FP 00 30–ISO FARM PROGRAM MOBILE AGRICULTURAL MACHINERY AND EQUIPMENT COVERAGE FORM ANALYSIS

(April 2020)

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The analysis is based on the 04 16 edition of the coverage form. Changes from the 02 09 edition are highlighted in bold.

ISO FARM INLAND MARINE DECLARATIONS PAGES

The ISO recommended Farm Inland Marine Declarations pages are FP DS 30, FP DS 31, and FP DS 32. Insurance companies usually modify the forms to meet their individual needs and purposes. The most important information generally remains constant, because the policy coverage forms refer to specific information found only in the declarations. The information shown on this form must be accurate. Errors in the information shown on this page could have an adverse effect on a given claim settlement. These forms are used in the following manner:

· FP DS 30 is always used. It is the summary page and provides essential identifying information such as name, the address of the insuring company and of the insured. It also includes premium and endorsement information.

· FP DS 31 is the declarations for the Mobile Agricultural Machinery and Equipment Coverage Form.

· FP DS 32 is the declarations for the Livestock Coverage Form.

FP DS 31–ADVISORY MOBILE AGRICULTURAL MACHINERY AND EQUIPMENT COVERAGE FORM DECLARATIONS

This is an advisory declarations page, but the information contained in this declarations is mandatory. The coverage form makes many references to the declarations, so the information on it must be accurate. The declarations should be reviewed carefully, and the company notified concerning changes and corrections in writing. This declarations is used with the FP 00 30–ISO Farm Program Mobile Agricultural Machinery and Equipment Coverage Form.

Deductible

The standard $250 deductible is shown but there is a place to indicate exceptions and changes. This deductible applies on a per-occurrence basis.

Limit of Insurance

Blanket: A blanket limit may be shown that covers mobile agricultural equipment in an aggregate or single amount of insurance, without listing each item of property with a specific value or limit for each item.

Schedule: Each item of property is listed or scheduled with a specific value or limit entered for each item.

Foreign Object in Machinery Coverage: This coverage applies to any item listed in this section.

All other property not specifically described: This is a "catchall" grouping of miscellaneous items with comparatively small values. It is used after listing specific items in the schedule. No individual item included in this blanket can have a value exceeding $2,000.

Extra Expense Coverage: A total limit for this coverage is shown.

Special Provisions

This area is reserved to describe any special agreements between the insured and the insurance company.

FP 00 30–ISO Farm Program Mobile Agricultural Machinery and Equipment Coverage Form

INTRODUCTION

FP 00 30–Mobile Agricultural Machinery and Equipment Coverage Form provides coverage for damage to mobile agricultural machinery and equipment. Protection may be written on a blanket basis, subject to a single amount of insurance, or on a scheduled basis, where a separate limit appears next to each item of equipment.

Although it is permissible to use this form along with FP 00 13–Farm Property–Farm Personal Property Coverage, it can be confusing, and duplication of coverage may occur. This coverage form is primary when duplication occurs, and the FP 00 13 will respond only as excess. This form was revised in 04 16. Changes from the prior edition are highlighted.

The entire form must be reviewed in order to understand how coverage applies. The terms you and yours in the form mean the named insured. If the named insured is married and the couple lives together in a common household, the term you also includes the spouse. Us, we, and ours refer to the insurance company. The other definitions that apply to this coverage form can be found in Section F–Definitions.

A. COVERAGE

Insurance provided under FP 00 30–Mobile Agricultural Machinery and Equipment Form covers direct physical damage caused by a covered cause of loss to mobile agricultural machinery and equipment, as described in this policy.

1. Covered Property

Mobile agricultural machinery and equipment, including attached or unattached accessories, tools, and related spare parts are covered.

The insured has options for listing equipment to be insured. One is to insure everything under a single blanket limit. If so, all mobile agricultural machinery and equipment is covered except for items listed as Property Not Covered. Section F-Definitions must be consulted to determine exactly what is considered mobile agricultural machinery and equipment. However, under this blanket option, there is no requirement that the items be actually owned by the named insured, be in the named insured’s care, custody, and control or even at an insured location.

Another option is to list each item of equipment separately and provide a limit of insurance for it. This can include borrowed or rented property, but it is covered only while in the named insured’s care, custody, or control. The borrowed or rented equipment is not eligible for coverage when it is located on its owner’s premises.

If the scheduled option is selected, a blanket limit for not described items can be provided. This is meant for small miscellaneous, lesser-valued items.

