FP 05 05–AGRITAINMENT – PROPERTY AND FL 05 01–AGRITAINMENT – LIABILITY

(April 2020)

INTRODUCTION

Insurance Services Office (ISO) introduced the term agritainment in the 04 16 edition of the Farm Program.

The term is defined as any activity that meets all of the following criteria:

Agricultural or aquacultural related
Operated primarily on the insured location

Note: The term “primarily” is used which means that the activity may also take place off the insured location as long as it is “primarily” taking place on the insured location. As an example, a hayride may be primarily on the insured location but may leave the insured location by crossing a road and then continue on the insured location on the other side of the road. This could be still considered on the insured location.

Tourism or entertainment purpose
Monetary or other compensation is the reason the activity is taking place

This new term is used throughout the property and liability coverage within the program to eliminate coverage.

FP 00 12–Farm Property–Farm Dwellings, Appurtenant Structures and Household Personal Property Coverage Form Analysis

FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverage, Conditions, Definitions Analysis

FP 00 13 FP 00 13–Farm Property–Farm Personal Property Coverage Form Analysis

FP 00 14–Farm Property–Barns, Outbuildings and Other Farm Structures Coverage Form Analysis

FP 10 60–Causes of Loss Form–Farm Property Analysis

FL 00 20–ISO Farm Program Liability Coverage Form

However, as is customary when ISO removes coverage, it also adds endorsements. This allows farm operations that need this coverage to obtain it and allows underwriters to review and appropriately price the exposures. There are two endorsements. FP 05 05 is for property and FL 05 01 is for liability. There is no similar endorsement for umbrella.

FP 05 05–AGRITAINMENT PROPERTY

This endorsement is very flexible, and its schedule reflects that.

Schedule

The insured location number, building and number and location description must be entered. If there are multiple location numbers, additional endorsements may be needed, or if the other information in the schedule applies to all locations, a separate schedule of location may be acceptable.

The description of the agritainment must be entered. This should be as descriptive as possible but not overly limiting because only the described agritainment is covered.

Example: Tabbert’s Farm hosts a Halloween festival every year. It includes hayrides, pumpkin patch visits, games and other activities. Tabbert may want to describe the agritainment as a Fall Festival rather than limit themselves to only Halloween.

One cause of loss (basic, broad or special) must be selected for Agritainment property, not including livestock, etc., and another cause of loss (basic or broad) for livestock, etc. This cause of loss is not required to be the same cause of loss used on the other property on the farm.

Limits of insurance are entered based on the type of property. If a limit is not entered, no coverage applies to the property. The types of property are:

Livestock
Machinery, vehicles, and equipment
Property that is not livestock, machinery, vehicles or equipment

Any limit of insurance amount entered applies only to the agritainment property as defined.

The next entry is for theft of agritainment property from a part of the insured location that is rented to another. A check must be made in the box for this extension of coverage to apply.

Food contamination is part of the endorsement unless the box on the schedule for not including is checked.

An entry can be made to specifically exclude certain property. When the entry is made, it is added to the other not covered property in the body of the endorsement. This area can remain blank.

Loss valuation must be selected as either Actual Cash Value or Replacement Cost.

Specific events can be excluded if the box is selected and the event described.

Example: Tabbert’s Farm allows Bay City Cloggers to hold their annual clogging competition during the Fall Festival. Bay City Cloggers provide their own property and liability insurance coverage. Tabbert does not consider this as their event even though it takes place in the midst of the Fall Festival so they might request that the Bay City Clogging Competition be entered in this area of the schedule.

Additional insureds can be added.

Endorsement Analysis

A. Property Coverage

Damage or loss of covered agritainment property that is direct and physical is paid by the insurance company up to the limit of insurance. The property must be at the scheduled insured location and the damage must be the result of the scheduled cause of loss.

Property may be owned or leased. However, if leased there must be a contractual obligation for the insured to provide the insurance for the property. In such a case, payment is for the account of whoever owns the property, and the insured would receive nothing.

Agritainment property is not covered property in the various Farm property forms. That property becomes covered property under this form; however, it is limited. Any property scheduled as not covered is not covered. In addition, most motorized vehicles designed and licensed for road use are not covered. Watercraft and aircraft are not covered. Tires and parts for the vehicles, aircraft, and watercraft are also not covered. Credit cards and similar money access cards are not covered except for some limited coverage granted later in this endorsement.

B. Covered Causes of Loss and Exclusions

The covered causes of loss are the same as described in the FP 10 60–Causes of Loss Form–Farm Property.

However, multiple modifications apply:

Windstorm or hail damage to dairy and farm products that are in the open is a covered cause of loss.
The Utility Services Exclusion does not apply to agritainment property.
The remaining modifications involve substituting the words agritainment property for either farm personal property or other types of property in existing causes of loss.

