471.9-5

ISO FARM COVERAGE FORMS ARCHIVE

(April 2020)

This document is a repository of articles and analyses that relate to earlier editions of this coverage form.

Archive Index
Analysis	ISO FARM PROGRAM PROPERTY COVERAGE FORMS ANALYSIS (09 03 edition)
Special Analysis	Impact of 2014 Farm Bill
Endorsement	Reserved for Future Use

IMPACT OF 2014 FARM BILL

Essentially the latest farm bill has no significant effect on 2014’s crop insurance programs because there were no changes to products or subsidy levels.

471.6-9 Crop Hail Insurance

471.6-10 Multiple Peril Crop Insurance

However, there are a couple of areas of concern that, eventually, will affect decisions on coverage.

Projected Prices

The amounts used, as projected prices for corn and soy, are likely to be significantly lower in 2014 than they were in 2013.

Crop	2013 Prices	* 2014 Projected Price
Corn	$5.65	$4.62
Soybean	$12.87	$11.36
* Actual prices are based on settlement prices used in February 2014

Typically, lower projected prices trigger decreased coverage guarantees. However, the lower amounts should not result in producers significantly changing their choice of coverage levels in their insurance programs.

Agricultural Risk Protection Program

Beginning in 2014, the Group Risk Plan and Group Risk Insurance Plans have been replaced by a new policy called the ARPI (Agricultural Risk Protection Insurance Policy).

The 2008 Farm Program revolved around the Average Crop Revenue Enhancement (ACRE) Program. It consisted of direct (and countercyclical) payments. In an effort to move assistance away from subsidies and price supports. The emphasis on the 2014 program is to promote higher reliance on risk management (particularly insurance); ACRE is being replaced by the ARPI. Under the ARPI, the following new programs have been introduced:

1. Price Loss Coverage

Under this program, producers qualify for payments when a covered crop’s market price falls below a predetermined (fixed reference) price.

2. Agriculture Risk Protection (ARC)

The ARC is a county-based plan. Payments are distributed under the following conditions:

· A farm’s total crop revenue or

· A county’s total single crop revenue does not meet 86 percent of an established revenue benchmark.

These programs are new methods to supplement crop insurance during extended periods of declining farm prices.

Additional Products

The 2014 Farm Bill also added some new products, including STAX (Stacked Income Protection Plan) and SCO (Supplemental Coverage Option). Both are meant to fortify producers against losses caused by natural disasters or decreased prices.

STAX is restricted to cotton producers since they are ineligible for other programs. It is a revenue protection plan that may be used on a standalone basis or in combination with other insurance coverage. SCO allows all crop producers maximize protection by adding supplemental area coverage with their own individual policy or plan.

Both programs took effect in the 2015 crop year.

ISO FARM PROGRAM PROPERTY COVERAGE FORMS ANALYSIS

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

Section I Coverage A–Dwellings

Section I Coverage B–Other Private Structures Appurtenant To Dwelling

Section I Coverage C–Household Personal Property

Section I Coverage D–Loss Of Use

Section II–Coverage Extensions

Section III–Additional Coverages

Section IV–Other Provisions

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

Section I–Coverages

Section II – Coverage Extensions

Section III–Additional Coverages

Section IV–Other Provisions

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

Section I–Coverages–Coverage G–Other Farm Structures

Section II–Coverage Extensions

Section III–Additional Coverages

Section IV–Other Provisions

FP 10 60–Causes of Loss Form–Farm Property

Covered Causes Of Loss–Basic

Covered Causes Of Loss–Special

Exclusions

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

Additional Coverages

Farm Property Conditions

Definitions

Five separate forms are needed in order to construct a farm property policy. This provides flexibility and simplifies terminology. Three of them are coverage forms, one is a cause of loss form, and the last contains farm program property definitions, conditions, and additional coverages. The forms are:

· FP 00 12–Farm Property–Farm Dwelling, Appurtenant Structures and Household Personal Property Coverage Form

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

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

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

· FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverages, Conditions and Definitions

All five forms are discussed in this section because they replace Form FP 00 10.

FP 00 12–FARM PROPERTY–FARM DWELLINGS, APPURTENANT STRUCTURES AND HOUSEHOLD PERSONAL PROPERTY COVERAGE FORM

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 they live 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 FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverage, Conditions and Definitions.

SECTION I COVERAGE

Coverage A–Dwellings

A. COVERAGE

The insurance company pays for direct damage to covered property, described on the declarations and at an insured location (or elsewhere when permitted in the property coverage form), if the damage is due to a covered Cause of Loss.

1. Covered Property

The form covers dwellings owned by the insured. The dwelling may be on the insured premises or location or elsewhere, if owned by the named insured and shown on the declarations. Coverage includes any attached structure if actually attached. Connection by a fence or utility line is not the same as being attached. Coverage A protects all material on the premises intended for altering, building or repairing the dwelling or a properly attached structure. Equipment used to service the insured dwelling and grounds is also treated as covered property.

2. Property Not Covered

Coverage does not apply to land, including land on which the dwelling is situated, or to water. Trees, shrubs, plants and lawns are also not covered except as covered by an Extension of Coverage.