2. Property Not Covered

There is no coverage for the following property:

· Aircraft, watercraft, their equipment or parts

· Automobiles

· Equipment, machinery, or vehicles that are considered dealers' demonstration items

· Dirt bikes, mopeds, motorcycles, motorized bicycles or tricycles, snowmobiles, and trucks

· Vehicles primarily designed and licensed for road use. There is an important exception. Wagons and trailers that are designed for farming purposes AND that are used most of the time on the insured location are covered property.

· House trailers and mobile homes

· Fixtures that are permanent inside or that are attached to buildings

· Barn cleaners, boilers, and pasteurizers whether or not permanently attached

· Bins, bulk milk or bulk feed tanks, but only when any are attached to a building or structure. Unless specifically described on the declarations with a limit, cotton pickers, harvester-thresher combines, and all-terrain vehicles.

· Irrigation equipment

Note: This equipment can be covered under Coverage E in FP 00 13.

Any property that is considered contraband and any property that may be legal but is being used in a type of illegal transportation or trade.

Note: It is against public policy to cover items that are used in illegal activities.

3. Covered Causes of Loss

Tangible loss or damage is covered if it involves covered property, and the source of loss is not listed in the policy exclusions or is limited somewhere within the policy.

4. Additional Coverages

a. Collapse

Building collapse is considered a falling down or caving-in of the building or any part of it. This action must be sudden or abrupt. Regardless of the circumstances, any property still standing is not collapsed property. If there is cracking, bulging, leaning, settling or any other signs of potential collapse, but the building or part of the building is still standing, is not a collapsed building. Collapse of the building must be caused by one of the following in order to be covered:

· *A specified cause of loss or glass breakage

· Decay, insect, or vermin damage hidden from view. If the insured was aware of the damage prior to the loss, there is no coverage.

Example: Tom had termite damage throughout his home and most of his barns. He decided to treat the home but left the rest alone. One day, his barn collapsed due to the termite infestation and damaged $25,000 worth of equipment. His claim for damage was denied because the collapse was due to known insect damage.

· *Weight of rain on the roof, or weight of people or personal property anywhere in or on the structure.

· Use of defective material during the course of construction but not after construction is complete unless caused by one of the items listed above.

*If loss or damage for these causes of loss would be covered under the Causes of Loss –Farm Property Coverage form except for the limitations in the first paragraph of this coverage, it continues to be covered.

Coverage provided for collapse losses is subject to the policy’s insurance limit.

b. Damage to Property Removed for Safekeeping

If an insured anticipates that a covered cause of loss is imminent and removes property to a safe location, coverage applies for any cause of loss, for up to 30 days after removal from the endangered location. This is not an additional amount of insurance.

c. Debris Removal

The costs to remove the debris resulting from loss or damage to covered property due to a covered cause of loss are covered, with the following limitations:

· The costs must be reported to the insurance company within 180 days after the loss.

· The most paid is 25% of the direct damage loss.

· Debris removal does not include any cost for pollutant cleanup.

The debris removal coverage is not in addition to the limit of insurance but is part of the limit of insurance. If the debris removal cost is more than 25% of the loss or the limit of insurance has been exhausted through the payment of the direct loss, an additional 5% of the limit of insurance is available to pay for debris removal.

Example: Robert had his tractor out in a remote field when it suddenly caught fire. The fire destroyed the tractor and the crops. It was an older tractor and had a value of only $1,000 (which equaled the limit he carried for that equipment). He needed the debris removed and was told that the cost would be $500. Since the available coverage was already exhausted by the tractor settlement, an additional amount of insurance was available. His policy would pay $50 ($1,000 X .05).

d. Extra Expense

When a limit is shown on the declarations for extra expense, the insurance company pays the extra expense that is necessary and is actually incurred by the named insured in order to resume normal farming operations. For this to apply, the farming operations must have been interrupted due to a covered cause of loss that damaged covered property. All payments are subject to the stated insurance limit. Regardless of the limit, coverage ends after the time necessary to rebuild, replace, or repair the covered property. No deductible applies to this coverage.

Example: Harvesting was late this year due to rain. George and his neighbors had about two weeks to bring in the crops or risk losing them. As George crossed the highway to get to his other field, a car suddenly appeared and plowed into George’s combine. George was not hurt, but the combine was out of commission. His neighbors couldn’t loan him one of theirs because they were under the same deadline he was. His brother lived in the next state and offered to loan his to George. The insurance company would pay for the expense to transport the combine from the next state to George.

e. Fire Department Service Charges

Some individuals and businesses enter into contracts for fire protection with community fire departments when they are outside the boundaries of government-provided fire service. Payment to the fire department is due after it responds to a call to protect the covered property. In those cases, the insurance company pays those charges if the loss or damage is due to a covered cause of loss. Any payment under this coverage is an additional amount of insurance. No deductible applies to this coverage.

f. Reasonable Repairs

A condition of the policy is that the insured must take reasonable care in protecting undamaged property from damage after a covered loss occurs. This additional coverage pays for those activities. The costs must be reasonable and are paid only after a covered loss occurs.

