from a covered cause of loss. Such loss must occur during the policy period and be reported to the insurer within 180 days of the date of direct physical loss.
The current form includes an exclusion of the costs for pollution testing, monitoring, or assessment of the existence, concentration, or effects of pollutants. However, the form does pay for testing that accompanies the extraction of pollutants from land or water.
The limit on this coverage is $10,000 per policy period. However, that limit applies to each insured location.
B. FARM PROPERTY CONDITIONS
In addition to the Common Policy Conditions and the Conditions in the individual Coverage Forms, the following apply:
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 the 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 differences 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 Or Damage
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.Legal Action Against Us
No one may bring a legal action against us under a Coverage Form to which this Condition applies, unless:
a.There has been full compliance with all of 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.
6.Loss Payment
a.In the event of loss or damage insured against under a Coverage Form to which this Condition applies, 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, subject to Paragraph b. below;
(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 of like kind and quality, subject to Paragraph b. below.
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.The cost to repair, rebuild or replace does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use, or repair of any property.
c.We will not pay you more than your financial interest in the Covered Property.
d.We will give notice of our intentions within 30 days after we receive the proof of loss.
e.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 the terms of the Coverage Form, and
(1)We have reached agreement with you on the amount of loss; or
(2)An appraisal award has been made.
f.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.
g.We may elect to defend you against suits arising from claims of owners of property. We will do this at our expense.
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.Other Insurance and Service Agreement
a.You may have other insurance subject to the same plan, terms, conditions and provisions as the insurance under the applicable 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 the 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 Paragraph 8.a. above, we will pay only 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 farm machinery, vehicles or equipment covered under Coverage E 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.
9.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.
10.Transfer Of Rights Of Recovery Against Others To Us
If any person or organization to or for whom we make payment under this insurance 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 loss.
b.After a loss, only if at the time of loss, that party is one of the following:
(1)Someone insured by this insurance;
(2)A business firm:
(a)Owned or controlled by you; or
(b)That owns or controls you; or
(3)Your tenant.
This will not restrict your insurance.
11.Unoccupancy and Vacancy
a.If a building or structure is “vacant” or “unoccupied” beyond a period of 120 consecutive days, the Limits of Insurance applicable to the building or structure and its contents will be automatically reduced by 50 percent, unless we extend the period of “vacancy” or “unoccupancy” by endorsement made a part of the applicable Coverage Form.
b.In addition to the penalty described in Paragraph a. above, “unoccupancy” or “vacancy” results in certain exclusions or limitations applicable to certain causes of loss. See Causes of Loss Form – Farm Property.
GENERAL CONDITIONS
1.Concealment, Misrepresentation Or Fraud
This insurance is void in any case of fraud by you as it relates to this insurance 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 insurance;
b.The Covered Property;
c.Your interest in the Covered Property; or
d.A claim under this insurance.
2.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 insurance 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.
3.Liberalization
If we adopt any revision that would broaden the coverage under this insurance without additional premium within 45 days prior to or during the policy period, the broadened coverage will immediately apply to any Farm Property Coverage Form that is affected by the liberalization and is a part of this policy.
4.Mortgageholders
a.The term mortgageholder includes trustee.
b.We will pay for covered loss of or damage to buildings or structures to each mortgageholder shown in the Declarations in their order of precedence, as interests may appear.
c.The mortgageholder has the right to receive loss payment even if the mortgageholder has started foreclosure or similar action on the building or structure.
d.If we deny your claim because of your acts or because you have failed to comply with the terms of this insurance, the mortgageholder will still have the right to receive loss payment if the mortgageholder:
(1)Pays any premium due under the affected Coverage Forms at our request if you have failed to do so;
(2)Submits a signed, sworn proof of loss within 60 days after receiving notice from us of your failure to do so; and
(3)Has notified us of any change in ownership, occupancy or substantial change in risk known to the mortgageholder.
All of the terms of the affected Coverage Forms will then apply directly to the mortgageholder.
e.If we pay the mortgageholder for any loss or damage and deny payment to you because of your acts or because you have failed to comply with the terms of the Coverage Forms involved:
(1)The mortgageholder's rights under the mortgage will be transferred to us to the extent of the amount we pay; and
(2)The mortgageholder's right to recover the full amount of the mortgageholder's claim will not be impaired.
