FP 10 60–CAUSES OF LOSS FORM–FARM PROPERTY ANALYSIS

(April 2020)

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This analysis is based on the 04 16 edition of this form. Changes from the 02 09 edition are in bold print.

The definitions that apply to this form can be found in FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverage, Conditions and Definitions.

A. COVERED CAUSES OF LOSS

All Farm Property Coverage Forms refer to the Causes of Loss Form. If this form is not attached to the policy, there is no cause of loss provided and the policy is incomplete. The cause of loss that applies to a particular covered property is shown on the declarations. In addition, some coverage extensions in some coverage forms specifically state the Covered Causes of Loss that apply. Both the declarations and the policy forms must be reviewed to determine which Causes of Loss Form or Forms apply.

B. COVERED CAUSES OF LOSS–BASIC

1. Fire or lightning

Fire and lightning are not defined in the policy but have been defined over the years in legal precedents and proceedings. Fire and lightning are major concerns in farm operations because of remote locations, general lack of water supply, exposures from flammable products such as straw, hay or tobacco and heat-producing activities such as machinery operation and repairs.

Fire loss is not covered if it involves tobacco barn buildings or contents when the loss or damage is a result of the use of open fires in the tobacco curing or drying process taking place or up to five days after that process.

Related Article: Fire–A Discussion

2. Windstorm or hail

Loss or damage caused by windstorm or hail is covered, including the damage resulting from wind-driven debris.

There are a number of limitations on this cause of loss:

· There is no coverage for any loss caused by frost or cold weather.

· There is no coverage for ice, snow or sleet, even if wind-driven. The only exception to this is hail.

· The interior of buildings and structures and any personal property located in those buildings are not covered for loss or damage caused by rain, snow, and sleet, sand or dust, unless the building is first damaged and the created breach in the building allows those elements to enter.

· Watercraft and related equipment are covered only when located inside a fully enclosed building.

· Under Coverages E and F, livestock and poultry are not covered if their death is a result of their running into streams, ponds or ditches, against fences or other objects, smothering or resulting from fright. Livestock and poultry are not covered if their death is a result of freezing or being smothered during a blizzard or a snowstorm. No coverage applies to dairy or farm products in the open, with the exception of hay, straw or fodder.

This cause of loss may be excluded from the entire policy or from specific property by using endorsement FP 10 15–Windstorm or Hail Exclusion.

Related Article: Windstorm or Hail–A Discussion

Related Court Case: Horse’s Death Excluded from Windstorm Coverage (Classic) – not a farm case, but does involve animals and illustrates application of peril

3. Explosion

This term is not defined in the policy, so a 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.

There is no coverage under Coverages E, F and G for loss or damage due to explosions in a number of circumstances. Explosions of alcohol stills, steam boilers, steam pipes, steam engines, or steam turbines owned, leased or operated by the named insured are not covered. 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.

Related Article: Explosion–A Discussion

4. Riot or civil commotion

Loss or damage due to riot or civil commotion is covered. This includes, but is not limited to, loss or damage due to acts committed by striking employees at the insured location and looting that occurs during a riot or civil commotion.

Related Article: Riot or Civil Commotion–A Discussion

5. Aircraft

This cause of loss covers only losses or damages resulting from direct contact of covered property or the building containing covered property with any aircraft, spacecraft, missiles, or objects that fall from them.

Example: A roof of one of Trester’s equipment barns is partially destroyed when spraying equipment attached to a crop dusting plane detaches and crashes through it. This loss would be eligible for coverage under the aircraft cause of loss. Any damage to covered property within that barn would also be covered.

6. Vehicles

This cause of loss form covers only losses or damages resulting from direct contact with a vehicle or an object thrown or kicked up by a vehicle. Coverage does not apply to death of livestock.

Coverage also does not apply to loss or damage to fences, driveway, or walks. There is an exception. If any of these items is appurtenant to a covered dwelling and the vehicle causing the damage is not owned or operated by a resident of that dwelling, coverage applies.

