3/D - Farm Insurance Flashcards
Farm
A property where a farmer or rancher both resides and conducts commercial business
A farmer needs:
- Homeowners coverage for personal property
- Commerical coverage for business assets
- Farm Insurance, combining both in one policy
A rancher needs all of the above and:
- Additional protection for livestock
Types of Insurance Provided
- Property insurance for dwelling and contents
- Scheduled and unscheduled farm personal property insurance
- Mobile agricultural machinery and livestock coverage
- Farm liability insurance
Eligibility
Eligibility requirement: farmer must live and conduct business on the insured property.
Properties not eligible:
- Farms that manufacture or process goods
- Farms for raising race or show animals
- Some vacant farm properties
Farm Property Coverage Forms
- Cover direct losses to physical property on the insured’s farm
- List types of property covered
- Use attached Causes of Loss forms to list covered perils
Coverage A - Dwelling
- For main dwelling, attached structures, and necessary materials
- Up to $5,000 for damaged grave markers
- Not covered: trees, shrubs, plants, or lawns (except with endorsement)
- Coverage extensions:
a. Debris removal
b. Pollution clean-up
c. Reasonable repairs
d. Fire department service charge
e. Consequential loss
Coverage B - Other Private Detached Structures
Covers private structures not attached to main dwelling:
- Detached garages or porches
- Guesthouses
- Patios
- Sheds (unless used for farming purposes)
- Outdoor antennas (up to $1,000 per occurrence)
- Limit: 10% of Coverage A limit
Coverage C - Household Personal Property
- Covers theft or damage of personal property
- Includes personal property of family and guests staying on the premises
- Has a limit of 50% of Coverage A
- Sets special limits for some items
Coverage C - Items with Special Limits
- $200 on cash, platinum, and gold (other than goldware)
- $1,500 on letters of credit, manuscripts, passports, and securities
- $1,500 on watercraft and associated engines and trailers
- $1,500 on trailers not used for watercraft or farming
- $2,500 on business personal property while on insured’s premises
- $500 on business personal property NOT located on insured’s premises
- $1,500 on electronics in or on a motor vehicle
- $1,500 on electronics used primarily in the operation of the farm or business
Coverage C - Special Limits for Theft
- $2,500 for furs, jewelry, precious stones, and wristwatches
- $2,500 for pure goldware, silverware, and other items whose value is principally derived from gold or silver content
- $3,000 for firearms
Coverage D - Loss of Use
- Pays additional living expenses resulting from a covered peril
- Includes Fair Rental Value if insured had tenants
- Applies when civil emergency, such as fire or flooding, makes home uninhabitable
- Sets a limit of 10% of Coverage A
Farm Commercial Coverage
Farm Insurance combines homeowners coverage and commercial coverage.
Farm Personal Property: Scheduled vs. Unscheduled
Scheduled Farm Personal Property
- Insured selects items from a farm inventory
- Policy insures only selected items, each for an assigned value
- Separate Causes of Loss forms for each insured item
Unscheduled Farm Personal Property
- Insures all from property
- Provides blanket coverage for all items together
- Single Causes of Loss form for all items covered
Coverage E - Scheduled Farm Personal Property
Covers:
- Farm machinery
- Grain, hay, straw or fodder stored in buildings or structures, or stored in the open in bales, stacks, or trucks
- Livestock on or away from the premises
- Farm packing materials and supplies
- Farm implements
- Specialized machinery and/or tools used in farming
- Computers and software used in farm management
- Portable, temporary buildings and/or structures
Coverage F - Unscheduled Farm Personal Property
- Gives blanket coverage of all farm items
- Settles claims at Actual Cash Value
- Requires coinsurance for full coverage to apply
Coverage G - Barns, Outbuildings, and Other Farm Structures
Covers:
- Barns, Silos, and Granaries
- Pens and Fencing (except field and pasture fencing)
- Corrals and Livestock chutes
- Feeding structures
- Outdoor masts, towers, and antennae
- Farming storage structures
- Construction or repair materials kept on or adjacent to these structures
Valuation: Actual Cash Value unless noted otherwise
Extension and Exclusions
Extension:
Private light and power poles (limit: $250 per occurrence)
Exclusions:
- Land
- Field or pasture fencing
- Foundations
- Pilings or piers
- Cost of excavations, grading, or filling
- Structures also used as dwellings
Inland Marine Forms
Two Inland Marine Forms are commonly added to Farm policies:
- Mobile Agricultural Machinery and Equipment Form
- Livestock Floater
These are available alone or with Farm Insurance Policy