3. Special Limit of Insurance Under Coverage A

Outdoor communication devices, such as radio and television antennas and satellite dishes, are covered but for no more than $1,000 in any occurrence. Higher limits, if desired, must be shown on the declarations.

Note: This modest amount of coverage is a sublimit. In other words, any payment for such property reduces the limit available to protect other farm structural property.

B. COVERAGE A–CONDITIONS

The conditions listed in Form FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverages, Conditions and Definitions and in Form IL 00 17, Common Policy Conditions, also apply to Coverage A. In addition to those, the following conditions apply.

Loss Conditions–Valuation

1. Property

The policy pays on a replacement cost basis if the insurance limit equals at least 80% of the replacement value of the property at time of loss. Replacement cost does not include the value of the excavation, basements, foundations, and underground structures. The 80% requirement can be changed by endorsement or valuation on specific dwellings can be limited to Actual Cash Value.

When replacement cost valuation applies, the insurance company pays the amount to replace any damaged or lost property with property of similar kind and quality, the cost to repair the structure, or the limit of insurance coverage applicable to the damaged property, whichever is the least expensive option. Two important provisions apply. One is that the structure can be rebuilt at another location. However, under this option, the insurance company only pays the amount that would have been required to rebuild on the original location. Two is that the insurance company does not pay for construction upgrades or improvements required by any laws or ordinances. FP 04 04–Ordinance or Law is available to cover increased costs required by laws or ordinances.

Example: Jim purchased a farm policy when he bought his farm 25 years ago. For years he kept the same coverage limits. Jim's son-in-law, an insurance agent, encouraged him to review and increase his limits. Jim agreed to the reevaluation of his farm property values. Jim was shocked when he saw the limits needed, but he increased his coverage as suggested. Less than a month later, a tornado touched down and severely damaged the dwelling on his farm. Because Jim's limits were current, the loss adjustment and settlement went through with no problems and the dwelling was replaced. Jim’s only out-of-pocket expense was the policy deductible.

When a policy’s limit does not represent (is less than) 80% of replacement cost, payments are made either on an actual cash value basis or as a proportion that the actual limit bears to 80% replacement cost, whichever is larger.

Example: Let’s revisit the previous situation. In this case Jim carried a dwelling limit of $50,000. The dwelling’s actual cash value was determined to be $45,000 while the dwelling’s replacement cost was found to be $125,000.

The ratio applicable to the loss would be 50% [$50,000/$125,000 X.80]. This means that for any loss, either the Actual Cash Value or 50% of the replacement cost ($62,500) would be paid, whichever was the higher amount, subject to the limit of insurance. Since the dwelling was a total loss, Jim would have recovered the full $50,000 limit on it but that would have left him with a substantial out-of-pocket expense to replace his farm home.

In any replacement cost situation (except for the exception referenced below), the insurance company does not pay until the repairs are actually completed. It pays the Actual Cash Value until the repairs are completed and then provides final payment to cover the difference. Within 180 days after the date of loss, the insured must tell the company if they want to rebuild or if they wish to take an Actual Cash Value settlement. However, if the loss is less than $2,500, or 5% of the coverage limit, the loss is settled on a replacement cost basis even before repairs are made in order to simplify the handling of the claim.

2. Glass Replacement

When glass is replaced, the cost of safety glazing material is included but only when required by law.

Coverage B–Other Private Structures Appurtenant To Dwelling

A. COVERAGE

The insurance company pays for direct damage to covered property, described on the declarations and at an insured location if the damage is due to a covered Cause of Loss. Limited coverage is provided at other locations but only as described elsewhere in the property coverage form.

1. Covered Property

All private structures owned by the named insured that are appurtenant (related) to the insured dwelling. This section addresses property that is separated from the covered dwelling, including those connected merely by fences or utility lines.

2. Property Not Covered

Land and water
Structures that are rented to persons who do not live in the named insured’s dwelling.
Structures that are used by the named insured for farming operations
Any structure specifically listed on the declarations as not covered

Private garages are covered even if rented out or used for farming.

3 Limits of Insurance Under Coverage B

The Coverage B limit is 10% of the Coverage A limit. Higher limits are available if shown on the declarations. When a limit is shown on the declarations it is the total limit available for Coverage B, not in addition to the 10%. The limit for Coverage B is an additional amount of coverage. Any payment under Coverage B does not reduce the Coverage A limit.

Example: Paul has a private garage and a tool shed on the insured location. They were both destroyed in the tornado. The Coverage A limit on the policy was $100,000, so $10,000 was available to apply to these buildings.

Just as with Coverage A, there is a limitation of $1,000 per occurrence for loss to outdoor communication equipment, such as radio and television antennas and satellite dishes. This is a maximum limit, not an additional amount of insurance. This limit can be increased by showing a higher limit on the declarations. However, it remains a maximum.

B. COVERAGE B. CONDITIONS

The conditions listed in FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverages, Conditions and Definitions and in Form IL 00 17– Common Policy Conditions, also apply to Coverage B. In addition, Coverage B is subject to the same valuation clause as under Coverage A, Conditions.

Coverage C–Household Personal Property

A. COVERAGE

The insurance company pays for direct damage to Household Personal Property at an insured location, if the damage is due to a covered Cause of Loss. Limited coverage is provided at other locations but only as described elsewhere in the property coverage form.