Example: There are two dwellings on the Peterson farm. The Peterson family lives in one and the other is rented to the Maxims.

Scenario 1: Jay Maxim loses control of his vehicle and drives into the fence. The fence is appurtenant to the Peterson dwelling and Jay is not a resident of the dwelling so the fence is covered.

Scenario 2: Jay Maxim loses control of his vehicle and drives into the fence. The fence is appurtenant to the dwelling Jay is renting from the Peterson’s. Because Jay is a resident of the dwelling, the fence loss is not covered.

7. Smoke

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

8. Vandalism (04 16 change)

The cause of loss vandalism is not defined, so a common definition must be used.

The rest of this cause of loss explains limitations under this cause of loss.

Vandalism coverage is not available to the building or its contents if a dwelling has been vacant for more than 60 consecutive days before a vandalism loss takes place.

Note: The prior edition ended vandalism coverage at 30 days. The 04 16 edition ends coverage at 60 days.

Example: The Gleaner family farm is vacant for 75 consecutive days when a vandalism loss occurs under different circumstances. In each instance, neighbors discover the damage and call the police the following day:

Scenario 1: Vandals cause nearly $5,000 in damages to the outside walls and interior of the farm’s residence. The vandalism takes place on the 50^th day of the vacancy period – this loss would be covered.

Scenario 2: Vandals cause nearly $8,000 in damages to the interior of one of the farm’s feed barns. The vandalism takes place on the 76^th day of the vacancy period – this loss would not be covered.

There is no coverage for vandalism to electronic equipment (including media used with such equipment) that is located in a vehicle or mobile equipment when such property is powered by the motorized property’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 transit data, audio or visual signals such as a radio or a computer.

9. Theft (04 16 change)

Note: Overall, the changes in this item reduce coverage for all except for livestock, poultry, bees, fish, worms, and other animals as covered under Coverage E or F.

a. Theft includes attempted theft. Theft is also loss of property from a place where it was known to have been when it appears likely that the property has been stolen. This part of the paragraph does not apply to livestock, poultry, bees, fish, worms or any other animals covered under Coverage E. or F. Refer to paragraph b. below to see how theft applies to those items.

Theft coverage is modified based on the Coverage.

Editorial Note: The policy mixes and matches the Coverages when dealing with the many theft exceptions. We have reorganized them by Coverage as an aide to understanding.

Under Coverage A, theft does not include:

· Theft of building materials during the construction of the dwelling until that dwelling is completed and is being occupied.

· Theft from the part of the principal dwelling being rented to a non-insured.

· Household personal property that is away from the insured location and at a residence of an insured. However, such property is covered when the insured is at that other location only temporarily or when the insured is a student living away from home. The student coverage applies only if that student was at that “away-from-insured-location” within 45 days of the loss.

Example: Mary’s luggage is stolen from a location that is not an insured location.

Scenario 1: The theft occurs at a hotel. The loss is covered.

Scenario 2: Mary is a student. The theft occurs while she is off campus during her two week winter break. The loss is covered because even though the loss happened when she was off campus, she had been on campus within 45 days of the loss.

Scenario 3: Mary is a student. The theft occurs while she is off campus during her semester studying in Spain. The loss is not covered when it is determined that the theft occurred right before she returned to the U.S.

· Household personal property that is watercraft related and away from the insured location. Outboard engines and motors are specifically mentioned as not covered.

· Trailers, semitrailers, and campers that are considered household personal property and are away from the insured location are also not covered.

· There is no coverage for theft of electronic equipment (including media used with such equipment) that is located in a vehicle or mobile equipment when such property is powered by the motorized property’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.

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

· 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.

· 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 also not covered for theft. Destruction by employees or authorized representatives is an exception but this exception does not include theft by such individuals.

Under Coverage B theft does not include:

· Theft of building materials during the construction of the dwelling until that dwelling is completed and is being occupied.

Example: Mary’s luggage is stolen from a location that is not an insured location.

Scenario 1: The theft occurs at a hotel. The loss is covered.

