FP 00 40–ISO FARM PROGRAM LIVESTOCK 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 EXPLANATION

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 32–LIVESTOCK COVERAGE FORM DECLARATIONS

Covered Property–Blanket

This is one of two ways to list covered property. This is a blanket basis where seven classes of animals are listed. A limit of insurance is indicated for each animal separate from the limit of insurance for the entire class of animals.

Example: Kevin has a dairy farm and also keeps horses. Since none of the animals have any special pedigree or stud potential, he believes limits of $3,000 per cow ($300,000 total for the class) and $5,000 per horse ($30,000 total for the class) is sufficient.

Covered Property–Schedule

The scheduled basis provides flexibility in scheduling limits. A limit for each class and a sub-limit for individual animals can be shown. An option for attaching a separate schedule is available.

Example: Kevin’s friend also has a dairy farm. Rather than depending on an outside service, he breeds using his own bulls. He also provides semen to other farmers. The bulls are valuable, and he does not want them grouped with the cattle limit. He purchases a total of $400,000 coverage for the cattle, with a $10,000 sub-limit on each bull.

Special Provisions

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

Note: The ISO advisory declarations does not have a space to indicate the deductible, even though the coverage form states that the deductible is shown on the declarations. Insurance companies that create their own declarations must include a space for the occurrence deductible.

FP 00 40–ISO FARM PROGRAM LIVESTOCK COVERAGE FORM ANALYSIS

INTRODUCTION

FP 00 40–Livestock Coverage Form insures cattle, sheep, swine, horses, mules, donkeys, and goats, as listed and specified on the declarations. It protects against the death of the animals but only when attributed to the form’s named causes of loss. Coverage may be written on a blanket basis, subject to a single amount of insurance for each class of animal and an 80% coinsurance clause, or on a scheduled basis, where an amount is scheduled in the policy declarations for each covered animal.

When this form is used, FP 00 13, Farm Property–Farm Personal Property Coverage may also be used. In such a case, it is important that Coverage F not be offered and that Coverage E not cover any livestock. Using the forms in this manner will prevent duplication and confusion.

Overview of the ISO Farm Program Property Coverage Forms

ISO Farm Program Policies Declarations Page – includes information on completing the policy declarations.

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 (04 16 change)

When covered property is damaged or sustains a loss due to a covered cause of loss that is not theft or when covered property is taken by theft, the insurance company pays.

1. Covered Property

Livestock of a class that is listed with a limit on the declarations is covered except when that livestock are in the custody of a carrier for hire.

Examples: Kevin was shocked to find smoke rolling out of the back of:

Scenario 1: His Golden Horns Cattle Ranch truck that he had just loaded with half a dozen head of cattle. He and two ranch hands promptly put out the smoldering fire. Unfortunately, four head died from smoke inhalation and the two survivors had to be destroyed because of irreversible lung burns. The Livestock Coverage form covered this loss.

Scenario 2: Kattle Karrier’s truck had just been loaded with half of a dozen head of his cattle. He and the Kattle Karrier truck driver promptly put out the smoldering fire. Unfortunately, four head died from smoke inhalation and the two survivors had to be destroyed because of irreversible lung burns. The Livestock Coverage form did not cover this loss because the livestock was in the custody of a carrier for hire at the time of the loss.

2. Property Not Covered

Livestock is not covered when in public stockyards, sale barns or yards, packing plants or slaughterhouses.

3. Covered Causes of Loss (04 16 change)

a. Covered Causes of Loss Other than Theft

A direct loss is covered if any of the following causes the loss or a loss results from it. Coverage also applies if a direct loss becomes necessary due to any of the following:

(1) Fire or Lightning

Fire and lightning are not defined terms but have been defined over the years in legal precedent. Fire and lightning are major concerns in farming operations because of remote locations, general lack of public or private water supplies and exposures from highly combustible materials, such as straw and hay.

Related Article: Fire–A Discussion

(2). Windstorm or Hail

Loss caused by windstorm or hail is covered, including damage that occurs because of wind-driven debris.

Related Article: Windstorm or Hail–A Discussion

However, there are several limitations:

· Coverage does not apply for any loss caused by frost or cold weather or by ice, snow, or sleet, whether the ice, snow, or sleet is driven by wind or not.

· There is no coverage when a loss occurs because of livestock running into streams, ponds, or ditches or against fences or other objects; loss due to fright regardless if it is direct or indirect.

