Farm Insurance

A property where a farmer or rancher both resides and conducts commercial business A farmer needs: Homeowners coverage for personal property Commercial coverage for business assets Farm insurance, combining both in one policy A rancher needs all of the above and Additional protection for livestock Introduction

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 Types of Insurance provided

Eligibility 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 the types of property covered Use attached Causes of Loss forms to list covered perils Farm Property Coverage Forms

Coverage A - Dwelling For main dwelling, attached structures, and necessary materials UP to $5000 for damaged grave markers Not covered: trees, shrubs, plants, or lawns (except with endorsement) Coverage extensions Debris removal Pollution clean-up Reasonable repairs Fire department service charge Consequential loss

Coverage B – Other Private Detached Structures Detached garages or porches Guesthouses Patios Sheds Outdoor antennas (up to $1000 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 w/ Special Limits $200 on cash, platinum, and gold $1500 on letter of credit, manuscripts, passports, and securities $1500 on watercraft and associated engines and trailers $1500 on trailers not used for watercraft or farming $2500 on business personal property while on insured’s premises $500 on business personal property NOY located on insured’s premises $1500 on electronics in or on a motor vehicle $1500 on electronics used primarily in the operation of the farm or business

Coverage C – Special Limits for Theft $2500 for furs, jewelry, precious stones, and wristwatches $2500 for pure goldware, silverware, and other items whose value is principally derived from gold or silver content $3000 for firearms Coverage C – Special Limits for Theft

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 Farm Commercial Coverage

Insured selects items from a farm inventory Scheduled Farm Personal Property Unscheduled 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 Insures all farm Property Provides blanket coverage for all items together Single Causes of loss form for all items covered

Coverage E – Scheduled Farm Personal Property 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 or tools used in farming Computers and software used in farm management Portable, temporary buildings or structures

Unscheduled Farm Personal Property Gives blanket coverage of all farm items Settles claims at ACV Requires coinsurance for full coverage to apply Unscheduled Farm Personal Property

Coverage G – Barns, Outbuildings, and other farm structures covers: Barns, silos, and granaries Pens and 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: ACV, unless noted otherwise

Extension and Exclusions 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 dwelling

Inland Marine Forms Two forms commonly added: Mobile Agricultural Machinery and Equipment form Livestock floater Available alone or with farm policy

Mobile Agricultural Machinery and Equipment 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 ACV 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 schedule or unscheduled coverage Includes animal injured or killed while in transit Provides named-peril coverage Requires coinsurance from the insured

Every farm coverage followed by Causes of Loss forms Form can be Basic, Broad, or Special Very similar to other policy types, but with extra livestock protections Causes of Loss Forms

Farm Covered Perils (BASIC) Fire Civil Commotion Lightning Theft Smoke Aircraft Wind Vehicles Hail Sinkhole collapse Explosions Volcanic activity Riot Loss of livestock by flood Vandalism Loss of livestock by earthquake

Covers all Basic Form perils, plus: Falling objects Weight of ice, sleet, or snow Glass breakage Sudden & 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 (excluding sheep) by wild animals Drowning of covered livestock Accidental shooting of covered livestock Loading and unloading acccidents

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 stolen Voluntary, fraudulent parting of farm property Unauthorized instruction to transport property Vandalism or glass breakage, if vacant 30 days Dishonest or criminal acts by the insured Acts or war or nuclear hazards

For example, if the insured is careful, he can avoid damage from rust and corrosion or rodent infestations. He can also avoid irresponsible decisions like leaving the property vacant for over a month, which increases the risk of vandalism.

Private Farm Insurance Farm Property where a farmer or rancher both lives and conducts business Farm Insurance Insurance that combines homeowner’s and commercial coverages Private Coverage Forms: Coverage A: Dwelling Coverage B: Unattached structures Coverage C: Personal property Coverage D: Loss of Use Private Farm Insurance

Commercial Farm Insurance Scheduled Farm Personal Property Unscheduled Farm personal property Barns, outbuildings, and other farm structures Inland Marine Forms Mobile agricultural Machinery and Equipment Livestock Floater Causes of Loss forms Attached to each farm coverage, either Basic, Broad, or Special Form Commercial Farm Insurance

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 other Includes attorney fees and court costs Is available in several different types

Farmers, like all business owners, must face the risk of being held liable if someone is injured on their property, or because of their actions. Consider the many hazards involved with using massive plows, harvesters, and threshers, or with raising large animals such as cattle or horses. Farm liability insurance helps protect farmers and ranchers from this financial risk. It includes coverage for attorney fees and the costs of defending the farmer and his property in court. There are several different types of farm liability insurance, and each one is designed to protect against a specific liability that farmers face.

Coverage H – Bodily Injury & Property Damage Liability: Covers damage or injury caused by normal business operations Applies to damages that occur on insured premises Coverage H – Bodily Injury & Property Damage Liability:

Coverage I – Personal & Advertising Injury Pays for claims not involving property damage or bodily injury Includes malicious prosecution, wrongful entry or eviction, and libel or slander Coverage I – Personal & Advertising Injury

Coverage J – Medical Payments Coverage Covers medical injuries suffered on farm property or because of farmer’s activities Includes medical, dental, hospital, and funeral costs Coverage J – Medical Payments Coverage

Farm Product Liability Covers injury or illness caused by eating the farmer’s products Because many farmers produce and sell food to the public, they risk being liable for illnesses or injury that people could get from eating their products. For example, if a farmer sells a truckload of tainted tomatoes, he will be liable if those tomatoes cause a salmonella outbreak. Farm Product Liability Insurance protects farmers against this liability, covering any illness or injury caused by eating products from the insured's farm or ranch. Some wholesalers require farmers to have sufficient farm product liability insurance before agreeing to distribute their 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) Farm Pollution Liability

Custom Farming Liability Covers farmers doing contract work Will not apply if a farmer makes more than $5,000 per year as a contractor Custom Farming Liability

Farm Employees Liability Is available by endorsement Covers employee injuries not allowed under Worker’s comp

Paying Farm Insurance Claims Loss Settlement Valuations Actual cash valuation, unless noted differently If replacement cost coverage, coinsurance is required As an adjuster, when you receive a farm insurance claim, you will need to pay close attention to two details: valuation and coinsurance. Most Farm policies automatically use actual cash valuations, but this is not always the case. If replacement cost valuation is chosen instead, it will be expressly noted on the Declarations page. When an insured has replacement cost coverage, she must meet a coinsurance requirement in order to get full indemnification. That is, the limit of insurance must equal at least 80% of the insured item's full replacement cost at the time of the loss.

Farm insurance - Coinsurance Insurer pays smallest of the following: -- the replacement cost of the damaged property -- the amount actually spent on necessary repairs r 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 she should have had

Applying the Coinsurance Requirement: Farmer Jones needs $100,000 coverage to have coinsurance She buys only $50,000 (half of the required amount) In the event of a claim, the insurer will only pay half of the replacement cost for damages. Since she has only purchased half of the required amount, her insurer will only pay half of the replacement cost for covered damages. So, if Farmer Jones files a claim for $30,000 of covered damage, the insurer will only pay $15,000 (that is, half of the covered loss).

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 RC Claim Process

Farm Liability Coverage & Valuations Farm Liability Insurance: Bodily injury and property damage Personal and advertising Injury Medical payments Farm Product liability Farm pollution liability Custom farming liability Farm employees liability

Loss Settlement Valuations Usually ACV; coinsurance required for RC valuations Replacement cost claims process Insurer only pays full amount only after repair are done Loss Settlement Valuations