1. Covered Property

The Household Personal Property must be owned or used by the named insured or a family member living in the household. In addition, Household Personal Property owned by others can be included and covered after a loss occurs if the named insured requests it. Such guest property must be located either in the named insured’s dwelling or on the grounds on which that dwelling rests.

2. Property Not Covered

The following items are not covered under Coverage C

Items insured in another policy or specifically covered in another part of this policy.
Aircraft or aircraft parts, unless the aircraft is for hobby use only and cannot carry passengers or cargo. An aircraft policy provides this coverage, if needed.
Trees, shrubs, plants, and lawns owned by a tenant named insured, except as covered by an Extension of Coverage.
Fish, birds, or animals.

Note: FP 00 40–Livestock Coverage is available to cover certain animals.

Business property, except as provided in item 3. Special Limits Of Insurance Under Coverage C
Electronic data processing media and software but only those amounts that exceed the greater of such property’s prepackaged software or blank discs value.
Any electronic device, such as stereos or disc players, used in motor vehicles or any land conveyance when in or on the vehicle or conveyance. Such devices can be covered by specifically scheduling them on the declarations.
Personal property used for the farming operation except for office fixtures and equipment. This property can be covered under Coverage G in FP 00 13–Farm Property–Farm Personal Property Coverage Form.
Motor vehicles and conveyances unless used only for servicing the named insured dwellings and grounds or for providing mobility to the handicapped. A commercial or personal auto policy covers normal motor vehicles. Golf carts may be covered using FP 05 27–Golf Carts.
Credit, debit and other similar cards that permit withdrawals or transfer of funds. This exclusion does not apply to the coverage granted under the form’s Section III, Additional Coverages.

Note: A separate crime policy can cover these exposures.

3. Special Limits of Insurance–Coverage C

The following classes of property are subject to sub-limits. These limits are not in addition to any limit in the policy. Instead, they act to restrict recovery to no more than the very modest sub-limit indicated. If higher limits are needed, the coverage must usually be purchased separately. The following sub-limit amounts apply to all property included in the category for each occurrence:

$200 on gold, platinum or silver, other than goldware, platinum ware or silverware, and also on money
$1,500 for manuscripts, passports, letters of credit, and securities. The costs of research, replacement, and restoration are part of this limit.
$1,500 on any watercraft, including all equipment, furnishings, outboard motors, and trailers
$1,500 on trailers not used with watercraft activities or farming operations
$2,500 on property at the residence used in business
$500 on property of an insured that is located at other premises and used for business purposes. This does not apply to electronic apparatus described in the following section.

The following types of property are also limited, but only for theft losses:

Furs, jewelry, precious stones, semi-precious stones, and watches are limited to $2500 per occurrence
Dinnerware and trays, trophies and other items containing silver, gold, platinum, or pewter are limited to $2,500 per occurrence. Goldware, gold-plated ware, silverware, silver-plated ware, platinum ware, platinum plated ware and pewterware are examples of this type of property
Firearms and related equipment are limited to $3,000 per occurrence
Electronic devices, such as stereos and disc players, used in any land conveyance are limited to $1,500 per occurrence. This limit applies only when such property is in the conveyance. It also applies to media and wires used with this property. These devices must be capable of being powered by the conveyance’s electrical system and by other sources.
Electronic apparatus, including related wires and media, used in the farm or business operation is limited to $1,500 per occurrence. This limit applies when the property is away from the insured premises and not in a land conveyance. The apparatus must be operated from power sources in the conveyance and also from other power sources.

These limits, along with those that apply to business property, may be increased or changed to coverage extensions by endorsing the policy

B. COVERAGE C–CONDITIONS

Household Personal Property is valued at actual cash value but not for more than the amount needed to repair or replace it. FP 04 36–Replacement Cost–Household Personal Property, can be used to amend and improve how such losses are settled.

Note: The conditions listed in FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverages, Conditions and Definitions and in Form IL 00 17–Common Policy Conditions, also apply to this Coverage.

Coverage D –Loss of Use

A. COVERAGE

The following are covered but only up to the Loss of Use limit of insurance on the declarations.

1. Your Additional Living Expense

Additional living expense applies if a covered cause of loss damages the primary family living quarters (owned or rented) to the extent that it is uninhabitable. This coverage pays for any necessary increase in living expense incurred so that the occupants can maintain their normal standard of living. Coverage applies for either the time it takes to repair the existing building or the time it takes to relocate to permanent new quarters. The amount paid does not exceed the policy limit for this coverage, so any such expenses become out-of-pocket costs should a policy’s limit be exhausted.

2. Fair Rental Value

The fair rental value of a tenant-occupied dwelling is paid if a covered cause of loss damages an insured dwelling or a covered appurtenant structure to the extent that it cannot be rented and rental income is lost. Payment is based on the fair rental value of the structure minus any non-continuing expenses. The payment period is restricted to the shortest time period required to rebuild or repair. The maximum amount of loss payable under this coverage is the limit stated on the declarations.

