Farm Property Flashcards
Farmer Annie has a loss that is covered by Coverage A of her Farm Property policy. Annie has met the co-insurance requirement and her Coverage A limit is $100,000. The amount to repair her dwelling will be $10,000 based on estimates and she has submitted a claim to her insurance company in that amount. Which of the following statements best describes how her insurance company will settle this claim?
Answer Choices: Select the Correct Answer
The insurer will issue a check for $10,000 to the contractor to complete the repairs.
The insurer will issue a check for the full replacement cost value only after Annie borrowed the money to make the repairs.
The insurer will issue a check to Annie immediately for the full replacement cost of the repairs.
The insurer will issue a check to Annie for the actual cash value of the repairs and Annie will be required to submit a supplemental claim after the repairs are made to receive the full replacement cost value.
The insurer will issue a check to Annie for the actual cash value of the repairs and Annie will be required to submit a supplemental claim after the repairs are made to receive the full replacement cost value. is correct.
EXPLANATION:
When the cost of the repair or replacement is more than either $5,000 or 5% of the applicable limit of insurance, the only basis for settlement under Coverage A is actual cash value until the repairs are actually made. Then, the remainder of the claim, up to the replacement cost, will be made after receiving the supplemental claim from the insured.
Coverage A of a Farm Property policy provides coverage in which of the following amounts for any one tree, shrub, or plant?
Answer Choices: Select the Correct Answer
$250.
$0.
5% of the Coverage A limit.
10% of the Coverage C limit.
The correct answer is: $0.
EXPLANATION:
Coverage A of a Farm Property policy excludes coverage for trees, shrubs, plants and lawns. Any coverage that may be included on the policy would be found in the coverage extensions.
All of the following statements are TRUE of Coverage B of a Farm Property policy, EXCEPT:
Answer Choices: Select the Correct Answer
Provides coverage for structures that are separated from the insured dwelling by a clear space.
Provides 10% of the Coverage A limit.
It is additional insurance and does not reduce the Coverage A limit.
Does not cover structures that are attached to the covered dwelling by a fence as the structure would then be considered a part of the dwelling.
Does not cover structures that are attached to the covered dwelling by a fence as the structure would then be considered a part of the dwelling. is correct.
EXPLANATION:
The answer choice that is NOT TRUE is: “Does not cover structures that are attached to the covered dwelling by a fence as the structure would then be considered a part of the dwelling.” Coverage B DOES cover structures that are attached to the insured dwelling by a fence.
Under Coverage A of a Farm Property policy, when the insured meets the co-insurance requirement, a claim will be settled:
Answer Choices: Select the Correct Answer
On an actual cash value basis.
At 80% of the replacement cost.
On the basis of repair or replacement cost.
At replacement cost plus the cost of the enforcement of any ordinance or law.
On the basis of repair or replacement cost. is correct.
EXPLANATION:
When the co-insurance requirement is met, a claim will be settled on the basis of the repair or replacement cost.
The Building Additions and Alterations coverage extension of a Farm Property policy:
Answer Choices: Select the Correct Answer
Applies to Coverage A when the named insured is an owner.
Applies to Coverage C when the named insured is a tenant.
Applies to Coverage D when the named insured is a tenant.
Applies to Coverage B when the appurtenant structure is owned.
Applies to Coverage C when the named insured is a tenant. is correct.
EXPLANATION:
The Building Additions and Alterations coverage extension of the Farm Property policy applies to losses for additions, alterations, fixtures, improvements, or installations made at the expense of the insured who is a tenant and made improvements to the part of the dwelling they occupy.
A Farm Property policy with the basic causes of loss selected would include coverage for all of the following perils, EXCEPT:
Answer Choices: Select the Correct Answer
Hail.
Vehicles.
Collapse.
Lightning.
Collapse. is correct.
EXPLANATION:
“Collapse” is a broad cause of loss peril, not a basic peril.
The Livestock Coverage form, of a Farm Property policy requires that livestock be covered:
Answer Choices: Select the Correct Answer
For 80% of its value.