This coverage is not an additional amount of insurance.

Note: This coverage does NOT pay for loss prevention measures taken prior to a loss.

g. Borrowed or Rented Mobile Agricultural Machinery and Equipment – Thirty-day Limit (04 16 addition)

An automatic limit of $10,000 is available to cover borrowed or rented mobile agricultural machinery and equipment but only if the item is not specifically listed and described on the Declarations. The contract can be written or verbal. Coverage lasts for 30 days or until the policy period ends, whichever is sooner. If coverage is needed beyond the 30 days, the property must be reported and premium paid to start with the 31^st day on which it is rented or borrowed.

The items that are covered must be:

· At the time of the loss, in the named insured’s care, custody or control

· Borrowed or rented by the named insured after the policy period had started

· Nonowned by the named insured and in which there is no lienholder interest

Borrowed farm machinery does not include any motorized vehicles such as automobiles, trucks, motorcycles, motorized bicycles, and tricycles, dirt bikes, mopeds or snowmobiles. Additionally excluded items are all-terrain vehicles, motor homes, house trailers, any vehicles meant for road use, watercraft, or aircraft. Equipment, parts or tires for any of the property described in this paragraph are also not included. However, wagons and trailers that are designed for farming purposes AND that are used most of the time on the insured location are exceptions.

Equipment or vehicles belonging to a dealer and being used for demonstration purposes are also not included as borrowed or rented farm machinery, vehicle, or equipment.

Borrowed or rented items are not covered while on their owners’ premises.

The $10,000 limit can be increased on the Declarations.

Example: Alvie recently rented equipment worth $20,000 and will keep it for only ten days. The maximum value of equipment kept in a single area on his property is $7,000. He does not increase his limit because as long as the equipment is kept separate, the $10,000 limit should be sufficient.

Note: Similar coverage was available under the Thirty-Day Additional Limit on Borrowed or Rented Mobile Agricultural Machinery and Equipment in the prior edition, but it required an entry on the Declarations while this is automatic coverage. This coverage is more specific as to what is not covered than was in the prior edition.

5. Coverage Extensions

a. Additional Acquired Property–Newly Purchased

This coverage applies only when property items are specifically listed on the Declarations. That means that if all coverage is blanket, this coverage would not apply. This is logical because the newly acquired property would be automatically included as part of the blanket without any need to report.

However, when the policy lists specific items of equipment, the only way a newly purchased additional mobile agricultural machinery and equipment is covered is for the named insured to notify the agent and have the item endorsed. This automatic limit of up to $100,000 for a maximum period of 30 days after acquisition provides a grace period for a named insured who is making a purchase. The new property must be reported to the insurance company and premium paid as of the purchase date.

This is not an additional amount of insurance. If the total insurance for the specifically insured items is less than $100,000, that lesser amount represents the total available for the newly acquired items.

Example: Mindy had 20 items on her equipment schedule for a total value of $150,000. She acquired another item valued at $25,000. While bringing the new equipment home, she was hit by another driver. The impact overturned the trailer carrying her new property and destroyed it. Even though she had not reported the new equipment or even gotten it home, it was covered because of this extension.

If coverage for this equipment is available under another coverage part or a separate policy owned by the insured, coverage under this extension will be applied in order to bar an insured benefiting from duplicate coverage.

Note: The intent of this provision is to address loss to new equipment without increasing the exposure the insurance company originally accepted.

b. Additional Acquired Property–Replacement

This coverage applies only when property items are specifically listed on the Declarations. If the insured purchases replacement mobile agricultural machinery or equipment, the limit for the previously scheduled item plus an additional $75,000 applies. The $75,000 additional amount is available for 30 days after the purchase date or when the policy expires, whichever occurs first. Coverage applies only to the extent that the insured does not have coverage under another coverage form or a separate policy.

Note: Under the two coverage extensions, there is a category of newly acquired property that is not covered. If, for some reason, the named insured receives equipment without purchase, such as a gift or inheritance, such property would not qualify for coverage under either extension. Therefore, though likely a rare occurrence, such property would need to be reported and listed immediately upon possession in order to be covered.