· Loss resulting from freezing or smothering due to blizzards or snowstorms is also not covered.

Example: Ben kept his cattle on the open range until November. He then brought them in, closer to home, because of excessive cold and snow in the winter in the open range. An unusual October blizzard arrived, and Ben could not get to the cattle fast enough. After the wind died down and the snow stopped, he found all but eight of his cattle had smothered in the blizzard. There was no coverage for this loss by the Livestock Coverage form.

This cause of loss may either be completely eliminated from the policy or from specific items or property by using endorsement FP 10 15–Windstorm or Hail Exclusion.

(3) Explosion

This term is not separately defined in the policy, so the dictionary definition is used.

Explosion of gases in the furnace of a vessel or in the flues or passages of that vessel is specially described as covered.

Coverage does not apply to explosions of alcohol stills, steam boilers, steam pipes, steam engines, or steam turbines but only if owned, leased, or operated by the insured. Explosions due to electric arcing, the rupture, or bursting of pipes, the rupture of pressure relief devices, or because water caused contents of a building or structure to swell or expand are also not covered.

Example: Johnny is the son of the owner of Country Eggs and loves to experiment. His Dad lets him set up a chemistry set in one of the sheds located some distance from the house. Johnny accumulated quite a collection of chemicals from mail-order catalogs. One day he created an interesting chemical concoction and left it to brew as he went to lunch. The combination was deadly, and an explosion destroyed the shed. Flying debris from the shed struck and killed two horses and a sheep. The loss was covered because the explosion was unintentional.

chem lab

Related Article: Explosion–A Discussion

(4) Riot or Civil Commotion (04 16 change)

Acts of striking employees at the insured location and any looting that occurs at the time of a riot or a civil commotion or uprising are also covered.

Related Article: Riot or Civil Commotion–A Discussion

(5) Aircraft

Coverage only applies to losses that are the result of direct contact of covered property with any aircraft, spacecraft, or missile, or from objects falling from them.

Example: The crop duster seemed to be having problems as it flew over Harry’s Farm. Suddenly, a piece of equipment fell from the plane, striking and killing Harry’s prize bull. Coverage applied, and the insurance company will probably seek recovery for its loss payment from the crop duster.

This coverage also applies if the aircraft makes direct contact with the building in which the Covered Property is contained, and the Covered Property is damaged as a result of that contact.

(6) Smoke

Smoke damage must be sudden and accidental. It can include emissions of smoke, soot, vapor, and fumes from a furnace. However, any smoke from agricultural smudging or industrial operations is not covered.

Example: The furnace that is used to keep the hog barn warm began smoking during the night. The building had no smoke detectors. When Phil went to the barn the next morning, all the hogs were dead from smoke inhalation. The Livestock Coverage form covered this loss.

(7) Sinkhole Collapse

Coverage applies when the ground collapses due to underground cavities created by water acting on limestone. However, coverage does not include any costs to fill the holes. It also does not cover covered property sinking into any man-made holes, regardless of how those other cavities were created.

(8) Volcanic Action

Direct damage due to the eruption of a volcano is covered if the damage is caused by the airborne blast or shock waves, ash, dust, or particulate matter or actual lava flow. However, costs to clean up the ash, dust, or particulate matter are not included unless there was other covered damage. All volcanic activities that occur during a 168-consecutive-hour time frame are treated as one occurrence.

(9) Collision Causing Death

If a vehicle transporting livestock overturns or makes contact with another vehicle, coverage applies for any damaged covered property in that transporting vehicle. Covered property that is damaged when livestock run into, or are run into by, a vehicle on a public road is also covered. However, there is no coverage if a vehicle owned or operated by any insured collides with the transporting vehicle or strikes the livestock.

Example: Life was hectic at Peter’s house as they prepared for the county fair. Their four horses were loaded into the horse trailer, and Peter took off. As he pulled out, his son made a quick and unexpected turn in his vehicle and collided with his Dad’s truck. The impact overturned the horse trailer. Two horses were killed in the collision. The loss was denied because one insured had collided with another insured.

Related Court Case: Liability Policy Covers Horse Accident

(10) Vandalism

Damage to or destruction of covered property in a willful or malicious manner is covered, if the parties committing the vandalism are not insureds. This cause of loss may be eliminated from the entire policy or from only specific items by using endorsement FP 10 16–Vandalism Exclusion.

(11) Earthquake

Coverage applies only for earthquake. Any other type of earth movement is excluded.