· Household personal property that is watercraft related and away from the insured location. Outboard engines and motors are specifically mentioned as not covered.

· Trailers, semitrailers, and campers that are considered household personal property and are away from the insured location are also not covered.

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

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

· 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.

Under Coverage C theft does not include:

Example: Mary’s luggage is stolen from a location that is not an insured location.

Scenario 1: The theft occurs at a hotel. The loss is covered.

· The theft of Household personal property that is watercraft related and away from the insured location. Outboard engines and motors are specifically mentioned as not covered.

· The theft of trailers, semitrailers, and campers that are considered household personal property and are away from the insured location are also not covered.

· The theft of electronic equipment (including media used with such equipment) that is located in a vehicle or mobile equipment when such property is powered by the motorized property’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 transit data, audio or visual signals such as a radio or a computer.

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

· 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.

Under Coverage D theft does not include:

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

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

· 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.

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

Under Coverage E theft does not include:

· Any loss that is the result of counterfeit money or money orders issued by a post office or express that are fraudulent yet accepted.

· Any loss that is the result of checks or promissory notes not being paid when presented but that had been accepted.

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

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

· 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.

· 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 also not covered for theft. Destruction by employees or authorized representatives is an exception but this exception does not include theft by such individuals.

Under Coverage F theft does not include:

· Any loss that is the result of counterfeit money or money orders issued by a post office or express that are fraudulent yet accepted.

· Any loss that is the result of checks or promissory notes not being paid when presented but that had been accepted.

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

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

· 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.

Under Coverage G theft does not include:

· Theft of building materials during the construction of the dwelling until that dwelling is completed and is being occupied.

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

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

· 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.

b. The a. paragraph in this cause of loss stated that it did not apply to livestock, poultry, bees, fish, worms, or any other animals covered under Coverage E or F. This paragraph applies to those items instead. Theft coverage of such items does not include:

· Any loss that is the result of counterfeit money or money orders issued by a post office or express that are fraudulent yet accepted.

· Any loss that is the result of checks or promissory notes not being paid when presented but that had been accepted.

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

· 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.

One final theft item

This final item has no paragraph letter. It provides two additional theft-related exclusions.

a. There is no theft coverage provided when property is missing when there is no physical evidence to indicate what happened to it or that is only discovered during an inventory. This applies to only Coverages E and F.

b. There is no theft coverage when a portable building or structure disappears, and there is no evidence as to where it went or who took it. This applies to only Coverage G.

This entire cause of loss can be eliminated for all property or for selected property by the use of FP 10 14–Theft Exclusion.

10. Sinkhole Collapse

Coverage applies when ground collapses due to underground empty spaces created by water acting on limestone. Coverage does not apply to any costs to fill the holes and does not apply to man-made sinkholes or cavities. Man-made cavities or sinkholes could be caused by mining or a number of related activities.

11. Volcanic Action

The loss or damage caused by airborne blast or shock waves, ash, dust, particulate matter and actual lava flow from the eruption of a volcano is covered. However, cleanup costs are not included unless other covered damage exists. All volcanic activity that occurs over a 168-consecutive-hour period is considered one occurrence.

12. Collision

Collision coverage applies to only Coverages E and F. Three types of property are covered for loss or damage caused by collision:

· Farm Machinery. Any overturn or accidental contact between farm machinery and another object is covered. There is no coverage for tires, unless that damage coincides with other covered damage, or for loss or damage caused by foreign objects taken into or sucked into a harvester or other farm machine. Foreign object coverage can be provided using endorsement FP 04 20.

· Death of Covered Livestock. Any vehicle overturn or accidental contact between a vehicle and livestock resulting in the death of the livestock is covered. This can occur when the livestock are transported in a trailer by a motor vehicle or when they strike or contact a motor vehicle on a public road. Coverage does not apply if the livestock transporter collision is with a vehicle owned or operated by any insured or if livestock is struck and killed by a vehicle owned or operated by any insured.