At our option, we may pay to the mortgageholder the whole principal on the mortgage plus any accrued interest. In this event, your mortgage and note will be transferred to us and you will pay your remaining mortgage debt to us.
f.If we cancel this policy, we will give written notice to the mortgageholder at least:
(1)10 days before the effective date of cancellation if we cancel for your nonpayment of premium; or
(2)30 days before the effective date of cancellation if we cancel for any other reason.
g.If we elect not to renew this policy, we will give written notice to the mortgageholder at least 10 days before the expiration date of this policy.
5.No Benefit To Bailee
No person or organization, other than you, having custody of Covered Property will benefit from this insurance.
6.Policy Period
We cover loss or damage commencing during the policy period shown in the Declarations.
Analysis
The eleven loss conditions of the farm property coverage form are as follows:
1.Abandonment.
2.Appraisal.
3.Duties in the event of loss or damage. The 2003 edition added a limitation, that in the event of a loss, the company has no obligation to provide coverage when the insured or a representative fails to comply with any of the specified duties in a way that is prejudicial to the insurer.
4.Insurance under two or more coverages.
5.Legal action against us.
6.Loss payment. Note the following:
A.This clause reserves to the insurer the same four options for payment of loss as under form CP 00 10 10 12: pay the value of the lost or damaged property; pay the cost of repairing plus any reduction in value of repaired items; take all or part of the property at an agreed or appraised value; or repair, rebuild, or replace with property of like kind and quality. The requirement that insurer give notice of its intent within thirty days after its receipt of the statement of loss is situated, so that it clearly applies to all four options.
B.The provision of the loss payment clause of form CP 00 10 that the insurer will pay the insured no more than the insured's financial interest in the property—which was omitted from the 1987 edition of this form—was added to the 1988 edition and remains in the current form.
C.The 2003 edition of the form adds a provision, not in CP 00 10, which specifies that the value of lost or damaged property or the cost to repair or replace the property will be determined in accordance with the valuation provision of the most current version of the coverage form.
7.Loss to pairs, sets, or parts
A.This clause, not found in the commercial property conditions, is similar to the pair or set clause of the ISO homeowners forms. It provides that if there is loss or damage to a any part of a pair or set, the insurer has the option to repair or replace any part to restore the pair or set to its value before the loss or pay the difference between the actual cash value of the pair or set before and after the loss.
B.The wording for parts has been added. The insurer will pay only for the value of the lost or damaged part.
8.Other insurance. Same as condition G of form CP 00 90 07 88. As to other insurance not written on the same basis as the farm form, the coverage once again provides that the insurer “will pay only the amount of covered loss or damage in excess of the amount due from that other insurance,” assuring that this form will apply only as excess.
9.Recovered property. Same as condition 5 of form CP 00 10.
10.Transfer of rights of recovery against others to us. Same as condition I of form CP 00 90, except adapted slightly, omitting references to “covered income,” which is not included in the farm property coverage.
11.Unoccupancy and Vacancy. There is much variation between lines of business with regard to the handling of vacant or unoccupied property. Under this form, if unoccupancy or vacancy extends beyond a period of 120 consecutive days, the limit of insurance is automatically reduced by 50 percent. This period may be extended by endorsement to the policy. Additionally, the Causes Of Loss Form – Farm Property, FP 10 60 02 09, excludes coverage for vandalism or breakage of glass if the building or structure was vacant for more than thirty or more consecutive days immediately preceding the date of loss.
The following six general conditions apply to the farm property insurance:
1.Concealment, misrepresentation, or fraud. Same as condition A of form CP 00 90 except for reference to “this insurance” instead of “this coverage part.”
2.Control of property. Same as condition B of form CP 00 90 with the same minor exception as in the concealment provision.
3.Liberalization. Same as condition E of form CP 00 90 with the same minor exception as previously mentioned. This provision also applies to any farm property coverage form that might be affected by a general broadening or coverage.
4.Mortgageholders. Same as additional condition two of form CP 00 10, except for reference to “coverage forms” instead of “coverage part.”
5..No benefit to bailee. Same as condition F of form CP 00 90.
6.Policy period. This condition limits coverage to loss or damage that begins during the policy period shown in the declarations. Unlike condition H—policy period, coverage territory— of form CP 00 90, this condition does not include a territorial definition. But note that under the Farm Property Form, FP 00 12 09 03, coverage extension C, household and personal property are protected anywhere in the world, while off-premises. Coverage under Farm Personal Property Coverage E and F, FP 00 13 09 03, is limited to the United States, Puerto Rico, and Canada.
C. DEFINITIONS
The following words and phrases have a special meaning throughout the Farm Property Coverage Forms:
1.”Business property” means property pertaining to any trade, profession or occupation other than farming.