(12) Flood

Flood includes surface water, waves, tides, tidal waves, any overflow of a body of water and overspray, whether wind-driven or not, including storm surge. Flood also includes tsunami and tidal water.

b. Covered Cause of Theft (04 16 change)

This item was one of the named covered causes of loss above in the prior edition. This edition is splitting theft from the other causes of loss in order to provide a more precise definition as to what constitutes theft. It groups all theft-related coverage and exclusions in one place. However, it also introduces new theft exclusions that may not be easy to spot in this transition.

(1) The insurance company pays for the following:

(a) The theft of covered property

However, it does not pay when the theft is the result of:

(i) Accepting counterfeit money, fraudulent checks, or money orders

(ii) Responding to unauthorized instructions to transfer covered property to a person or place

(iii) A voluntary parting of covered property because of a trick, device or scheme. The parting can be by the named insured or another who is entrusted with the property. (04 16 addition)

(b) Attempted theft of covered property that caused a loss or that become necessary because of the attempted theft is covered. The term “becomes necessary” is a newly introduced term that could be considered a coverage enhancement.

Example: A group of thieves attempts to steal Massive Brute, the Killinghams' prized bull. The thieves quickly realize that he is too aggressive for them. They stop their truck before it overturns, open the door, and release him. Unfortunately, he begins running and is deemed a public safety risk, and the local deputies are forced to shoot him. The loss of Massive Brute is covered because the shooting became necessary due to the attempted theft.

(2) There is no coverage under either (a) or (b) above when caused by:

· Dishonest or criminals act of any of the following:

o The named insured

o Any other insured

o Partners, managers, members, officers

o Employees

o Temporary workers

o Directors, trustees

o Authorized representatives

· Theft by anyone the named insured entrusted with covered property. This applies if acting alone or in collusion with others.

This (2) theft exclusion applies regardless of when the loss occurs.

This (2) theft exclusion does not apply to destructive acts by employees, temporary workers or authorized representatives but continues to apply to any theft by those individuals.

Note: This is a new exclusion.

(3) There is no coverage under (a) or (b) above when the only evidence that a loss occurred is an inventory or other similar instances where the property is missing, but no physical evidence is available to prove that theft occurred. (04 16 change but very similar to prior exclusion.)

Example: Paul checked on his sheep on the range. They should have numbered 65, but when he counted, there were only 59. He was sure the sheep had been stolen, so he reported the matter to the police and to the insurance company. Neither the police nor the insurance company investigator could find any evidence of theft, so the investigation halted and no payment was made.

Related Court Case: Animal Insurance Policy Held Not To Cover Unexplained Disappearance Of Horse – illustrates how the lack of evidence affects a claim.

4. Additional Coverage

a. Property Removed for Safekeeping (04 16 change)

If an insured anticipates that a covered Cause of Loss is imminent and removes property to a safer location, coverage applies when coverage property is damaged by ANY CAUSE OF LOSS or when THEFT of covered property occurs. This applies for up to 30 days after the removal from the endangered location. This is not an additional amount of insurance.

Example: A wildfire moved through the area, and Jim arranged for temporary lodging of his livestock with a farmer friend located several miles away. Rains finally came and extinguished the fire. Before Jim could get his livestock back, a pack of wild dogs broke into the pen they were in and killed several of them. Because this happened while the property was removed for safekeeping, coverage applies, even though death by wild dogs is not a covered cause of loss.

huge fire image004[1] copy

b. Debris Removal

The Livestock Coverage form covers the cost to remove debris created by loss or damage to covered property resulting from a covered cause of loss. The following limitations apply:

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

· The most paid is 25% of the sum of the direct damage loss and any applicable deductible

· Debris removal does not include any costs to clean up pollutants.

The debris removal cost is not in addition to the limit of insurance. It is part of the limit of insurance. If the debris removal cost exceeds the 25% limitation, or if the limit of insurance is depleted through payment of the direct loss, an additional 5% of the limit of insurance is available to pay for only the debris removal.

c. Extra Expense

When a limit for Extra Expense is shown on the declarations, that limit is available to cover the necessary and actual documented extra expenses incurred by the named insured in order to resume normal farming operations. The farming operations must be interrupted by covered property being damaged or destroyed by a covered cause of loss or by the theft of covered property. Coverage ends after the amount of time necessary to rebuild, replace, or repair the Covered Property passes. Expenses do not include any costs for testing or monitoring for pollutants. No deductible applies to this coverage.