· Damage to Other Farm Personal Property. Loss or damage to Farm Personal Property that is caused by accidental contact (collision) or overturn is covered. However, this does item does not apply to Farm Machinery or Livestock.

13. Earthquake Loss to Livestock

Coverage for loss or damage by earthquake applies only to livestock. Loss to livestock is only the death or necessary destruction of livestock as a result of the earthquake.

14. Flood Loss to Livestock

Loss due to the death or necessary destruction of livestock is covered if caused by 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.

C. COVERED CAUSES OF LOSS–BROAD

This cause of loss form includes the causes of loss listed in the basic form and the following additional causes of loss.

15. Electrocution of Covered Livestock

Coverage by this cause of loss applies only to the death or necessary destruction of livestock when caused by electrocution. Electrocution can be from any natural or artificially generated source of electricity.

16. Attacks on Covered Livestock

Coverage by this cause of loss only applies to the death or necessary destruction of livestock caused by attacks by dogs and wild animals. There is no coverage if the dogs or wild animals are owned by the named insured, its employees or by other people residing at the insured location.

Coverage does not apply to sheep under any circumstance.

17. Accidental Shooting of Covered Livestock

Coverage by this cause of loss applies only to the death or necessary destruction of livestock caused by an accidental shooting. Coverage does not apply if the named insured, its employees, or people residing on the insured location did the shooting.

18. Drowning Of Covered Livestock

Death by drowning is covered if it occurs due to external causes, and the drowned animal is not a swine younger than 30 days old.

19. Loading/Unloading Accidents

Death or the necessary destruction of livestock resulting from being loaded or unloaded off a transporting vehicle is covered. The death or necessary destruction must be sudden, unforeseen, unintended and not due to or resulting from disease of any kind.

20. Falling Objects

This cause of loss applies to the interior of a building and personal property in a covered building or structure damaged by a falling object. It does not cover loss or damage to the falling object and does not apply unless the falling object first damaged the outside of the building or structure before causing damage to property inside.

21. Weight of Ice, Snow or Sleet

This cause of loss covers the loss or damage to covered property resulting from the weight of ice, snow, or sleet. Coverage does not apply to loss or damage caused by the pressure or weight of water on foundations, pavement, awnings, fences, outdoor equipment, swimming pools, bulkheads, docks, piers or wharves.

22. Sudden and Accidental Tearing Apart

Coverage under this cause of loss applies to the sudden and accidental cracking, burning, bulging, or tearing apart of steam or hot water heating systems, appliances for heating water, air conditioning or sprinkler systems. Coverage does not apply to loss or damage caused by freezing.

23. Accidental Discharge or Leakage of Water or Steam (04 16 change)

This cause of loss covers loss or damage to covered property resulting from any plumbing, heating, air conditioning, or other system containing water or steam when it produces an accidental discharge or leakage of the water or steam.

Coverage does not apply to the cost to repair the defect that caused the leak. It does not apply to loss caused by the sump pump, loss or damage caused by discharge or overflow occurring away from the insured location or for loss to a building vacant more than 60 consecutive days before a loss occurs. There is no coverage for loss or damage caused by or resulting from freezing or for loss or damage due to a discharge from roof drains and similar equipment.

Coverage applies to the costs incurred to tear out and repair parts of the building necessary to access the defective system under Coverages A, B or G. This coverage does not apply to the costs of repairing the defective part.

24. Freezing

This cause of loss covers the freezing of a plumbing, heating, air conditioning, or automatic fire protective system or a household appliance, BUT it applies only if the named insured is responsible for the care and maintenance of the system and does so in a proper manner. For example, the named insured must maintain heat in a building or shut off and drain the water supply in any building that is unheated.

If the building is equipped with an automatic sprinkler system, the building must be heated, the heating system must be turned on and operating, and the water must be turned on and operating in order for coverage to apply.

A roof’s gutters, downspouts, drains and similar items are NOT considered part of a plumbing system.