3. Loss and Expense Due To Emergency Prohibition Against Occupancy

There are cases where a dwelling is not damaged but it still cannot be occupied because of damage to surrounding areas. If the damage in the surrounding areas is from a covered cause of loss, and local authorities deny access to the insured dwelling, coverage applies under this section for any additional living expense or fair rental value for a period of up to two weeks, excluding any loss due to the cancellation of a lease.

Examples:

Scenario 1: A severe storm hit the area near Mary’s farm. Although Mary’s farm was not damaged, the sheriff decided no one could travel to her part of the county because of downed power lines and fears of looting. The sheriff’s action meant that Mary would not be able to return home for at least one week. Her additional living expenses for this period were covered.

Scenario 2: A political cult has declared war with the local government over zoning laws. Mary’s farm is close to the land and buildings owned by the cult. Though her property has not been damaged, the sheriff decided it was dangerous to travel to her part of the county because of marauding, firearm-bearing cult members. The sheriff’s action meant that Mary would not be able to return home until the volatile situation is resolved. It turns out that she is denied access to her home and land for a week. Her additional living expenses for this period were not covered, as the cause of the loss is ineligible for coverage.

B. COVERAGE D CONDITIONS

The conditions listed in FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverages, Conditions and Definitions and in IL 00 17–Common Policy Conditions apply to this Coverage.

SECTION II–COVERAGE EXTENSIONS

A. TREES, SHRUBS, PLANTS, AND LAWNS

Coverage applies for all trees, shrubs, plants and lawns located within 250 feet of the dwelling. Coverage is limited to theft, fire, lightning, explosion, riot, civil commotion, aircraft, non-owned vehicles (not operated by a resident), and vandalism.

The limit is 5% of the policy Dwelling. However, if the named insured does not own the dwelling coverage is 10% of the Household Personal Property Limit. Coverage is subject to a limit of $500 for any one tree, shrub, plant, or lawn.

No coverage applies to any trees, shrubs, plants, or lawns grown for business or farming purposes. This extension applies as additional insurance.

Example: Herman lives near a town with some residents who are having fun with a new “game” of driving cars through fields and lawns. One night, some local kids decided to play on Herman’s farm. They ran through some low shrubbery, then onto the lawn and finally pulverized a prized 3-year-old dogwood, valued at $485. Since the damage was within 250 feet of the house, there is coverage for up to 5% of the dwelling limit ($100,000 X .05 = $5,000 in this case). The deductible amount would have to be met but the remaining loss would be paid up to the extension limit.

B. HOUSEHOLD PERSONAL PROPERTY OF THE INSURED AWAY FROM THE INSURED LOCATION

Coverage for Household Personal Property applies anywhere in the world. However, when such property is located at another location owned by a person who qualifies as an insured, coverage is limited to 10% of the limit of insurance shown on the declarations or $1,000, whichever is greater. The covered property must be owned by the named insured or someone in the named insured’s family who lives in the household. The limit may be increased and the increased limit shown on the declarations.

Example: Derek moved to college and took along his TV, DVD player, computer, digital camera, CD player, guitar, refrigerator, books, and clothes. When the house he lived in burned down, he was amazed to find out how valuable his possessions were. The total value came to $7,000. Since his parents had not scheduled his location as an insured location on their policy, the only coverage available was the off-premises property limit. The household personal property was only insured for $50,000, so the most he could recover was $5,000.

Certain Household Personal Property is covered off-premises and is not subject to the percentage limitation. One situation is when property is moved from the insured location because the dwelling is not fit for occupancy. Another is when the family moves from one principal residence to another. In this second situation, there is pro rata coverage between the two locations for up to 30 days.

C. REFRIGERATED PRODUCTS–NOT FARM PERSONAL PROPERTY

Coverage extends to cover up to $500 for loss or damage to contents of a freezer or refrigerated unit on the insured premises. The loss must be caused by a change in temperature due to an interruption of electrical service to refrigeration equipment, by damage to generating or transmission equipment or by a mechanical or electrical breakdown of a refrigeration system. This is a coverage limitation, not an additional amount of insurance, but there is no deductible. Property must be owned by the insured and cannot be farm personal property.

Example: The Farner family took a much-needed vacation. A neighbor watched over the livestock and pets while they were away. When they returned, they noticed an odor from the garage. Somehow the fuse that controlled the power to the garage had blown while they were away but no one had noticed. All of the food in the freezer/refrigerator had thawed and was spoiled. This extension of coverage paid up to $500 for the Farners’ spoiled food.

D. BUILDING ADDITIONS AND ALTERATIONS

This extension is available only if the named insured is a tenant.

1. Coverage

Any additions, alterations, fixtures, improvements or installations made to the part of the residence occupied by the named insured and made or acquired at the tenant's expense are covered under this coverage extension. The limit of insurance is 10% of the Household Personal Property limit, unless a higher limit is specified on the declarations. This extension is an additional amount of insurance.

2. Loss Settlement

If a tenant pays for any repairs, this extension covers on an actual cash value basis. If any damage is not repaired within 12 months after the date of loss, a settlement based on the cost of the repairs and the time remaining on the lease is offered. The lease can be either written or oral. However, if another party pays for the repair or replacement, there is no payment under this coverage.