Example: The calves were in the barn and their mothers were just crossing an adjacent road when four of them were struck and killed by a speeding car. The calves were not yet weaned. Janey hired extra hands to feed the calves for the next five weeks until they were ready to be sold. The cost of the additional labor and the formula were covered under the Extra Expense provision.

d. Fire Department Service Charges

Some individuals and businesses enter into contracts for fire protection with community fire departments. 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 call for services was in order to protect covered property from a covered cause of loss. However, this coverage only applies in instances when a location is outside of city limits or outside the protected area of the governmental entity that provides the firefighting service. Any payment under this coverage is an additional amount of insurance. No deductible applies to this coverage.

5. Coverage Extension

Livestock in the Custody of Common or Contract Carrier

A limit of $1,000 applies to livestock that is in the custody of a common or contract carrier. The limits can be increased on the declarations.

B. EXCLUSIONS

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.

1. Earth movement (04 16 change)

Earth movement is defined in three paragraphs. Paragraph (1) excludes landslides and associated earth sinking, rising, and shifting; 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 livestock or theft of livestock 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.

2. Governmental action

There is no coverage for property destroyed by government action except for such action taken to stop a fire if the fire is covered under this policy.

3. Intentional Loss (04 16 change)

There is no coverage if the loss is due to a deliberate act of any insured. No insured has coverage following intentional acts, even insureds not involved and unaware of the actions.

Example: Herb had a bull insured for $25,000. He received a medical report that the bull had cancer and would be dead within six months. Rather than suffer the loss, he decided to start a fire in the bull’s area and take the insurance money. He never told his wife or partner of the scheme. The plan seemed to work until an investigator contacted the vet for the medical records. The additional investigation produced the proof of arson. Herb was arrested. His wife and partner were not arrested, but they did not receive any insurance proceeds for the dead bull.

There is no coverage for any deliberate act of theft by any insured. No insured has coverage following such an intentional act, even insureds not involved and unaware of the actions.

4. 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 only for the damage from the fire.

5. 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 that is not theft, 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.

6. 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: Phillip was amazed when he saw a large area of ground in his pasture just drop. He was shocked when one of his horses stumbled, fell into the hole, and died. Rather than taking any precautions for the rest of the herd, he rushed into the house and called various news agencies to report this event. By the time he came out of the house, four more horses had fallen to their deaths. The insurance company paid for the first one, but Phillip was on his own after that, because he did nothing to protect his property from further damage.

7. War and Military Action

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

8. Water

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

Water that combines with dirt and creates mud. Mudslide and mudflow are 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.

C. LIMITS OF INSURANCE

For policies written on a blanket basis with a single limit applying to all livestock of a certain class, the limit per animal is the least expensive of the following settlement options:

· The actual cash value of the animal on date of loss,

· 120% of the total limit of insurance for each class, divided by the number of head of animals of the type owned by the insured at the time of loss or theft, or

· $2,000.

Under this provision, horses, mules, or head of cattle younger than one year are considered one-half a head.

In all other circumstances, the declared limit of insurance applies.

D. DEDUCTIBLE

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

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. Additional Acquired Property

Note: Under FP 00 13–Farm Property – Farm Personal Property Coverage Form, this same wording is used as a Coverage Extension. Placing such an extension of coverage into a conditions section seems out of place.

If coverage includes specifically declared livestock or has a livestock class limit of insurance, any livestock additionally acquired during the policy period is covered. The acquisition must be reported to the insurance company within 30 days. If at the end of 30 days following the acquisition the items have not been reported, coverage ceases. If reported within the 30 days, premium is calculated based on the date of acquisition. The most paid is the lesser of either the actual cash value or 25% of the total of all livestock limits shown on the declarations.

Example: The Phillips Farm has a total value of $250,000 on livestock scheduled on the Livestock Coverage form. They purchased their neighbor's farm, including their herd of animals, for $150,000, of which $50,000 applied to the livestock. The herd remained at the neighbor’s farm. The Phillips family was moving back and forth between the two farms and forgot to notify the insurance company of the acquisition. Two weeks after the acquisition, the Phillips family smelled fire, and they saw the neighbor's barn on fire. All the livestock was destroyed. Even though the insurance company had not been notified, the $50,000 value of the livestock was covered because the acquisition occurred less than 30 days before and the $50,000 value was less than 25% of the $250,000 livestock coverage limit.