25. Sudden and Accidental Damage from Artificially Generated Electrical Current

This cause of loss applies to only Coverages A, B, C and D. Coverage applies for any loss or damage resulting from the sudden and accidental electrical current discharged from any artificially generated electrical source. Coverage does not apply to tubes, transistors, integrated circuitry, laser or infrared devices used to control appliances or other devices by remote.

D. COVERED CAUSES OF LOSS–SPECIAL

Special Causes of Loss covers all risks of direct physical loss or damage unless the cause of loss is specifically excluded or limited in the policy.

Note: The prior edition mentioned that the exclusion or limitation would be in Section E. The current edition says that the exclusion or limitation can be anywhere in the policy. This change is acknowledging that limitations and exclusions can exist is almost any part of the policy.

1. Loss or damage caused by the following is not covered:

a. Tobacco Barn Fires

Loss or damage to tobacco barns and their contents as a result of the use of open fires to cure or dry tobacco is excluded. This exclusion applies when the tobacco is being cured and during the five-day period following the firing.

b. Collapse

Collapse is an additional coverage in only certain specific circumstances (as provided in FP 00 09–Farm Property – Other Farm Provisions Form – Additional Coverages, Conditions, Definitions). If a covered cause of loss occurs after a collapse, coverage applies to the ensuing loss or damage.

c. Windstorm or Hail

Coverage does not apply to loss or damage caused by or resulting from windstorm or hail to dairy or farm products that are in the open. Watercraft are not covered unless kept in a fully enclosed building. This applies to any trailers, furnishings, equipment, engines, and motors that are used with the watercraft.

d. Rain, Snow, Ice, or Sleet to Personal Property in the Open

Coverage does not apply to loss or damage to any covered personal property that is in the open when the loss or damage is caused by or results from rain, snow, ice, or sleet.

e. Rain, Snow, Sleet, Sand, or Dust

Coverage does not apply to loss or damage to building interior or personal property caused by rain, snow, sleet, sand, or dust. The only exception is when the building first sustains damage and through the damage created an opening for rain, snow, sand, or dust enters and causes the loss or damage.

f. Freezing or Thawing, or Pressure or Weight of Water

There is no coverage for loss or damage caused by freezing, thawing or the pressure or weight of water on structures that support property covered under Coverages A, B or G. There is also no coverage for such damage to retaining walls, bulkheads, pavement, fences, swimming pools, docks, piers, or wharves.

g. Discharge or Overflow of Water or Steam from Plumbing, Heating, Air Conditioning, or Automatic Fire-Protective Systems or Within a Household Appliance (04 16 change)

There is no coverage when such discharge or overflow begins elsewhere, but the damage occurs on the insured location. Coverage also does not apply if the loss or damage is due to freezing unless the heat in the building had been properly maintained or the water supply had been shut off. However, if the building is equipped with an automatic sprinkler system, heat in the building must be maintained and the water supply must be turned on.

When the discharge or overflow is not caused by freezing, the loss is excluded if the building or structure had been vacant for more than 60 consecutive days prior to the loss.

h. Coverage G and Any Farm Personal Property Only Exclusion:

This exclusion describes the type of ruptures and explosions in boilers and hot water vessels not covered by this policy and better covered by an Equipment Breakdown policy. There is some limited coverage, such as the explosion of gas or fuel within a furnace, but the rupture and explosion of steam operating vessels are not covered. Any steam or pressure vessel or water-heating vessel is not covered for rupture, bursting or explosion. If coverage is needed, an equipment breakdown protection policy should be purchased.

i. Coverages A, B or C Only Exclusion:

Theft from any portion of the principal residence that is rented and occupied by someone other than an insured is not covered. If there is a room or building on the premises rented out and items are missing from that area, there is no coverage.

However, the rest of the residence is still covered for losses by theft. If coverage is needed, endorsement FP 04 80– Rental to Others–Theft Coverage, can be attached.

j. Coverages B or G Only Exclusion:

Coverage does not apply to theft in or from a building or structure under construction. This includes any material to be placed on or in the building and any items already installed or attached. If coverage is needed, a builder’s risk policy should be purchased.