C. Coverage Extensions

The only Coverage Extension in the FP 00 12 that applies under this endorsement is the Trees, Shrubs, Plants, and Lawns Extension. However, coverage does not apply for any that are grown for agritainment purposes.

The other coverage extensions in the FP 00 12 do not exclude agritainment property, so coverage may apply for agritainment under the FP 00 12 but there is no separate coverage for those extensions under this endorsement.

None of the coverage extensions in the FP 00 13 apply as part of this endorsement. However, there is nothing in those extensions that specifically exclude agritainment property. Therefore, coverage may exist for agritainment property under those extensions as part of FP 00 13.

Refrigerated Products is an added Coverage Extension.

When changes in temperature that are the result of damage to transmitting or generating equipment that causes electrical service to a refrigeration unit to stop or are the result of a breakdown in the refrigeration system, the resulting damage to property that is in the refrigeration system is covered for up to $1,000. The property can be owned agritainment property or property of others that is used for agritainment purposes.

D. Additional Coverages

The Collapse Addition Coverage in FP 00 90 is expanded to include collapse due to the weight of agritainment property.

The Credit Cards and Electronic Fund Transfer Cards or Other Access Devices; Forgery; Counterfeit. Current Additional Coverage in FP 00 12 does not apply to this endorsement and is replaced with an almost identical version of itself except with a $3,000 limit and applicable to only this endorsement.

None of the Additional Coverages in FP 00 13 apply to this endorsement. However, all are replaced by very similar versions within this endorsement. The main changes are the references to agritainment or agritainment property. The extra expense additional coverage does not contain exclusionary language against pollution expense but also does not explain that coverage is not limited by the policy period.

Food Contamination Additional Coverage is added.

When any government entity shuts down agritainment because of actual or suspected food contamination, $5,000 is available to pay loss of income and various expenses needed to replace contaminated food, inoculate employees, clean equipment, and advertise in order to let customers know the establishment is safe. This is additional insurance and there is no deductible.

Note: This additional coverage does not apply if it is so indicated on the schedule (item G) in this endorsement.

E. Limits of Insurance

The limits of insurance section in the FP 00 90 is replaced by the one in this endorsement. The change is that only agritainment property is covered and the available limits are only those scheduled on this endorsement.

F. Conditions

The valuation and coverage territory conditions within FP 00 12 and FP 00 13 do not apply to coverage provided by this endorsement. The coverage territory condition is not replaced so that means there is no coverage territory limitation in this endorsement.

The valuation conditions are replaced by the following:

When actual cash value is selected on the endorsement schedule, all agritainment property losses are valued at their actual cash value as of the time of the loss. However, if it would cost less than the actual cash value to repair or replace the damaged property, only the cost to repair or replace will be paid.
When replacement cost is selected on the endorsement schedule, losses are settled on a repair or replacement basis. However, there are limitations:

Payment will be not more than the amount actually spent in repairing or replacing the damaged agritainment property but that is further limited to no more than 400% of the actual cash value of the property at the time of loss.

Four types of property are never eligible for replacement cost. These are adjusted at actual cash value but not more than the cost to repair or replace:

o Antique or rare articles that are considered irreplaceable. These include paintings, antiques, fine arts and more.

o Items whose value increases with age. This includes memorabilia and various types of collectible items.

o Property that is not kept in a condition so that it can be used.

o Obsolete property that is stored or just not used.

A replacement cost loss valued at more than $500 is not paid until the repair or replacement is complete. The named insured can choose an actual cash settlement and then request the additional funds available due to the replacement cost valuation after the work is complete. The written request for replacement cost valuation must be made within 180 days of the loss.

Replacement cost valuation does not include the cost to comply with ordinance or law requirements or for costs related to the enforcement of such laws or ordinances.

G. Definitions

1. The definition of agritainment in FP 00 90 is changed only by stating that only the activity or enterprise described in this endorsement’s schedule is considered agritainment. Any such activity that is not described would therefore not be covered under this endorsement and therefore would be subject to the agritainment limitations within the various Farm Property Coverage Forms.

2. The definition of insured in FP 00 90 is modified by adding insured status for members and partners plus spouses of partnerships and joint ventures along with members and managers of limited liability companies but only as respects agritainment property. Executive officers and directors of corporations plus their stockholders are also added as insureds but not with the agritainment property limitation. When an entry is made in the endorsement schedule for an additional insured, that entity is an insured limited to agritainment property.

3. Food contamination is a new definition that applies to only this endorsement. It is when a visitor sustains food poisoning that is due to food that is tainted in some way, food that has not been handled or stored, properly or served properly or because an employee has transmitted a communicable disease.

H. Designated Event Exclusion

Agritainment property that is at any event listed in the Designated Event Exclusion section of the endorsement schedule is not covered if its damage is due to the scheduled event.