Example: Kevin lived and worked on his uncle’s farm. Because he planned to continue living there a long time, he added a room to the back of the house. He used the space as a music studio. One day a fire started that severely damaged his studio. Fortunately, Kevin’s insurance agent had convinced him to increase the limit on his policy when the addition was built. The 10% of personal property extension was not sufficient in this case. The separate limit allowed him to make the needed repairs and to continue to enjoy the house.

SECTION III–ADDITIONAL COVERAGES

A. REMOVAL OF FALLEN TREES

1. If a tree falls and damages covered property, coverage applies for the removal of that tree but there are stipulations and requirements:

If the tree is more than 250 feet from the dwelling and the fall is due to a covered cause of loss, removal of the tree is covered.
If the tree is less than 250 feet from the dwelling and the fall is due to a covered cause of loss other than fire, lightning, explosion, riot, civil commotion, aircraft, non-owned/operated vehicles, vandalism, or theft, coverage to remove the tree applies.

Note: Trees felled by the listed losses are covered under the trees, shrubs, plants and lawns coverage extension. This prevents duplicate coverage.

2. If a covered cause of loss causes a tree to fall as described above but the tree does not damage covered property, tree removal expense is still provided but only if the tree blocks a driveway or a handicapped-access facility.

3. A limit of $1,000 is available for any one loss but it is further limited to $500 for any one tree. This does not apply to any coverage provided under the Trees, Shrubs, Plants and Lawn Coverage Extension.

B. CREDIT CARDS AND ELECTRONIC FUND TRANSFER CARDS OR OTHER ACCESS DEVICES; FORGERY; COUNTERFEIT CURRENCY

1. The four elements included in this coverage all relate to monetary transactions. This coverage is an additional $500 of insurance, unless a higher limit is shown on the declarations. This coverage specifically pays for:

Any credit card obligations due to either theft or unauthorized use of the card. However, the insured must have complied with all credit card obligations.
Any loss due to theft or unauthorized use of an electronic fund transfer or debit card provided the insured has complied with all the card obligations and requirements.
Any loss due to forgery or alteration of a negotiable document.
Any loss involving counterfeit U.S. or Canadian currency when accepted in good faith.

2. If losses occur because of a business operation, or because the insured knowingly engaged in a dishonest transaction, there is no coverage.

3. There is no deductible.

4. Defense

The insurance company can make investigations and provide defense to the insured for losses under this Additional Coverage. The defense ends after payment of a loss exhausts the limit of insurance. The legal representative selected by the insurance company defends any suit brought because of credit or debit cards. The company also retains the option to defend any insured for losses involving forgery.

5. This is not a sublimit. It is additional insurance.

C. WATER DAMAGE

In the event of a water damage claim, this coverage pays to tear out and replace the parts of the building or structure that block access to the pipe or other equipment causing the water damage. This coverage does not apply to the actual repair of the faulty part or equipment. This coverage does not increase the limit of insurance. Sumps, sump pumps and other similar types of equipment are not part of this additional coverage.

Example: Fred could hear rushing water. Then he saw wet spots on the first floor ceiling of his home. When water began to drip through the ceiling, he took action. He shut off the water main, and called a plumber. The plumber inspected the ceiling and then opened up the area where he was sure he would find the problem. He then replaced the ruptured pipes. The loss involved:
Damaged Item/Expense	Amount
Drywall Removal	$65
Replastering	$75
Drywall/Plaster Labor	$115
New Pipes	$275
Pipe Replacement Labor	$200
Total	$730
Total Paid	$255
The insurance company paid for the water damage and for repairing the area that was torn out. However, they refused to pay the plumber’s bill related to pipe replacement.

D. GRAVE MARKERS

The insurance company pays up to $5,000 for damage to grave markers and mausoleums whether they are on or off premises. The Covered Cause of Loss must be BASIC or BROAD. Payment is on an actual cash basis. This is not an additional amount of insurance. In other words, payment made under this provision reduces the policy’s applicable limit.

E. OTHER ADDITIONAL COVERAGES

This policy includes a statement to refer to the FP 00 90–Farm Property–Other Farm Provisions Form for more coverages, defined terms, and provisions that also apply.

SECTION IV–OTHER PROVISIONS

A. COVERED CAUSES OF LOSS, EXCLUSIONS AND LIMITATIONS

A policy requires a Covered Cause of Loss section to be complete. These provisions are discussed below under the section on FP 10 60–Causes of Loss Form–Farm Property.

B. LIMITS OF INSURANCE

This is discussed below under the section on FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Condition and Definitions.

C. DEDUCTIBLE

This is discussed below under the section on FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Condition and Definitions.

FP 00 13–FARM PROPERTY–FARM PERSONAL PROPERTY COVERAGE FORM

The entire form must be reviewed in order to understand how coverage applies. The term you in the form means named insured. If the named insured is married and they live 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 FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverage, Conditions and Definitions.

SECTION I–COVERAGES

Coverage E– Scheduled Farm Personal Property

A. COVERAGE–

The insurance company pays for direct damage or tangible loss to the following items while at the insured location or another location that appears in the description of the item. Damage or loss must be due to the occurrence of a cause of loss that qualifies for coverage under this policy section.