B. EXCLUSIONS

1. The following items are excluded whether or not they are concurrent or a part of a sequence of events and whether they directly or indirectly cause the loss. These exclusions apply even when a significant area is impacted by the cause of loss or damage is impacts multiple businesses, farms or individuals.

a. Earth movement

Earth movement is defined in three paragraphs. Paragraph (1) excludes landslides and associated earth sinking, rising, and shifting. b, The subsidence of earth into man-made mines is excluded in paragraph (2). Earth sinking and other soil conditions that cause settling, cracking or other damage to foundations are excluded in paragraph (3) except for sinkhole collapse. The movement described in any of these paragraphs is excluded regardless of what triggered the earth movement. However, if fire or explosion ensues from an earth movement, the damage from that fire or explosion is covered.

Any type of earthquake damage to mobile agricultural machinery and equipment is covered. This exception is for earthquake only. There is no coverage for loss due to any of the three paragraphs described above unless triggered by an earthquake.

Earth movement involving volcanic eruption, explosion, or effusion (lava flow) is not covered. Coverage does apply for any ensuing fire or volcanic action. Volcanic action is blasts, shock waves, ash, particulate matter, and lava flow. Volcanic activity occurring within a 168-hour period qualifies as one occurrence. There is one further restriction on volcanic action. The cost to clean up ash, dust or particulate matter is covered only if other types of direct physical damage occurred to property damage.

Note: There is no such time statement for the earthquake coverage provided. This would mean that each earthquake incident would be a separate occurrence. This could enhance the amount of coverage available but also the number of deductibles to be applied.

b. Governmental action

There is no coverage for property destroyed by governmental decree and action. The only exception is when governmental action is taken to stop the spread of fire. This exception applies only if the spreading fire would be considered covered under the policy.

Example: Joe is out of town when a storm causes a great deal of destruction around the town that neighbors Joe’s farm. Storm debris closes access to the town’s main road. When the national guard arrives, the troops are in a hurry. Instead of clearing and repairing the road, they violently overturn several pieces of parked farm machinery on Joe’s adjacent farmyard in order to gain immediate access to the town. This loss is ineligible for coverage.

c. Intentional Loss

There is no coverage if the loss is due to a deliberate act of any insured. All insureds are barred coverage stemming from intentional acts, even insureds not involved and unaware of another insured’s actions.

Note: This change may be pre-empted by various state laws and statutes. Some jurisdictions preserve insurance protection for innocent insureds.

d. Nuclear Hazard

Any loss or damage caused by or resulting from nuclear reaction, radiation, or radioactive material is not covered unless fire ensues and then coverage applies only to the damage caused by the fire.

e. Utility Services (04 16 change)

Any loss or damage caused by or resulting from lack of a utility service, such as power, communication, water, or other is not covered. This applies only if the reason for the lack of service originates off the insured location or involves utility supplied equipment that is located on the insured location.

This exclusion is referring to both complete lack of service and insufficient service. Power surge losses are excluded if the only reason for the surge is the off premises power failure. When a loss or damage due to this excluded cause of loss results in a covered cause of loss, coverage is available for ensuing loss or damage.

The term “communication service” is defined to include internet access and other types of electronics, cellular and satellite networks.

f. Neglect

The insured must take reasonable care to protect and preserve property after a loss. If additional damage results from the insured’s failure to protect property, there is no coverage for that additional damage.

Example: A tornado tore through Harry’s hometown and destroyed many of his barns. Harry had tickets for a non-refundable cruise and was not going to let them go to waste. He and his wife went on the trip, after deciding that the insurance company could sort everything out. When he got home, most of his equipment had disappeared because he had made no arrangement for their safeguarding. The insurance company denied the claims on all items not damaged by the wind because the additional damage in the form of theft was due to Harry’s neglect.

However, either the insurer or the insured may dispute what constitutes neglect.

g. War and Military Action

Loss or damage from war, warlike action, insurrection, and similar actions against a government are not covered. This exclusion centers on actions between governments or that involve the overthrow of a government and is not considered to be an exclusion against terrorism or random acts.

h. Water

The following, distinct types of water and water-related damage are excluded.

· Water that combines with dirt and creates mud. Mudslide and mudflow is considered water damage and is excluded.

· Water that backs up or is discharged from a sewer or drain

· Water that backs up or is discharged from a sump, its pump, and equipment

· Underground water that presses up to seep or flow into foundations or basements

· Material that is borne by any of the above.