Related Article: Builders Risk Coverage Form Analysis

k. Coverage C Only Exclusion: (04 16 change)

Note: This applied to Coverages A, B and C in the prior edition and was not limited to only household personal property.

Theft coverage does not apply to the following household personal property located away from the insured location:

· Property when at a residence owned, rented or occupied that is permanently occupied by an insured except for a temporary visit

· Watercraft and any of its furnishings

· Motors or any trailer or camper.

Coverage does apply to a college student’s property stolen from a residence used by the student but, only if the student was at that college residence during the 45 days preceding the theft.

l. Unauthorized Instruction

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

m. 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 that losses due to con artist activities are generally not covered.

Example: Fred decided to sell his combine on his own. He placed a local ad, confident he could get more than the trade-in value offered by several local dealers. A young couple saw the advertisement and contacted Fred. They claimed that they had recently bought a neighboring farm and were in a hurry to get the equipment they needed at a good price. Fred and the couple haggled for some time, and Fred agreed to let them try it out for 24 hours. The man left his driver’s license and a check for half the purchase price with Fred as security. After 48 hours, Fred attempted to locate the couple and discovered the driver’s license and the check were both fakes. His loss was not covered.

n. Theft or Vandalism to Electronic Equipment in Motor Vehicle or Agricultural Equipment (04 16)

The theft or vandalism of electronic equipment (including media used with such equipment) that is located in a vehicle or mobile equipment when such property is powered by the motorized property’s electrical system. Exceptions exist for covered property that is permanently installed in the motorized vehicle.

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

o. Vandalism

There is no coverage for vandalism if the building is vacant for a period of 60 or more consecutive days prior to the loss.

p. 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.

Example: Carol’s boyfriend convinced her to help with a crime. Carol agreed to his idea to leave certain doors to her employer’s large machinery storage barn unlocked when she left one evening. The boyfriend stole tens of thousands of dollars in farm equipment but neglected to pick up Carol on his way out of town. Carol confessed to the police and to her employer, but the property was long gone. The insurance company denied coverage because of her collusion in the theft.

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

q. Transportation of Farm Property Limitation

There is no coverage for losses involving transported property, except for the limited coverage found under the basic and broad form coverage provisions.

r. Loss or Damage to Farm Machinery (04 16 change)

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

s. Artificially Generated Electric Current

Loss or damage to electrical devices, appliances, or wires due to flowing electricity is excluded. This means that lightning (not artificial) damage is covered but that loss of damage due to blackout, power surges and similar events due to generated electric current are not. The only exception is when a fire results from the generated electric current. The damage from such a fire is covered.

Under Coverages A, B, C, and D, coverage is further restricted to not apply to artificially generated electric current caused:

· Damage to tubes, transistors, or integrated circuity that are used in electronic devices, such as computers, home entertainment units, or appliances.

· Damage to laser/infrared devices that are used in the operation of electronic devices such as appliances, computers, or home entertainment units.

The term integrated circuity is broadly defined to include chips, transformers, rectifiers, wafers, and diodes. This broad definition often doesn’t work in an exclusion. Many courts will limit the exclusion to only the specific integrated circuitry listed while ISO may prefer the term to be used more broadly to incorporate changes in technology since the exclusion was written.

t. Agricultural Smudging or Industrial Smoke, Vapor or Gas

There is no coverage for any damage caused by agricultural smudging or industrial smoke, vapor or gas.

u. Loss or Damage Limited to Only Resulting Specified Causes of Loss and Glass Breakage:

Loss or damage to buildings, structures, or personal property due to any of the following is not covered:

· Wear and tear

· Rust

· Corrosion

· Fungus

· Decay

· Deterioration

· Hidden or latent defect

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

· Smog

· Settling

· Cracking

· Shrinkage

· Expansion

· 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 but this does not apply to the freezing of plumbing systems if heat has been maintained or the water supply has been shut off and appliances have been drained. However, when a fire sprinkler system is in place, heat must be maintained so that water can be supplied.