1. Covered Property

The following types of property are eligible when a limit is entered on declarations for it:

While in buildings, structures, sacks, wagons or trucks; grain, seeds and beans already threshed, silage, ground feed are covered property. Under the same circumstances, manufactured and blended feed for livestock is covered property.
While in the open, in stacks, shocks or piles; grain is covered but only for fire, lightning, vandalism, vehicle damage and theft
Hay, straw and fodder are covered but only while inside.
Hay, straw and fodder that are outside in stacks, windrows or bales are covered but only for fire, lightning, windstorm, or hail, vandalism, vehicles and theft causes of loss.

Note: A stack must be located at least 100 feet away from other hay, straw, or fodder.

Example: A farm hand was on his way to continue work on a storage shed that was just built. He was carrying a plastic container of wood preservative. He stumbled on a pitchfork and fell. The container of preservative burst and contaminated a haystack. The hay must be destroyed, but this loss is not eligible for coverage.

Farm products and related materials for the farm operations. This does not include hay, grain, or growing crops.
Poultry in the open or in any building designated on the declarations for poultry. The Special Cause of Loss form is not available to cover this property. Turkeys are covered ONLY if so stated. Turkeys are difficult to insure because they are very prone to loss from a number of sources.
Trays, boxes, and box shook (unassembled wood crates). These are commonly used for fruit and vegetable packaging. These are not itemized individually when a loss occurs but the value is based on a proportional basis of the total number in the category.
Computers and related software that are part of the farming operations and used as part of the farm management process. Software is replaced for not more than the cost of prepackaged software or for blank media. No coverage applies to the labor required to create customized programs.
Miscellaneous equipment closely related to farm operations, including machinery, vehicles, tools, and supplies. The values of these items of equipment must be added together and listed as one item or amount. The following is a list of items not included in this category:

□ Threshing machines, tractors, combines, corn pickers, hay balers, harvesters, peanut diggers, potato diggers, potato pickers, cotton pickers, crop driers, or equipment in sawmills

□ Automobiles, trucks, motorcycles, motorized bicycles and tricycles, dirt bikes, mopeds, snowmobiles, all-terrain vehicles, motor homes, house trailers. Vehicles intended for road use but this does apply to farm trailers or farm wagons.

□ Watercraft or aircraft. Any equipment, parts, or tires for any of the items in the paragraph are also not included as miscellaneous equipment

□ Liquefied petroleum or manufactured gas or fuel and the containers which hold them

□ Permanent fixtures in or attached to any buildings.

□ Bulk milk tanks.

□ Feed tanks and bins but only if attached to a buildings or other structure.

□ Boilers, pasteurizers, and barn cleaners.

□ Brooders which are poultry houses and all equipment associated with raising poultry

□ Fences, windchargers, windmills or their towers

□ All outdoor radio or television equipment or wiring and any private power and light poles

□ Irrigation equipment

□ Buildings and structures that are portable

□ Household personal property and any property that would normally be found in a dwelling

□ Property that is more specifically insured under another coverage or coverage form in this or any other policy.

Any borrowed or rented farm machinery, vehicle, and equipment, regardless of the rental contract. It must be property normally related to farming operations, in the insured's care, custody, or control and in which the insured has no interest as either an owner or lien holder. It is not covered while at the owner’s premises.
Borrowed farm machinery does not include any motorized vehicles such as automobiles, trucks, motorcycles, motorized bicycles and tricycles, dirt bikes, mopeds or snowmobiles. Additional 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.
Equipment or vehicles belonging to a dealer and being used for demonstration purposes are also not included.
When farm machinery, vehicles, and equipment are individually described on the declaration they are covered whether on or away from the insured location. The only time they are not covered is while in the custody of any company that transports property for others.
Livestock on or away from premises. Livestock is excluded while in transit by a common or a contract carrier, while at public stockyards, sales barns, or sales yards or at packing plants or slaughterhouses. Special Causes of Loss do not apply to livestock.
Bees but not for Special Causes of Loss.
Worms but not for Special Causes of Loss.
Fish but not for Special Causes of Loss.
Other Animals but not for Special Causes of Loss.
Portable buildings or structures owned by the named insured.

2. Property Not Covered

The following property is not included under Coverage E:

Any growing crops, trees, plants, shrubs, or lawns. Some coverage is available under FP 00 12 described above. Growing crops should be covered under a crop hail or crop multi-peril policy.
Any household personal property or property normally kept in a dwelling. This is covered under FP 00 12 described above.
Electronic data processing media and software but only those amounts that exceed the greater of such property’s prepackaged software or blank discs value.
Fixtures considered a permanent part of a building or attached to a building. This is part of FP 00 12 described above or FP 00 14 described below.
All outdoor radio or television equipment or wiring and any private power and light poles. This property may be a part of FP 00 12 described above or FP 00 14 described below. Additional limits may need to be purchased with an Inland Marine policy.

3. Special Limits of Insurance under Coverage E

A special limit is actually a limitation because it places a lower maximum limit on specific property. It is not additional insurance but instead sets a cap on recovery. The limits in this section can be increased on the declaration so these limits are defaults when no limit is shown on the declarations.