2.”Dwelling” means a building used principally for family residential purposes, and includes mobile homes and modular and prefabricated homes.
“Dwelling” does not mean a building used in such agricultural operations as storage of farm produce, “livestock” or “poultry”.
3.”Farm personal property” means equipment, supplies and products of farming or ranching operations, including but not limited to feed, seed, fertilizer, “livestock”, other animals, “poultry”, grain, bees, fish, worms, produce and agricultural machinery, vehicles and equipment.
4.”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.
c.A student enrolled in school full time, as defined by the school, who was a member of your household before moving out to attend school, provided the student is under the age of:
(1)24 and your relative; or
(2)21 and in your care or the care of a person specified in Paragraph a.
5.”Insured location” means any location, including its private approaches, described in the Farm Property Declarations.
6.”Livestock” means cattle, sheep, swine, goats, horses, mules and donkeys.
7.”Money” means currency, coins and bank notes in current use and having a face value; also scrip, stored value cards and smart cards, travelers' checks, register checks and money orders held for sale to the public.
8.”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.
9.”Poultry” means fowl kept by you for use or sale.
10.”Securities” means negotiable and non-negotiable instruments or contracts representing either “money” or other property and includes:
a.Tokens, tickets, revenue and other stamps (whether represented by actual stamps or unused value in a meter) in current use; and
b.Evidences of debt used in connection with credit or charge cards, which cards are not issued by you;
But “securities” does not include “money”.
11.”Unoccupancy” or “unoccupied” means the condition of:
(a)A “dwelling” (except while being constructed) not being lived in; or
(b)Any other building or structure (except while being constructed) not being used; even if it contains furnishings or other property customary to its intended use or occupancy.
12.”Vacancy” or “vacant” means the condition of a building or structure (except while being constructed) not containing sufficient furnishings or other property customary to its intended use or occupancy.
13.”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.(See Causes of Loss Form – Farm Property)
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. This cause of loss does not include:
(1)The cost of filling sinkholes; or
(2)Sinking or collapse of land into man-made 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 apart or cracking of a plumbing, heating, air conditioning or other system or appliance (other than a sump system including its related equipment and parts), that is located on the “insured location” and contains water or steam.
Analysis
Section C of FP 00 90 consists of thirteen defined terms used with farm property. Wherever these terms appear in the text of any of the farm coverage forms, set in quotation marks, they are used with the meaning shown in the section C definition.
The defined terms are as follows:
1.Business property. Property pertaining to any trade, profession, or occupation other than farming. The term no longer defines as business property use of any premises or portion of “residence premises” for any business purpose. Note that “business property” does not include “farm personal property,” a separate and separately defined category of property (definition 3).
2.Dwelling. A building used principally for family residential purposes, including mobile homes and modular and prefabricated homes. The definition excludes buildings used in such agricultural operations as storage of farm produce, livestock, or poultry.
3.Farm personal property. This definition includes equipment, supplies, and products of farming or ranching operations. Examples of such operations include (but are not limited to) feed, seed, fertilizer, livestock, other animals, poultry, grain, bees, fish, worms, produce, and agricultural machinery, vehicles, and equipment.
4.Insured. The named insured shown in the declarations, and if that person is an individual, the following members of his household: relatives and any person under age twenty-one in the care of any person specified. A full-time student may be considered an insured if under age twenty-four and a relative of the named insured, or under age twenty-one and in the care of the named insured or a relative.
The definition of “insured” as used in this form tracks very closely with that in the homeowners policy. However, it should be noted that showing only a family corporation name as the named insured can restrict coverage. It does not give insured status to individuals or members of their household. When insuring a corporate family farm, showing as named insured both the corporation and the individuals owning the corporation and residing on the farm will avoid this restriction.
5.Insured location is defined as “any location, including its private approaches, described in the Declarations.” The practical effect of this definition is to expand the meaning of insured location to include private (but not public) roadways, paths, or walkways leading to the premises. The form uses the word “location” only in references to insured locations that, in the description of section A. coverage, are limited to those described in the declarations or elsewhere as provided in the farm property forms.
6.Livestock. References to livestock in the farm property form apply only to cattle, sheep, swine, goats, horses, mules, and donkeys. No other animals are included as livestock.
7.Money. Money refers to currency, coins, and bank notes that are in current use and have a face value. Also defined as “money” are travelers checks, register checks, and money orders held for sale to the public. Note that numismatic collections are not money.
8.Pollutants. This definition was added to the form in 1988. It 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.
