Chapter 5

Question 1

Define “farming”

Answer 1

The ownership, maintenance or use of premises for the production of crops or the raising of livestock, including all necessary operations. Farming also includes the operation of roadside stands and farm markets maintained principally for the sale of the insured’s own farm products

Question 2

There are many types of farms. Identify and briefly explain the basic differences between them

Answer 2

• The products grown or produced
  Farms produce a variety of products including vegetables, potatoes, fruits, honey, tobacco, grains, meats, eggs and dairy products
• The types of specialized machinery or equipment used
  The machinery or equipment needed to operate a grain farm varies significantly from that needed to maintain a specialized dairy, poultry, hog or bee keeping operation
• The types of buildings insured
  Generally, the more specialized the farming operation, the more sophisticated the buildings needed. As a result, there can often be a substantial difference in the values of buildings between farms

Question 3

Identify the four coverages generally provided by most farm policies

Answer 3

• Dwelling building and personal property
• Major outbuildings and contents
• Machinery and equipment
• General Liability

Question 4

Identify three types of farm structures that might be insured under “major outbuildings and contents”

Answer 4

• Barns
• Workshops
• Granaries

Question 5

Identify three types of structures that are excluded from the form

Answer 5

• Windmills
• Wind chargers and their towers
• Independently-erected television or radio towers and their appurtenances

Question 6

Identify five types of structures that no coverage is provided for windstorm and hail

Answer 6

seed cleaning plants
workshops
metal roofs
metal siding

Question 7

Outline the four requirements before replacement cost will be provided on major outbuildings

Answer 7

• Less than 15 years old
• Constructed principally of new materials
• On a permanent foundation
• In use for its originally intended purpose

Question 8

The “Deferred Settlement Clause” was designed by insurers to avoid paying the full amount of insurance purchased when outbuildings are not replaced after a loss. After a loss the insured will receive an initial payment of not more than 50%. Outline the three requirements before the insured will receive the balance

Answer 8

• The building is repaired or replaced with a building designed for the same purpose
• The repair or replacement is completed within nine months of the date of the loss or damage; and
• The building insured is repaired or replaced within 200 feet of the building which was destroyed

Question 9

Identify four types of machinery that represent a greater than average exposure to loss and therefore require an additional premium

Answer 9

• Farm tools and repair parts
• Grain dryers
• Irrigation equipment
• Machinery used in custom farming operations

Question 10

Identify six exclusions to farm machinery

Answer 10

• Caused by electrical currents other than lightning, excepting resultant damage caused by fire or explosion
• Mechanical breakdown, excepting resultant damage caused by fire or explosion
• To property used for logging, forestry, brush cutting, and clearing or sawmill operations
• To tires or tubes unless the loss or damage is caused by fire, windstorm or theft, or is coincident with other loss or damage insured by the policy
• To property engaged in custom farming or while in transit in connection with custom farming, unless permission for custom farming is stated on the coverage summary page
• Caused by or resulting from wear, tear, gradual deterioration, latent defect, dampness of atmosphere, freezing or extremes of temperature, insects, rodents, vermin or skunks

Question 11

Briefly explain the following policy extensions and limitations concerning equipment:

Loss of Use

Answer 11

Reimburses the insured for expenses incurred in the rental of a substitute machine in order to complete work already underway. Coverage is provided only when machinery insured is being repaired due to damage from an insured peril.
Increased limits can be purchased for an additional premium

Question 12

Briefly explain the following policy extensions and limitations concerning equipment:

Newly Acquired Machinery

Answer 12

When additional or replacement machinery is acquired during the policy period, coverage is usually automatically extended for a period of 30 days
The limits provided under this extension can vary significantly between insurers

Question 13

Briefly explain the following policy extensions and limitations concerning equipment:

Replacement Cost

Answer 13

Some insurers will agree to provide replacement cost coverage on machinery which is less than five years old

Question 14

Define “Residence Employees”

Answer 14

Those whose duties are exclusively in connection with the maintenance or use of the residence premises. Such employees are not involved in the business or farming pursuits of the insured

Question 15

Define “Farm Employees”

Answer 15

Those who are paid for their work and who are hired on a part-time, seasonal or full time basis to perform duties principally connected with farming activities outside the insured’s dwelling
OR
Persons engaged in farm related work on behalf of the insured in a neighbourly exchange of assistance for which the insured is not obligated to pay any money

Question 16

Briefly explain the coverage usually provided for volunteers and include in your answer if the coverage can be amended

Answer 16

Some farmers receive occasional help during busy periods from friends, children, and other relatives, who do not live on the farm. When such persons are not compensated for their work, or are not engaged in a neighbourly exchange of assistance, they do fall within the definition of “persons insured” under the policy

Question 17

Under the “Farm Operations Liabilities”, in addition to farming operations conducted on the insured’s premises, unless otherwise excluded, identify two operations away from the insured’s premises that coverage would be provided

Answer 17

• The cutting and baling of hay along a municipal roadway

- The driving of farm machinery on public roads

Question 18

Identify four types of motor vehicles insured by the policy

Answer 18

• Utility, boat, camp or home trailer
• Recreational motor vehicle
• Crawler or farm type tractors and farm implements; or
• If not subject to motor vehicle registration, any equipment which is designed for use principally off public roads

Question 19

Explain the need for “Employers Liability” coverage

Answer 19

Farmers should purchase Employer’s Liability Coverage because “farm employees” are not subject to Workers’ Compensation and may sue their employer for injuries they receive on the job

Question 20

Outline three situations where the insured will likely be held legally liable for the injuries sustained by an employee

Answer 20

• Improper tools or equipment are provided for the use of the employee and injury results from their use
• Directions on how to perform a certain task are incorrect and injury results from following such directions
• A task is assigned to the employee which could not be reasonably performed by one person and injury results

Question 21

Outline why an insured should purchase “Voluntary Compensation Rider”

Answer 21

Employees can be injured or killed in an accident through no fault on the insured. In such cases there would be no recourse against the insured under the Employee’s Liability Rider. The Voluntary Compensation Rider, provides the farm employee or their family with some compensation

Question 22

Environment Liability losses are generally excluded from the “Farmshield Liability Rider” because of the potential catastrophe exposure. Identify four sources of losses excluded

Answer 22

• Smoke from grass fire originating on the insured’s premises
• Due to vapours from hog, dairy or poultry operations
• Contamination of rivers, lakes, streams, and underground water sources from manure piles
• Chemical drift during spraying of field crops

Question 23

Most insurers agree that the exclusion with not apply when the damage is caused by accident. List two additional events that many insurers are prepared to respond to

Answer 23

• Heat, smoke or fumes from a hostile fire; and

- Accidental chemical drift from spraying operations on the insured’s premises, other than by means of an aircraft

Question 24

Identify six structures that very often insurers will require photographs of before providing coverage

Answer 24

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