Questions - Chapter 5 Farm Insurance

Question 1

Define Farming.

Answer 1

The ownership maintenance or use of premises for the production of crops or the raising or care of livestock, including all necessary operations.

Question 2

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

Answer 2

• The products grown or produced.
• The types of specialized machinery or equipment used.
• The types of buildings required. (the more specialized the farming operation, the more sophisticated the buildings needed)

Question 3

Identify four coverages generally provided by most farm policies.

Answer 3

1) Dwelling building and personal property.
2) Major outbuildings and contents.
3) Machinery and equipment.
4) General Liability.

Question 4

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

b) Identify three types that are excluded from the “major outbuildings and contents”.

Answer 4

1) Fences
2) Yard Lights
3) Corrals

b)

i) Buildings or structures used in whole or in part for manufacturing or commercial purposes.
ii) Windmills, wind charges, and their towers, independently-erected television or radio towers and their appurtenances.
iii) All damage to metal roofs and siding.

Question 5

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

Answer 5

Windmills, wind charges, and their towers, independently-erected television or radio towers and their appurtenances.

Question 6

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

Answer 6

1) Less than 15 years old.
2) Constructed principally of new materials.
3) On a permanent foundation.
4) In use for its originally intended purpose.

Question 7

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 three requirements before the insured will receive the balance.

Answer 7

1) The building is repaired or replaced with a building designed for the same purpose.
2) The repair or replacement is completed within nine months of the date of the loss or damage.
3) The building insured is repaired or replaced within 200 feet of the building which was destroyed.

Question 8

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

Answer 8

1) Farm tools and repair parts.
2) Grain dryers
3) Irrigation equipment
4) Machinery used in custom farming operations.

Question 9

Identify six exclusions to farm machinery.

Answer 9

1) Resulting from coupling or uncoupling operations.
2) To data.
3) Caused by electrical currents other than lightning, excepting resultant damage caused by fire or explosion.
4) To property used for logging, forestry, brush cutting, and clearing or sawmill operations.
5) Caused by wear, tear, gradual deterioration, latent defect, dampness of atmosphere, freezing or extremes of temperature, insects, rodents, or vermin.
6) To tires or tubes unless the loss or damage is caused by fire, windstorm, or theft.

Question 10

Explain the following policy extensions and limitations concerning equipment:

i) Loss of Use
ii) Newly Acquired Machinery
iii) Replacement Cost

Answer 10

i) When there’s damage to machinery, it may be necessary for the insured to rent a substitute machine in order to complete work already underway. Rental equipment when machinery is being repaired or replaced.
ii) When additional or replacement machinery is acquired during the policy period, coverage is automatically extended for 30 days. Farmers should advise their insurers when new equipment is purchased to avoid a gap in coverage.
iii) Some insurers will provide coverage for equipment that’s five years or newer.

Question 11

Define the following:

i) Residence Employees

ii) Farm Employees

Answer 11

i) Residence employees are those who duties are exclusively in connection with the maintenance or use of the residence premises.
ii) Farm employees may be paid for their work and who are hired on a part-time/full-time/seasonal basis to perform duties principally connected with farming activities. Also, people 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 money.

Question 12

Explain the coverage usually provided for volunteers and include in your answer if the coverage can be amended.

Answer 12

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 13

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 13

Coverage would extend to include the insured’s liability for bodily injury or property damage to others arising out of:

i) The cutting and baling of hay along a municipal roadway.
ii) The driving of farm machinery on public roads.

Question 14

Identify four types of motor vehicles insured by the policies.

Answer 14

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

Question 15

Explain the need for ‘Employers Liability’ coverage.

Answer 15

There is no coverage provided when other employees are injured (besides resident employees) in their course of employment with the insured. Farmers will normally purchase the Employer’s Liability Coverage Rider.

Question 16

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

Answer 16

• 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 reasonably be performed by one person and injury results.

Question 17

Why would an insured purchase the ‘Voluntary Compensation Rider’.

Answer 17

Employees can be injured or killed in an accident through no fault of the insured. To ensure that employees and their beneficiaries receive some benefits in such cases, many farmers also purchase the Voluntary Compensation Rider.

Question 18

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

Answer 18

1) Smoke from grass fire originating on the insured’s premises.
2) Due to vapours from hog, dairy, or poultry operations.
3) Chemical drift during spraying of field crop chemicals.
4) Contamination of rivers, lakes, streams, and underground water sources from manure piles.

Question 19

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

Answer 19

1) Heat, smoke, or fumes from a hostile fire.

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

Question 20

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

Answer 20

Photographs are usually required for all buildings including the dwelling .