9.Poultry. Only fowl “kept by you” (the named insured) for use or sale are included as poultry.
10.Securities. This term refers to negotiable and nonnegotiable instruments or contracts. It includes tokens, tickets, revenue, and other stamps and evidences of debt issued in connection with credit cards. The term does not include money.
11.Unoccupancy or unoccupied. The condition of a dwelling not being lived in or any other building or structure not being used (except while being constructed)—even if the dwelling or structure contains furnishings or other property customary to its intended use or occupancy.
12.Vacancy or vacant. The condition of a building or structure (except under construction) not containing sufficient furnishings or other property customary to its intended use or occupancy.
13.Specified causes of loss. Whenever this phrase appears in the policy, it means the following causes of loss: fire; lightning; explosion; windstorm or hail; smoke, including soot, fumes or vapors; 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; and water damage. This form uses the same definitions for sinkhole collapse, falling objects, and water damage as found in the commercial property Causes Of Loss – Special form, CP 10 30 10 12. However, the term “water” is not found in the Causes Of Loss Form – Farm Property, FP 10 60 09 03. As used here, water damage is the accidental discharge of water or steam as the direct result of breaking apart or cracking of heating, plumbing or air conditioning, including related equipment, other than a sump pump, that is located on the insured location.
D. LIMITS OF INSURANCE
The most we will pay for loss or damage in any one occurrence is the lesser of the following:
1.The applicable Limit of Insurance shown in the Declarations; or
2.The applicable Special Limit of Insurance described under Section A of each applicable Coverage.
E. DEDUCTIBLE
We will not pay for loss, damage or expense in any one occurrence until the amount of loss, damage or expense exceeds the applicable Deductible shown in the Declarations. We will then pay the amount of loss, damage or expense in excess of that Deductible, up to the applicable Limit of Insurance or Special Limit of Insurance.
In the event that you sustain, from the same occurrence, losses or expenses in excess of the applicable Deductibles under two or more Coverages, only the highest applicable Deductible amount will apply.
Analysis
Form FP 00 90 automatically provides a $10,000 annual aggregate limit of insurance applicable exclusively to the costs to remove pollutants from land or water at an insured location. A separate aggregate applies to each location listed as an insured location in the declarations.
FP 00 90 includes an additional coverage that provides for the removal of the debris of covered property for an amount equal to 25 percent of the loss (before application of the deductible). An additional 5 percent of the limit of insurance applying to the damaged property is available under this form if the debris removal expense exceeds the amount payable under the 25 percent limitation or if the sum of the physical damage loss and the debris removal expense exceeds the applicable Limit of Insurance.
Form FP 00 90 imposes a loss condition that reduces the applicable limit of insurance by 50 percent if a building or structure is unoccupied or vacant more than 120 consecutive days.
Section D of the form states that the most the insurer will pay for loss or damage in any one occurrence is the applicable limit of insurance shown in the declarations. It also mentions that there are special limits of insurance for some property items.
Separate deductible amounts may be applied to different items, but the deductible applies only once for each occurrence. Under the farm rules, division four of the Commercial Lines Manual, the basic deductible is $250, which may be reduced to $100 with a 10 percent increase in rate, or increased to $500, $1,000, $2,500, $5,000, $7,500, $10,000, or $25,000, with progressive reductions in rate. Rate factors for $500 and $1,000 are .95 and .90 respectively of the rate for $250 deductible. Factors for the other deductibles are “A” rated—refer to insurer.
The deductible section provides that the insurer will not pay for any loss until the amount of loss exceeds the amount of the deductible shown in the declarations and will then pay only the amount of loss in excess of the deductible, up to the limit of insurance.
It also provided that, if two or more items of coverage with different deductibles are damaged in the same occurrence, only the highest deductible is applied to the entire amount of loss. This clause seems to suggest that, for a loss involving items with different deductibles, if the loss to the item with the largest deductible is less than the amount of that deductible, payment for loss to other items is reduced by applying the larger deductible to the entire loss.
Assume, for instance, two items, with a $2,500 deductible and a $250 deductible respectively, and a $4,000 loss, $2,000 to each item. According to the language of the clause, the $2,500 deductible is applied to the $4,000 total amount of the loss, allowing payment of only $1,500, whereas applying separate deductibles (or disregarding the loss to the first item) allows payment of nothing for the first item and $2,000 minus $250 or $1,750 for the second.
A more equitable approach in this situation would be to disregard the loss that is below the deductible, paying nothing for it, and apply the next highest deductible to the remainder of the loss, whenever this will result in higher payment to the insured.