There are exceptions to this exclusion. If any of the water damage above results in fire, explosion, or sprinkler leakage damage, there is coverage but only for that damage, not any of the water damage.

2. Other Exclusions

a. There is no coverage for loss or damage from any of the following:

(1) Collapse

There is no collapse coverage other than the amount available under the Additional Coverage section. However, if a covered cause of loss occurs at the insured location after a collapse, the portion of the damage due to the covered cause of loss is covered.

(2). Rain, Snow, Ice, or Sleet to Personal Property in The Open

When covered personal property is left in the open, it is not covered for loss or damage caused by or resulting from rain, snow, ice, or sleet.

(3) Explosions and Ruptures

This exclusion describes the types of ruptures and explosions in boilers and hot water vessels not covered by this policy that are better covered by equipment breakdown protection policy. A limited amount of coverage applies, such as the explosion of gas or fuel within a furnace.

(4). Unauthorized Instruction

Any type of instructions to transfer property to a person or property when those instructions were not authorized.

(5) Voluntary Parting

The giving away of property by the named insured or anyone else (not required to be an insured) when such voluntary parting occurs because of a trick or scheme of any type.

This means activities of con artists are not usually a covered loss.

Example: John worked for Klinghoff Farms, which had multiple locations. One day Cliff showed up and said the combine was needed at another location, and he was sent to get it. John never met Cliff before, but he knew the farm had hired more workers for the harvest. John assumed Cliff was a co-worker, helped him prepare the equipment, and waved goodbye as Cliff drove off with the equipment. When his boss asked about the combine the next day, John told him about Cliff needing it. By that time, the equipment was well on its way to Mexico. The insurance company denied the claim.

(6) Dishonesty by Trusted Persons (04 16 change)

Dishonesty or criminal acts committed at any time by the named insured, any other insured, officers, managers, trustees, or authorized representative. Such acts by employees, including temporary and leased employees, are not covered. If the named insured entrusts another person with property, theft of that property by that person is also not covered.

The above applies even if any of the described persons are working in collusion with another not described in the paragraph.

Destruction by employees or authorized representatives is an exception, but this exception does not include theft by such individuals.

(7) Loss or Damage to Mobile Agricultural Machinery and Equipment

Coverage does not apply to loss or damage to tires and tubes unless a collision upset or overturn also damages the rest of the covered vehicle. In addition, there is no coverage for foreign objects that are taken into machinery or a harvester. Coverage for loss or damage caused by foreign objects can be purchased using endorsement FP 04 20–Foreign Objects in Machinery.

(8) Artificially Generated Electric Current

There is no coverage for loss or damage to electrical devices because of the flow of electrical power. This means lightning damage not artificially generated is covered, but loss or damage due to blackout, power surges and similar events are not covered. If a fire breaks out after an artificial current event, coverage applies for that subsequent loss or damage.

((9) – (17)) Loss or Damage Limited to Resulting Specified Causes of Loss and Glass Breakage Only

Loss or damage due to any of the following is not covered:

· Rust

· Corrosion

· Fungus

· Decay

· Deterioration

· Hidden or latent defect

· Any quality in property that causes it to damage or destroy itself

· Smog

· Any nesting, infestation, discharge, waste, secretions of:

o Birds

o Vermin

o Rodents

o Insects

o Domestic animals

· Centrifugal force caused rupture or bursting and any other type of mechanical breakdown

· Atmospheric dampness or dryness

· Changes or extremes in temperature

· Marring and scratching

If any of the above results in a specified cause of loss or in glass breakage, the ensuing loss is covered.

(18) Theft of or Vandalism to Electronic Equipment in Mobile Agricultural Machinery and Equipment (04 16 change)

There is no coverage for theft of or vandalism to electronic equipment (including media used with such equipment) if that equipment is located in mobile agricultural machinery and equipment AND such property is powered by that machinery’s electrical system. Exceptions exist for covered property that is permanently installed in the motorized vehicle.

This electronic equipment restriction applies only to equipment that can reproduce, receive, or transmit data, audio or visual signals such as a radio or a computer.

(19) Pollution

There is no coverage for any loss or damage due to any action of pollutants. However, if the action of a pollutant leads to a covered cause of loss, the resulting loss or damage is covered.