Note: This should be used very sparingly and for only low-valued property. If an agritainment risk includes a difficult to insure exposure, there can be a temptation to exclude it in this manner. Unfortunately, such exclusions are often challenged because of a significant loss. When used, it must be completed very carefully and explicitly. A signed acknowledgment by the named insured should be considered to avoid later questions.

If the property values being excluded are significant, a requirement should be considered that coverage must be purchased for that excluded event using a specialty carrier. Complete written documentation helps prevent later lapses of memory that lead to lawsuits.

FL 05 01–AGRITAINMENT – LIABILITY

This endorsement is very flexible and its schedule reflects that.

Schedule

The insured location number, building and number and location description must be entered. If there are multiple location numbers, additional endorsements may be needed or if the other information in the schedule applies to all locations, a separate schedule of location may be acceptable.

The description of the agritainment must be entered. This should be as descriptive as possible but not overly limiting because only the described agritainment is covered.

All of the following apply only to the agritainment described above:

A liquor liability exclusion is added unless the box in this section is selected.
A mobile equipment exclusion is added unless the box in this section is selected.
The use of livestock or other animals is excluded unless the box in this section is selected.
Renting of part of the insured location to others is added if the box in this section is selected.
Specific events can be excluded if the box is selected and the event described.

Example: Tabbert’s Farm allows Bay City Cloggers to hold its annual clogging competition during the Fall Festival. Bay City Clogger provides its own property and liability insurance coverage. Tabbert does not consider this as their event even though it takes place in the midst of the Fall Festival so they might request that the Bay City Clogging Competition be entered in this area of the schedule.

I. FL 00 20–Farm Liability Coverage Form is modified as follows:

A. Liability Coverages

1. Liquor Liability Exclusion

FP 00 20 does not contain a liquor liability exclusion. Many agritainment operations provide liquor or allow liquor to be brought on premises as part of the activity. In such cases, it is important for all parties to consider the exposure. Therefore, this exclusion is added unless specifically selected as not applicable.

The liquor exclusion applies only to the agritainment described in the endorsement. The wording of the exclusion is similar to but not identical to the standard general liability liquor exclusion. Rather than applying only for the serving or providing of alcohol, it applies when a person becomes intoxicated because of alcoholic beverages that were permitted on the premises and if those beverages were to be consumed at the location.

This means that if an agritainment event is held at the location and alcohol is permitted, any coverage for liability against the insured because an individual became intoxicated would be excluded even if the insured did not provide the liquor.

Example: A group of young adults pays for a hayride at Tabbert’s Farm during the festival. They bring their own beer to drink on the ride and during the bonfire afterward. Tabbert’s did not supply the beer but also did not prevent the individuals from bringing the beer in. Jeremy, a member of the group, ran into a tree on his way home. He and his family sued Tabbert for not monitoring his consumption and for allowing him to drive home. Tabbert has no coverage if this endorsement is attached and the exclusion box was left unchecked. If this endorsement was NOT on the policy, coverage would also not be provided because the incident took place during agritainment.

2. Agritainment Exclusion

The agritainment exclusion in the FL 00 20 does not apply to any agritainment described in the endorsement schedule.

3. Mobile Equipment Exclusion

Selecting the Mobile Equipment Exclusion does not apply box does not mean that the entire mobile equipment in the FP 00 20 is removed. Instead only item (1) is eliminated and it is eliminated only when the mobile equipment is used with farm wagons or trailers and only for agritainment.

Note: The entry on the schedule suggests very broad coverage while the actual coverage is much more limited. This could be argued as misleading if a coverage dispute would arise.

4. Use of Livestock or Other Animals Exclusion

Selecting the Use of Livestock or Other Animals Exclusion does not apply box does not mean that the entire exclusion in the FP 00 20 is removed. Instead only item (2) is eliminated and it is eliminated only when livestock is used to provide rides to visitors to agritainment.

Note: The entry on the schedule suggests very broad coverage while the actual coverage is much more limited. This could be argued as misleading if a coverage dispute would arise.

5. Rental of a Part of the Insured Location to Other Provided

Selecting the Rental of a Part of the Insured Location to Others is provided box results in FP 00 20 exclusion 2.l Rental of Premises and Ownership or Control of Premises being removed but only item (2) and also exclusion 2.4. Damage to Property exclusion being removed but only item (5). This applies only for agritainment-involved rental on the insured location or a part of it.

6. Employers Liability Exclusion

The FL 00 20 Employers Liability exclusion is rewritten to eliminate all exceptions for resident employees.

7. Personal Injury Coverage

The agritainment exclusion in the Personal Injury and advertising coverage does not apply to any agritainment described in the endorsement schedule but coverage in this endorsement applies only to agritainment.