Hay, straw or fodder in the open is limited to $10,000 for a single stack.
The poultry limit per bird is the cash market value at the time of loss.
Any single item of miscellaneous equipment is limited to $3,000.
The least expensive of the following options is the amount the insurance company pays for loss or damage to any one head of livestock:

□ 120% of the amount obtained by dividing the total insurance on the class and type of animal by the number of head owned at the time of the loss.

□ The actual cash value of the animal

□ $2,000

Each individual horse, mule or head of cattle under one year of age is counted as 1/2 head.

Example: The Greene Dairy Farm had 130 head of cattle. The total insurance carried was $120,000. A recent fire in one of the barns killed 10 animals. Here are the valuation options that apply to this loss:

$120,000 ÷ 130 = $1,000 X 1.20 = $1,108 (rounded)

Actual cash value of each head is $1,500.

Since the least expensive option is to pay $1,108 per animal, the total settlement is $1,108 X10 animals or $11,080.

B. COVERAGE E. CONDITIONS

LOSS CONDITIONS

The conditions listed in FP 00 90–Farm Property–Other Farm Provisions Form–Additional Coverages, Conditions and Definitions and in IL 00 17–Common Policy Conditions apply to this Coverage. In addition, the following conditions apply:

1. Portable Buildings and Portable Structures That You Own

Payments made on these structures are on a proportional basis. At the time of loss, the total value of all portable buildings is added up and compared to the limit of insurance that applies to that class of property. That ratio is then applied to and multiplied against the loss amount to determine the amount paid.

Example: The amount of insurance is $150,000 and the value of all buildings is $200,000. The loss amount is $5,000. $150,000 ÷ $200,000 = .75. As a result, the payment is $5,000 X .75 or $3,750.

2. Pro Rata Distribution

This condition applies to only Grain, Hay, Straw and Fodder, Farm Machinery, Vehicles and Equipment and Poultry in Unheated Buildings. It applies only when coverage applies at more than one location. The limit available for a given loss depends upon whether the total amount of coverage carried is adequate compared to the total value of the property that exists at all locations. The value is determined at the time a given loss occurs. Further, payment also depends upon the relationship between the amounts of property located at the loss site (or sites) in comparison to the total amount of property protected at all sites.

Note: The FP 00 13 form includes two examples (one concerning adequate limits and one concerning underinsurance) to assist the reader’s understanding of this condition. Essentially the limit calculation that applies to a given loss is as follows:

Property Value at Loss Location ÷ Property Value at All Locations

X Limit Carried for All Locations

Example: An insured has five locations. He suffers a grain loss at a single location. Here is how the pro rata distribution condition would affect the loss payment:
Amount of Coverage Carried - All Locations	$250,000
Value of Property - All Locations	$400,000
Value of Property - Loss Location	$75,000
Amount of Loss	$50,000
Proportion Calculation	$250,000 ÷ $400,000
Available Coverage Calculation	.625 x $50,000 = $31,250
* Available for loss	$31,250

* The applicable deductible is subtracted before the loss is paid.

3. Livestock, Poultry, Bees, Fish, Worms and Other Animals

The term loss is limited in its usage for livestock, poultry, bees, fish, worms, and other animals. A loss must be actual death or destruction. Illness and disease that does not lead to death is not covered. Damage causing a reduction in value is not a covered loss. The death or destruction must result from a covered cause of loss.

Example: Joe had agreed to sell eight chickens to a neighboring farmer. A respiratory illness caused a weight-loss to the hens. While the sale was completed, it was at less than half the original price This loss is not eligible for coverage.

4. Valuation

The only valuation is actual cash value at the time of loss not to exceed the amount needed to repair or replace the property.

5. Coverage Territory

The coverage territory is the United States, Puerto Rico, and Canada.

Coverage F–Unscheduled Farm Personal Property

A. This coverage is unusual because all property covered is unscheduled. If the property meets the description of covered property, coverage applies. Coverage is provided only if there is direct physical damage or loss to covered property and that loss or damage is caused by a covered cause of loss.

1. COVERED PROPERTY

Covered property includes all farm personal property at the insured location, unless it is listed as property not covered. The following items are also covered when away from the insured location:

Grain, ground feed, fertilizer, fodder, hay, herbicides, manufactured and blended livestock feed, pesticides, silage, straw, threshed beans and threshed seeds EXCEPT while being stored or processed in commercial drying plants, manufacturing plants, public elevators, seed houses, or warehouses.
Livestock, EXCEPT while in transit by common or contract carrier, at public stockyards, sales barns, or yards or at packing plants or slaughterhouses.
Farm machinery and equipment, implements, tools and supplies, unless listed as property not covered or in the possession of a common or contract carrier.

Note: The Special Causes of Loss form is not a coverage option for unscheduled farm property (with the exception of livestock).

2. Property Not Covered

All of the following property is excluded under Coverage F:

Personal property that is usual to a dwelling or called household personal property.
Electronic data processing media and software but only those amounts that exceed the greater of such property’s prepackaged software or blank discs value.

Example: Hannah’s laptop is destroyed in a fire; she turns in a claim that includes $2,200 for her inventory software that she extensively modified for her farming operation. She’s paid only $495, the cost of the off-the-shelf software; the modification expense is ineligible for reimbursement.