Example: Connie hears a large thud just as she stops her harvester. When she gets out of the vehicle’s cab, she notices a spreading pool. Connie inadvertently parked over a pump that punctured the harvester’s fuel tank. She had just refueled the harvester, so there was enough fuel to spread out nearly one hundred square feet. The fuel soaks into a pile of soybeans to the right of the tractor. Another part of the pool accumulates near a barn where someone then dropped a cigarette butt. A fire erupts and severely damages the barn and the two tractors stored inside. The pollutant-caused damage to the beans is excluded, but all damage caused by the fire is covered.

b. No Physical Evidence of Loss (04 16 addition)

Coverage does not apply to the loss of property that is missing but for which there is no physical evidence to prove that the property was removed, damaged or that a loss had occurred.

3. None of the following circumstances are covered unless they create a covered cause of loss that results in loss or damage:

a. Weather Conditions

There is no coverage if weather conditions contribute to any cause of loss excluded in the B.1 Exclusions Section of the policy. This means that a loss caused by a combination of weather conditions and a cause of loss excluded in the B. 2 Exclusions is not subject to this weather conditions exclusion.

b. and c. Decisions Of Groups, Persons, Organizations And Governmental Bodies

Actions or lack of action on the part of any person or organization can result in property loss or damage. These losses or damages are not covered.

There is also no coverage for loss or damage due to or resulting from faulty, inadequate, or defective planning, zoning, development, surveying, siting, design, specifications, workmanship, or repair.

Coverage also does not apply to loss or damage due to construction, renovation, remodeling, grading, compaction, materials used in the repair, construction, renovation or remodeling or maintenance of a part or all of the property on or off the defined insured location.

C. LIMITS OF INSURANCE

The most paid in a single occurrence is the limit shown on the declarations. If the option to list items specifically but to group miscellaneous items together under a single limit is exercised, the maximum amount for any one of those miscellaneous items is limited to no more than $3,000.

Example: Max specifically listed and applied values to 15 items of equipment and then estimated $25,000 for the remaining 20 items. One of those miscellaneous items was destroyed by lightning. Max was surprised to learn that its actual cash value was $5,000. Because of the limitation per item, even though he had $25,000 in total coverage, he could only recover $3,000 for the loss.

D. DEDUCTIBLE

The insured must satisfy the deductible amount shown on the declarations before the insurance company pays a loss. The deductible applies for each occurrence, not for each item.

Example: Last year, Dee’s Tomatoland Farm had some theft problems. In January, vandals ruined a tractor, and Dee paid a $500 deductible on a $2,500 loss. In June, she suffered four separate thefts of different items of equipment. No individual loss was more than $500. Even though the total amount of the June losses added up to $3,400, Dee received no payment from her carrier because each of the losses were less than her deductible.

E. FARM INLAND MARINE CONDITIONS

Loss Conditions

1. Abandonment

The insured cannot abandon property to the insurance company. The company must agree in writing to accept and be responsible for damaged covered property.

2. Appraisal

If the company and the insured disagree about the value of damaged property, each side selects an appraiser. The two appraisers then select an umpire. Both sides present their cases and the majority rules with respect to determining the value. Each side pays its own appraiser and must share the cost of the umpire and the appraisal.

Note: Participation in this process does NOT affect an insurance company’s right to deny a claim.

3. Duties In The Event of Loss or Damage

The named insured has a number of duties that must be performed. If they are not performed, it creates problems for the insurance company which could allow it to deny the claim. If an insured other than the named insured is submitting the claims, that insured must perform the duty. A representative of the named insured or the submitting insured can perform the duties on their behalf.

The police or other applicable law enforcement must be notified if a law has or may have been broken. Regardless of the inconvenience or preference to not do so, the notification must be made in order for the claim to be honored.

The insurance company is to receive prompt notice of the loss and then is to receive the details regarding how, when and where as soon as practicable. Reasonable steps must be taken to protect property. A record of expenses made to protect the property should be kept because those are considered covered expenses. If possible, damaged property is to be set aside so that it can be examined.

An inventory of both damaged and undamaged property that includes values, quantities, costs and the amount of loss must be provided when requested by the insurance company. The company must be allowed to inspect, test, and sample the property and all records that verify the claims and make copies of any applicable records.

A signed and sworn proof of loss must be submitted to the insurance company within 60 days of their request on the forms provided by them. Cooperation is required as the insurance company investigates and adjusts the loss.

The company has the right to separately question insureds under oath, without being in the presence of other insureds. The questioning can occur as often as reasonably required as long as the questions are related to the loss.

4. Insurance Under Two Or More Coverages

In some cases, the same property is covered by more than one coverage part. In those cases, the most paid by the insurance company is the actual amount of the loss.

5. Loss Payment

The insurance company decides how the loss will be settled. It can pay the value of the property, pay the cost of repairing or replacing the property, take all or part of the property at its agreed or appraised cost, or repair or replace the property.