· Marring and scratching

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

Note: Using FP 05 30–Limited Coverage for Fungi, Wet Rot, Dry Rot and Bacteria–Property and FP 05 31–Limited Coverage for Fungi, Wet Rot, Dry Rot and Bacteria–Farm Dwellings, Appurtenant Structures and Household Personal Property provide a more extensive fungus type exclusion but then provide a very small amount of coverage.

2. The following suspicious Coverage E, F or G losses will not be paid: (04 16 moved and wording changed but very similar.)

a. Property that is covered under Coverages E or F that is reported missing based only on an inventory shortage and for which there is no physical evidence that a covered loss occurred. In prior editions, this applied to all coverages.

b. Portable building or structures covered under Coverage G that disappear and for which there is no physical evidence that a covered loss occurred.

3. Damage or loss caused by any of the following is not covered. However, if any one results in a covered Cause of Loss, the damage caused by that covered cause of loss is covered. These are commonly referred to as the anti-concurrent causation exclusions.

a. Weather conditions

These are not covered if they contribute to any cause of loss excluded in the Exclusions Section of the policy.

Example: The weather had been tough. Severe drought conditions in the summer were followed by torrential rains in September. The drought killed most of the plants and shrubs used for erosion control, so the insured farmer’s barn started to slide down the hill during the prolonged rains. Even though the rains caused the mud, because earth movement is excluded, the loss remains excluded.

b. Acts or Decisions

Groups, persons, organizations and governmental bodies decide to act or not to act in certain ways. Actions or lack of actions can result in property losses. The policy does not cover those losses or damages.

Example: The township trustees controlled the earthen dam. Jack and his sons noticed a weakness in the dam and asked that work be done to strengthen it. The trustees responded by saying the dam had been there 50 years, and reinforcement wasn’t necessary. During the next downpour, the dam broke and three of Jack's barns were destroyed by the flooding. His insurance claim was denied because of the water exclusion. He refiled the claim as being due to acts of the trustees. This was also denied because of this exclusion.

c. Faulty, Inadequate or Defective

Coverage does not apply to loss or damage resulting from faulty, inadequate, or defective planning, zoning, development, surveying, siting, design, specifications, workmanship, repair, construction, renovation, remodeling, grading, or compaction of not only the insured location but any of the property. Coverage also does not apply to loss or damage that results from faulty, inadequate, or defective materials that have been used in repair, construction, renovation, or remodeling or maintenance of a part or all of the property on or off the insured location.

Example: Phil built a barn at the edge of his property. His old neighbor recently sold his property to a developer. The developer had a survey done and discovered the barn was on his property and not on Phil’s. Phil was ordered to move the barn off the property. This expense is not covered on Phil’s policy because the loss is a result of an error in the initial survey. An employee helped Phil prepare the barn for the move and carelessly discarded a match. The resulting fire destroyed the barn. The fire loss was covered.

4. Pollution

Coverage does not apply for any loss or damage caused by or resulting from pollutants, unless it triggers a covered cause of loss. Coverage applies to the resulting damage.

Note: Under Coverages A and B, if an excluded cause of loss 1., 2., 3., or 4. above triggers a covered cause of loss, the resulting damage from the covered cause of loss is covered.

E. EXCLUSIONS

The following exclusions apply to all three types of causes of loss. They apply no matter where they occur in a sequence of events. They apply whether or not they directly or indirectly cause the loss. They also apply regardless of how widespread the loss or damage is.

1. Ordinance or Law (04 16 change)

Coverage does not apply to loss or damage due to the enforcement of ordinances or laws that affect the construction, use, or repair of property or that require that undamaged property must be torn down. It also doesn’t apply when there is compliance of such laws. This exclusion applies if the ordinance would have been enforced even without the damage or if the compliance costs occur while building actions are taken following a loss.

Ordinance or Law coverage may be purchased to cover the cost of certain ordinances using endorsement FP 04 04–Dwelling and Farm Building Replacement Cost Protection Including Ordinance or Law Coverage.