3. Appraisal

If the company and the named 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. Any such agreement is binding, but just with respect to reliance upon the appraisal. Each side pays its own appraisers and shares 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.

4. Duties In The Event Of Loss (04 16 change)

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 insurance company is to receive prompt notice of the loss or theft 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. As 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.

5. Insurance Under Two Or More Coverages (04 16 change)

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

6. Loss Payment (04 16 change)

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

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

The company pays no more than the named insured’s financial interest in the damaged property.

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 can be settled with the property owner and if so it ends the insurance company’s obligation to the named insured.

The company may defend the named insured for suits brought by owners of property. The cost of the defense is the responsibility of the insurance company and will not reduce the limit available to pay losses.

7. Other Insurance

If there is other insurance on the covered property subject to the same agreements, terms, and conditions of this policy, the insurance company pays only its share of any loss. If there is another type of insurance, this insurance pays on an excess basis. This provision applies, regardless of the other source’s collectability. However, any payment is subject to this policy’s limit of insurance.

8. Pair Or Set (04 16 change)

If a loss or theft occurs so that one part of a pair is gone, the company either replaces the missing part so that it returns to its prior value or pays the difference between the value of the pair before the loss or theft 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 portion.

9. Recovered Property

If covered property is recovered after the settlement has been made, 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. However, such expenses are part of the applicable property’s insurance limit.

Example: Jimi of Stringblaze Ranch was paid $3,400 for the theft of a prized bull from a barn that showed evidence of break-in and vandalism. A few weeks later, the police recovered the bull from thieves who attempted to sell the bull at a fair in a neighboring county. Jimi takes the bull and immediately sends $3,400 to his insurer. The insurer handles the $200 it cost to transport the bull back to Jimi.

ribbons

10. Transfer of Rights of Recovery Against Others To Us (04 16 change)

The rights of recovery held by any party paid for a loss or theft against others responsible for a loss or theft are transferred to the insurance company but only for the amount the insurance company paid. 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 or theft occurs. However, after a loss or theft 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.

11. Valuation (04 16 change)

Valuation is actual cash value at the time of loss or theft. In no case is a payment made that exceeds the amount necessary to replace the property.

General Conditions

1. Coinsurance (04 16 change)

The insurance per animal limit for livestock must be at least 80% of the actual value at the time of loss or theft. If the limit on the declarations does not meet this requirement, a penalty is applied. The limit of insurance on the declarations is divided by the actual value multiplied by 80%. If the factor is less than 1.00, that factor is multiplied times the amount of the loss to determine the penalized settlement amount.

Example: Mark insured his cattle for $2,500 per head, with a total limit of $250,000. As a result of dangerous debris blown during a severe windstorm, ten cattle died. The adjuster determined that the cattle were worth $3,500 per head and there was 120 head in the herd at the time of loss. The required insurance was $336,000 (80% of the full herd market value of $420,000). The penalty factor was .744 ($250,000 limit divided by $336,000, the required amount). Had Mark properly insured his cattle he would have received $3,500 X 10 = $35,000. However, because he underinsured, he receives only $2,500 X 10 - $25,000 based on his per head limit of insurance AND that amount is further reduced because of the coinsurance penalty ($25,000 X .744 = $18,600).

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 of a person whom 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 if the other location does not also have a breach of a policy condition.

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 occurrence date of the loss or theft.

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

5. Liberalization

Any broadening 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: Marilee’s policy was issued on 03/01. Her insurance company changed forms on 06/01 and the new forms eliminated all coinsurance penalties. This change involved no premium charge or adjustment. When Marilee’s pigs were stolen on 08/01, 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 (04 16 change)

Only loss or theft that starts during the policy period shown on the declarations is covered. The policy coverage territory is the United States of America, Puerto Rico, and Canada so only loss or theft 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 declaration. Any private roads and other similar approaches to the described location are also considered part of the insured location.

3. Livestock

This term is limited to cattle, sheep, swine, goats, horses, mules, and donkeys.

4. Loss

When the term loss is used it means that the livestock must have died. The death may have been a natural death or the animal may have been destroyed following an event out of a necessity. This means that there is no coverage to treat an illness or for the loss of use of the animal.

It is important to note that in 04 16 coverage wording has been added throughout this form to differentiate loss from theft. Because theft is not considered “loss,” the wording in this definition does not apply to theft events.

5. 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.