The value of covered property is determined based on the valuation clauses in the coverage forms.

Any cost to repair or replace does not include any increased costs required to satisfy government laws or ordinances relating to the construction, use, or repair of a property.

The company pays no more than the named insured’s financial interest in the damaged property. The company is required to tell the insured how it will pay the loss within 30 days after receiving the proof of loss.

Once the value of the settlement has been resolved between the insurance company and the named insured and all terms of the policy have been met, the insurance company must pay within 30 days of receiving the signed and sworn proof of loss.

Any payment to a party other than the named insured may be settled separately with that party or could be included with the payment to the named insured. Under no circumstance is the other party due more than their insurable interest in that property.

The company may defend the named insured for suits brought by owners of property. If it does so, it does so at its own expense.

Example: Revising the situation with Tomatoland. The insurance company contacted Dee and asked her to either return half of the $3,900 settlement she received for her destroyed tractor or pay that half to her cousin. The insurance company had received a claim from Dee’s cousin, asking for reimbursement. Her cousin has documentation that proves she was the tractor’s co-owner. Dee is only legally due half of the tractor’s value (her insurable interest) while the cousin is due payment because the item was in Dee’s care, custody, and control.

Dee agrees to handle the settlement with the cousin but drags her feet. When the cousin sues Dee for her part of the settlement, Dee contacts the insurance company to defend her. They decline because defense is provided only at their option (and also because Dee is in the wrong).

6. Other Insurance and Service Agreement

If there is other insurance on the lost or damaged property subject to the same agreements, terms, and conditions of this policy, this policy will pay only its share of any loss. If there is another type of insurance on an item, this insurance pays on an excess basis over that other available coverage. If a loss involves borrowed or rented equipment covered as part of the specific listed items option, and other insurance exists on that property, this coverage pays on a proportional basis. This insurance pays on an excess basis over any service or warranty agreement that is in place.

7. Pair, Set, or Parts

If one part of a pair or set is damaged, the company either repairs or replaces the damaged part so that it returns to its prior value or pays the difference between the value of the pair before the loss and the value of the remaining piece(s).

If only one of several parts of an item of covered property is damaged, the insurance company pays for only the damaged part.

8. Recovered Property

If covered property is recovered after the loss has been paid, the recovering party must inform the other of its recovery. The named insured may choose to take the property back but, in doing so, must return the full settlement paid by the insurance company. Regardless of the decision made, the insurance company pays the recovery expenses and any costs of repairing the recovered property.

9. Transfer of Rights of Recovery Against Others To Us

The rights of recovery held by any party paid for a loss against others responsible for a loss are transferred to the insurance company but only for the amount the insurance company paid for the loss. That party must do everything possible to preserve the rights of the insurance company to recover from the responsible party(ies).

The named insured has the right to waive any rights of recovery in writing before a loss occurs. However, after a loss, the named insured’s right to waive recovery rights is limited to:

· A business operation owned by the named insured

· A business firm that owns the named insured

· A tenant.

The waiving of such rights must be done in writing and doing so will not invalidate the insurance coverage provided by the policy.

Example: Willie and John mutually agreed in writing to waive all rights of recovery against one another because they regularly shared equipment with each other. John caused a loss that damaged Willie’s baler. Although the insurance company would normally engage in a legal action against John, they could not in this case because Willie had waived those rights in writing before the loss occurred. The claim was paid without any effort to seek reimbursement from John.

10. Valuation

Valuation is actual cash value at the time of loss. In no case is a payment made that exceeds the amount necessary to repair or replace the property. If replacement cost valuation is needed, endorsement FP 05 21–Replacement Cost–Mobile Agricultural Machinery and Equipment can be attached to the policy.

General Conditions

1. Coinsurance

This condition does not apply to mobile agricultural machinery and equipment that are specifically described on the declarations.

All other equipment must be insured to at least 80% of actual cash value at the time of loss. If the limit shown on the declarations does not meet this requirement, a penalty is applied, based on the ratio determined by dividing the limit of insurance on the declarations for all covered property at all locations by the actual value of those items at the time of loss times 80%.

Example: Martin’s Farm specifically listed 20 different items of machinery and equipment but lumped together a number of miscellaneous items for a total limit of $25,000. A barn fire occurred. After the inventory and appraisal, the actual cash value of the miscellaneous items was determined to be $50,000. The claim for these items was $10,000.

$50,000 X .80 = $40,000. $25,000÷$40,000 = .625. $10,000 X .625 = $6,250.