Mobile Agricultural Machinery and Equipment Form
- Covers agricultural machines and their tools and equipment
- Allows higher limits of insurance than other forms
- Provides scheduled or unscheduled (blanket) coverage
- Requires coinsurance for full coverage to apply
- Gives open-peril coverage, with Actual Cash Valuation
Property not covered:
- Equipment for sale or on consignment
- Machinery used in logging or forestry
Livestock Floater
- Covers horses, mules, cattle, swine, sheep, and goats
- Provides scheduled or unscheduled coverage
- Includes animal injured or killed while in transit
- Provides named-peril coverage
- Requires coinsurance from the insured
Farm Property - Causes of Loss Forms
- Every farm coverage followed by Causes of Loss form
- Form can be Basic, Broad, or Special
- Very similar to other policy types, but with extra livestock protections
Basic Form - Covered Perils
- Fire
- Lightning
- Smoke
- Wind
- Hail
- Explosions
- Riot
- Vandalism
- Civil Commotion
- Theft
- Aircraft
- Vehicles
- Sinkhole Collapse
- Volcanic Activity
- Loss of Livestock by Flood
- Loss of Livestock by Earthquake
Broad Form
Covers all Basic Form perils, plus:
- Falling objects
- Weight of ice, sleet or snow
- Glass Breakage
- Sudden and accidental tearing apart
- Accidental discharge or leakage of water or steam
- Sudden and accidental discharges of electricity
- Collapse
- Electrocution of covered livestock
- Attack of covered livestock by wild animals (excluding sheep)
- Drowning of covered livestock
- Accidental shooting of covered livestock
- Loading and unloading accidents
Special Form Exclusions
- Normal wear and tear, or purposeful neglect
- Rust, corrosion or decay
- Settling, cracking or shrinking of structures
- Infestation by rodents, vermin or birds
- Mechanical breakdown
- Disappearance of farm property, unless proof provided the property was stolen
- Voluntary, fraudulent parting of farm property
- Unauthorized instructions to transport property
- Vandalism or breakage of glass if vacant 30 days
- Dishonest or criminal acts by the insured
- Acts of war or nuclear hazards
Farm Liability Coverages
Farmers face the same liability risks as any other business.
Farm Liability Insurance:
- protects the farmer against liability for harm caused to others
- includes attorney fees and court costs
- is available in several different types
Bodily Injury & Property Damage Liability
- covers damage or injury caused by normal business operations
- applies to damages that occur on insured premises
Personal & Advertising Injury
- pays for claims not involving property damage or bodily injury
- includes malicious prosecution, wrongful entry or eviction, libel or slander
Medical Payments
- covers medical injuries suffered on farm property or because of farmer’s activities
- includes medical, dental, hospital, and funeral costs
Farm Product Liability
Covers injury or illness caused by eating the farmer’s products
Farm Pollution Liability
- covers pollution damage caused by farm property and operations
- includes animal waste overflow, chemical spills
- does not include chemical over-spray from aircraft (separate endorsement required)
Custom Farming Liability
- covers farmers doing contract work
- will not apply if a farmer makes more than $5,000 per year as a contractor
Farm Employees Liability
- is available by endorsement
- covers employee injuries not allowed under Workers’ Comp
Agritainment
- refers to farm-based entertainment
- poses risks to farmers and farm insurers
- excluded from farm form
- endorsements can add this coverage back in:
a. Agritainment-Property: adds coverage for damage to the farmer’s property caused by agritainment
b. Agritainment-Liability: covers the farmer’s liability for injuries that occur during agritainment activities on his farm
Example: - a child falls off of a hayride and breaks his leg
- teenagers accidentally start a fire in the farmer’s barn during a harvest festival
Loss Settlement Valuations
- actual cash valuations, unless noted differently
- if replacement cost coverage, coinsurance is required
Coinsurance Requirement Met
Insurer pays smallest of the following:
- The replacement cost of the damaged property
- The amount actually spent on necessary repairs or replacements
- The policy limit
Coinsurance Requirement Not Met
Insurer pays the larger of the following:
- The actual cash value of the damaged property
- A fraction of the replacement cost: based on how much insurance the claimant had compared to how much they should have had
RC Claim Process
Process for Paying Replacement Cost Claims
- Insurer pays actual cash value at first.
- Claimant has 180 days to say they will repair or replace damaged property.
- After completing replacement, claimant must submit another claim.
- Then insurer will pay for full repair or replacement cost.