B. Medical Payments

1. Off premises coverage is changed to substitute the term agritainment employee for farm employee.

2. The agritainment exclusion is changed to provide coverage during agritainment but not for bodily injury arising from the named insured’s product that is intended to be consumed when that product is associated with agritainment, but the exclusion applies only when the injury occurs after the product has been relinquished.

C. Definitions

Changes are made to the definitions in the FL 00 20 to work with coverage provided within this endorsement.

1. Advertisement is changed by substituting the term agritainment for the term farm-related.

2. Agritainment is identical except that the activity or enterprise must be described in this endorsement’s schedule.

3. Insured is changed by substituting the term agritainment for the term farming operations in only the a. section of the definition.

Note: There is a potential coverage gap because, in item d. of the definition, persons or organizations having custody of animals or watercraft are NOT considered insureds when engaged in agritainment.

4. Insured location is changed by modifying item h. The modification considers premises that an insured rents on an occasional basis as an insured location. Under the FL 00 20, such locations used for agritainment or business purposes are not insured locations but under this endorsement, only such locations used for agritainment purposes are not insured locations. This means that subject to the other terms in this endorsement, an insured location does include such locations used for business purposes.

5. Motor vehicle item b. (3) is changed. This part of the definition is about golf cart exposure. The first part explains the physical characteristics of a golf cart that would not be considered a motor vehicle and is unchanged. The next part explains where and how the golf cart must be used in order to not be considered a motor vehicle. This part of the FL 00 20 is removed and replaced. Under this endorsement, the golf cart is not considered a motor vehicle only if, at the time of the bodily injury or property damage, it is being used to transport people where the agritainment is taking place. The location where coverage applies includes all premises even when part of the premises is separated by a barrier such as a street, railroad crossing, or water.

6. Residence premises is changed. The beginning part of the definition that explains what is a residence premises is unchanged from the FL 00 20. However, the sentence explaining what is not a residence premises is changed but this change is subject to other parts of this endorsement. All reference to business is removed so parts of the residence premises used for business would be covered. Any part of a building or structure used for agritainment is not residence premises unless a check is shown in the Rental of a Part of the Insured Location to Others is Provided a portion of the endorsement schedule. This applies only to the rental of parts of the residence premises to others for agritainment.

7. Agritainment employee is a new definition for use only on this endorsement. Only those employed by an insured principally for agritainment primarily at an insured location or to maintain agribusiness equipment, meet the definition. Those engaged in the insured’s business or farming are not agritainment employees.

D. Designated Event Exclusion

The coverage provided by this endorsement does not apply to any event entered in the designated event area on this endorsement’s schedule. This means there is no bodily injury, property damage, or personal or advertising injury. There is also no medical payments coverage.

Note: This is a very difficult situation. If an agritainment risk includes a difficult to insure exposure, there can be a temptation to exclude it in this manner. Unfortunately, such exclusions are often challenged because of a significant loss. When used, it must be completed very carefully and explicitly. A signed acknowledgment by the named insured should be considered to avoid later questions. In addition, a requirement should be considered that coverage must be purchased for that excluded event using a specialty carrier. Complete written documentation helps prevent later lapses of memory that lead to lawsuits.

E. Premium Audit

The premium for this endorsement is subject to audit. The initial premium is considered a deposit that can be later adjusted. After the policy period is completed, the actual earned premium will be calculated and notice of premium earned will be sent to the first named insured. The date of the audit is the due date for an additional premium. If a return premium is due, the insurance company will send it to the named insured. The insured is required to maintain records and have them available to the insurance company as required.

Note: One concern is that neither the Farm Liability Declarations nor this endorsement provides a space to indicate the classification, rate, or premium basis used to calculate the premium. There are many agritainment classifications and the rate and premium basis varies by class. Premium basis may be per camper days, admissions, gross sales, or per animal. The insured should be made aware of the classification being used and its premium basis so records can be easily and accurately maintained.

II. Modification to Other Liability Endorsements

A. FL 04 71–Owned Snowmobile Coverage is revised so that scheduled snowmobiles are covered even when used in agritainment. Item A. 5. is changed so that snowmobiles being used to carry persons for a charge or that are rented to others are covered if, at the time of the bodily injury or property damage causing occurrence, the snowmobile is being used in agritainment.

B. FL 04 74–All Terrain Vehicle Coverage is revised so that scheduled all-terrain vehicles are covered even when used in agritainment. Item A. 5. is changed so that all-terrain vehicles being used to carry persons for a charge or that are rented to others are covered if, at the time of the bodily injury or property damage causing occurrence, the all-terrain vehicle is being used in agritainment.

C. FL 04 83–Watercraft is revised so that scheduled watercraft are covered even when used in agritainment. Item C.1.a. is changed so that watercraft being used to carry persons for a charge or that are rented to others are covered if, at the time of the bodily injury or property damage causing occurrence, the watercraft is being used in agritainment.