2. Concealment, Misrepresentation or Fraud

Fraud on the part of the named insured voids the policy if the fraud is related to the coverage form regardless of when the fraud occurs.

Any misrepresentation of a material fact relating to the policy, the covered property, the named insured’s interest in the property or any claim by the named insured or any other insured also voids the policy regardless of when such misrepresentation occurs.

3. Control of Property

Any neglect or other act by a person who the named insured does not control or who is beyond direction by the named insured does not affect this insurance. In addition, breach of a policy condition at one location does not negatively affect insurance coverage at another location.

4. Legal Action Against Us

Any legal action against the insurance company can occur only after all policy conditions have been satisfied. In addition, the suit must be brought not later than within two years after the date of loss.

Note: Some states or jurisdictions have laws or statutes that impose different time frames or other requirements. In those cases, those laws or statutes pre-empt this policy condition and apply in its place.

5. Liberalization

Any broadening policy feature introduced by the company automatically applies to the policy if it was introduced during the policy term or up to 45 days before the start of the policy term. This provision applies only if there is no premium charge for the new feature.

Example: Tim’s policy was issued on 02/01. His insurance company changed forms on 05/01, and the new forms eliminated all coinsurance penalties. This change involved no premium charge or adjustment. When Tim had a loss on 07/01, the company adjusted the policy without a coinsurance penalty because of the broader coverage feature.

6. No Benefit to Bailee

This insurance is for the benefit of the named insured and not for anyone else. This is important because this insurance will not relieve a bailee of its obligations to the named insured.

7. Policy Period, Coverage Territory

Only loss or damage that starts during the policy period shown in the declarations is covered. The policy coverage territory is the United States of America, Puerto Rico, and Canada, so only loss or damage that occurs in that coverage territory is covered.

F. DEFINITIONS

1. Insured (04 16 change)

The named insured is an insured.

If the named insured is an individual, anyone who lives in the house with the named insured, if related to the named insured, is an insured. Also, anyone who is living in the house, is not yet 21 and for whom either the named insured or a relative living in the home is responsible, is an insured.

Note: There is a formatting change but not a coverage change.

2. Insured Location (04 16 addition)

The location described on the declarations. Any private roads and other similar approaches to the described location are also considered part of the insured location.

3. Mobile Agricultural Machinery and Equipment

Any device that is mobile and used in the regular operation of a farm. Accessories, while attached to the device but also while not attached, are part of this definition. Tools and spare parts are also part of the definition but only if designed specifically to be used with and intended for the mobile equipment and machinery maintenance and operation.

4. Pollutants

This is irritants and contaminants. These can be in any state of matter – solid, gas, thermal or liquid. Examples are soot, acids, smoke, chemicals, vapor, fumes, waste, and alkalis. The term waste is not limited to only items being thrown away. Items being held in order to be recycled, reclaimed, or reconditioned are also considered waste. This is the same definition used in all ISO products.

5. Specified Causes of Loss

Specified causes of loss are only fire, lightning, explosion, windstorm, hail, smoke, aircraft, vehicles, riot, civil commotion, vandalism, leakage from fire extinguishing equipment, sinkhole collapse, volcanic action, falling objects, weight of snow, ice or sleet and water damage.

However, some of these causes of loss need more explanation:

· Smoke includes puffback, soot, fumes, or vapors from furnaces.

· Sinkhole collapse is a specified cause of loss only when land on which covered property sits suddenly sinks into an empty space that was created underground by the action of water on limestone. Even the collapse is covered; the cost of filling the hole or any sinking into any man-made spaces is not.

· Falling objects includes all damage caused by a falling object except for damage to the falling object itself. However, there are two limitations as to where the damage can occur in order to be covered. There is no coverage when the damage occurs to property in the open. There is also no coverage when the damage is to the interior of a building and to property that is inside that building unless the building is first damaged by a falling object causing a breach that permits entry of a falling object.

· Water damage is accidental discharge or leakage of either of the following:

Note: The prior edition of this definition was only the first bullet in this updated definition. The second bullet and the final sentence are added with the 04 16 edition.

o Water or steam but only when caused by the cracking or breaking apart of the plumbing or HVAC system or appliance on the insured location. The system must contain water or steam. However, this definition does not include sump systems.

o Water or waterborne material but only when caused by cracking or breaking apart a water or sewer pipe located off premises. The water or sewer pipe must be part of a municipal water supply system or municipal sanitary sewer system. Wear and tear must cause the pipe to crack or break.

Water damage, as defined in this definition, is not subject to the Water Exclusion.