Example: Kenny’s Poultry was originally located five miles from the outskirts of town. With the passage of time and with urban expansion, the city now almost surrounds Kenny's property. There is an ordinance that prohibits poultry farming inside the city limits, but since Kenny’s Poultry operation was in place before the ordinance was enacted, his operation has been grandfathered out of the ordinance. When a tornado came through, the main building was more than 75% damaged. Kenny was notified that, because of the damage, the ordinance now applied to him so he could not rebuild at the location and would have to relocate. The insurance company paid for the damage, regardless of where he would rebuild, but they would not pay for the cost of tearing down the undamaged property.

2. Earth Movement (04 16 change)

Earth movement is defined in four paragraphs. Paragraph a. describes earthquakes, tremors and aftershocks along with other earth sinking, or rising when associated with the earthquake. Landslides and their own associated earth sinking, rising, and shifting are in paragraph b. The subsidence of earth into man-made mines is excluded in paragraph c. while Earth sinking that is not a part of paragraphs a. or b. and other soil conditions that cause settling, cracking or other damage to foundations are excluded in paragraph d. The movement described in any of the four 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.

Earthquake damage to farm machinery, vehicles, and equipment is covered but only when the Special Causes of Loss which applies to such 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.

3. 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.

4. Intentional Loss

No coverage applies if the loss is due to any intentional act by any insured. No insured has coverage for loss or damage that follows any intentional act, even insureds not involved and unaware of the actions.

Example: Betty and Bob were having a really rough time financially. Without Betty's knowledge, Bob decided to burn the barn down, with him in it, and end it all. He figured Betty would get the insurance money from the barn and his life insurance. He started the fire after Betty headed to church one Sunday morning, knowing she would be gone for at least four hours. However, Betty forgot to take something with her and returned home to get it. When she returned, she saw the smoke, called the fire department, saving Bob’s life as well as part of the barn. The fire investigator found the gasoline cans Bob had used to set the fire. The whole story came out and the entire claim was denied.

5. Nuclear Hazard

Any loss or damage from nuclear reaction, radiation or radioactive material is excluded, unless a fire ensues, and then only for the damage caused by the ensuing fire.

6. Utility Services

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 a 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.

Example: The power supply to John’s farm went out and shut down his grain dryer. The grain was wet from a storm the night before. Sometime later, the grain experienced spontaneous combustion. Coverage did not apply to any damage to the crop until the fire started and then only for the damage caused by the fire.

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

This exclusion states that coverage provided under Coverage C. is an exception. The one such coverage is Refrigerated Products – Not Farm Personal Property. However, the open-endedness of this exception could be considered ambiguous.

7. Neglect

The insured must take reasonable care to protect and preserve property during and after a loss. If additional damage occurs because the insured did not act in a reasonable manner to protect the property, coverage does not apply to that additional damage.

Example: Mike’s trailer sustained hail damage that left a large hole in the roof. He reported the loss to the insurance company. When the representative arrived a few days later, he found Mike had done nothing to protect the property, such as covering the property with a tarp. Rainfall from the night before soaked the inside of the trailer, including its contents. Mike told the representative he thought everything would be taken care of by the claim’s adjuster. When all the damage was evaluated, Mike was informed that the damage to the inside of the trailer and the contents was not covered because of his failure to take reasonable action to protect it.

8. War and Military Action

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

9. Water

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

· Floods and similar events, including surface water, waves, tides, tidal waves, and overflow of any body of water. This includes farm ponds and similar bodies of water. Loss or damage caused by or resulting from the spray from any of these bodies of water is also excluded, even if driven by the wind including storm surge. Tidal water and tsunamis are also excluded.

· Water that combines with dirt and creates mud. Mudslide and mudflow are considered water damage and are 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 or equipment

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

· Material that is borne by water, mudslides or mudflows

There are exceptions to this exclusion. If any of the water damage above results in fire, explosion, or sprinkler leakage damage, there is coverage for only that damage.

The flood paragraph above does not apply to farm machinery, vehicles, or equipment if covered under the Special Causes of Loss form. It also does not apply to livestock.