On a blanket basis.
For 90% of its value.
On an open perils basis.
For 80% of its value. is correct.
EXPLANATION:
The Livestock Coverage form has a co-insurance requirement. The livestock must be insured for 80% of its value.
Under a Farm Property policy, the electrocution of covered livestock:
Answer Choices: Select the Correct Answer
Is excluded.
Is covered as part of the broad form perils for Farm property insurance.
Is covered as part of the basic form perils for Farm property insurance.
Is not mentioned as a coverage or an exclusion in the policy.
Is covered as part of the broad form perils for Farm property insurance. is correct.
EXPLANATION:
The electrocution of covered livestock is covered by the special broad form perils for farm risks.
Coverage G of a Farm Property policy would provide coverage for all of the following, EXCEPT:
Answer Choices: Select the Correct Answer
A garage located at the end of the driveway leading to the farmhouse.
A silo located a couple of miles away from the barn but still located on the farm premises.
A garage located on the farm premises used to park the vehicles used to transport livestock.
A barn where the livestock are kept.
A garage located at the end of the driveway leading to the farmhouse.
EXPLANATION:
Coverage G is used to cover “farm other structures” that are used in the farm business. Coverage G does not cover any building that is related to the dwelling.
Farmer Jane has her owned farm premises and dwelling covered by a Farm Property policy. Jane’s 15-year-old daughter Vanessa, takes Jane’s credit card from her wallet while Jane is distracted. Vanessa uses the card to charge $5,000 worth of clothing online. Jane’s loss:
Answer Choices: Select the Correct Answer
Will be covered under the Additional Coverages of her policy.
Will be paid under Coverage C of her policy.
Will not be covered as credit card losses when used by a resident of the insured’s household are specifically excluded.
Will be covered because Jane’s daughter is a resident of the household.
Will not be covered as credit card losses when used by a resident of the insured’s household are specifically excluded. is correct.
EXPLANATION:
The Additional Coverage would pay the loss under certain circumstances but credit and debit card losses are specifically excluded if the card was used by a member of the household.
A Farm Liability policy provides each of the following coverages, EXCEPT:
Answer Choices: Select the Correct Answer
Bodily injury and property damage.
Personal injury and advertising injury.
Medical payments.
Professional liability.
The correct answer is: Professional liability.
EXPLANATION:
Professional liability coverage is provided by other types of policies, but not under farm liability coverage.
Coverage H of the Farm Liability policy provides coverage for:
Answer Choices: Select the Correct Answer
Bodily injury and property damage.
Medical payments.
Personal injury.
Pollutants.
Bodily injury and property damage. is correct.
EXPLANATION:
Coverage H of the Farm Liability policy provides coverage for bodily injury and property damage that the insured is legally obligated to pay.
Which of the following would be covered by a Farm Liability form/policy?
Answer Choices: Select the Correct Answer
Liability arising out of the wholesaling of the farm’s products.
Those activities that are considered to be “farming” under the policy.
Those activities needed to sort and package the farm’s products.
Liability arising out of the labeling of the farm’s products.
Those activities that are considered to be “farming” under the policy. is correct.
EXPLANATION:
Those activities that are defined as “farming” under the policy are covered by a Farm Liability form/policy.
The custom farming endorsement should be attached to a Farm Liability policy when the annual receipts for farming for others are above:
Answer Choices: Select the Correct Answer
$5,000.
$4,000.
$10,000.
$7,500.
$5,000. is correct.
EXPLANATION:
The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year.
A Farm Liability policy automatically includes which of the following?
Answer Choices: Select the Correct Answer
Coverage for liability incurred due to aircraft spraying.
Personal injury liability.
Coverage for employees not eligible for workers’ compensation.
Coverage for livestock mortality.
The correct answer is: Personal injury liability.
EXPLANATION:
Personal injury liability is the only coverage in the answer choices that is automatically included in a farm liability policy. If the insured farmer would like to add the other coverages mentioned, they can be added by endorsement.