Animals that are not considered livestock.
Poultry, bees, fish, or worms. Coverage E should be used to cover this property.
Racehorses, show horses or show ponies. Coverage E or more specialized horse related coverage such as Bloodstock coverage should be used to cover this property.
Grain, threshed seeds, threshed beans, hay, straw, fodder, silage, ground feed, herbicides, fertilizer, manufactured or blended livestock feed but only while being stored or processed in manufacturing plants, public elevators, warehouses, seed houses, or commercial drying plants.
Trees, plants, shrubs, or lawns.
Tobacco, cotton, vegetables, root crops, potatoes, bulbs, fruit, or nursery stock.
Crops in the open, except as provided for under the extension of coverage in Coverage F.
Contents of chicken fryer or broiler houses, laying houses, poultry brooders, or duck or turkey houses. Coverage E should be used to cover this property.
Automobiles, trucks, motorcycles, motorized bicycles or tricycles, mopeds, dirt bikes, snowmobiles, four-wheel all-terrain vehicles, mobile homes, house trailers, vehicles primarily designed and licensed for road use, and watercraft or aircraft. Parts, tires, and equipment used with any equipment within this paragraph are also not covered. Farm wagons and trailers are an exception. An automobile policy should be used to cover most of this property.
Fences; windmills or wind chargers or their towers. Coverage G should be used to cover this property.
Permanent fixtures in or attached to any buildings. Bulk milk tanks, feed tanks and bins but only if attached to a buildings or other structure. Also, boilers, pasteurizers, and barn cleaners.
Outdoor radio or television equipment. An Inland Marine Floater should be used to cover this property.
Portable buildings or portable structures. Coverage G should be used to cover this property.
Irrigation equipment.
Property that is described separately and is covered specifically in whole or part under another coverage or coverage in this or any other policy. This means that items listed and covered by an Inland Marine floater would not be covered under this coverage. Its value should therefore be removed from this coverage’s limit.
Cotton pickers and harvester-thresher combines.
Any property that is shown under Coverage F on the declarations as other property that is not covered.

3. Special Limits of Liability Under Coverage F

The special limits are maximum amounts within the Coverage F limit of Insurance. These do not extend coverage but rather limit coverage for certain categories of property. These maximum amounts apply to horses, mules, or head of cattle. The limits are $1,000 on any one horse, mule, or head of cattle that is under one year of age and $2,000 on any other head of livestock that is older than that. This limit is further subject to modification by operation of the coinsurance clause, if applicable. These maximum amounts are not necessarily the amount the insurance company pays. If an animal is worth less than the limit available, the actual value is the amount paid.

B. COVERAGE F CONDITIONS

LOSS CONDITIONS

1. Livestock

Loss is a term with a limited definition with respect to livestock. A loss must be actual death or destruction. Illness and disease that does not lead to death is not covered. Damage causing a reduction in value is not a covered loss. The death or destruction must result from a covered cause of loss.

2. Coinsurance

The limit of insurance for unscheduled personal property must be 80% or more of its actual cash value at the time of loss. If the limit does not meet this requirement, a penalty is applied. It is based on the ratio determined by dividing the limit of insurance by the required (80% of value) limit of insurance.

IMPORTANT EXCEPTION: If property is underinsured only because of the purchase of a new item of equipment or machinery within 30 days of the date of loss, the value, up to $100,000 for a new item and $75,000 for a replacement item, is removed before the calculation.

Example: The limit of insurance is $300,000. The actual cash value on the date of loss is $500,000. The required limit is $400,000 ($500,000 X .80). As a result, the penalty is .75 ($300,000/$400,000). Any loss or damage would be settled for only 75% of the value of the loss. If the reason for the difference is newly purchased equipment valued at $150,000, then $100,000 is deleted from the formula. That computation is:
Actual value of all unscheduled property:	$500,000
Minus the value of the new equipment	$100,000 ($150,000 value capped at $100,000)
Value to be used in calculation:	$400,000
X.80	coinsurance percentage
Required amount of insurance	$320,000
Exception – Coinsurance Penalty	$300,000 ÷ $320,000 = .9375
In this case, a loss is penalized by a factor of .9375 instead of the .75 factor that would apply if no newly acquired equipment were involved.

3. Valuation

The only valuation is actual cash value at the time of loss not to exceed the amount needed to repair or replace the property.

4. Coverage Territory

The coverage territory is the United States, Puerto Rico, and Canada.

SECTION II – COVERAGE EXTENSIONS

These extensions apply to Coverage E, Coverage F or both. The extension states which coverage applies.

A. PROPERTY IN THE CUSTODY OF A COMMON OR CONTRACT CARRIER

This extension applies to both Coverage E and Coverage F.

A $1,000 limit applies to farm personal property (as defined in the form) in transit while with a common or contract carrier. Higher limits are available and must be shown on the declarations.

B. COVERED PROPERTY AWAY FROM THE INSURED LOCATION

This extension applies only to Coverage E.

Property away from the insured location is covered but only for the percentage of the limit of insurance for that particular type of property. The percentage is 10% of the limit of insurance, unless the property is Miscellaneous Equipment Usual or Incidental to the Operation of a Farm, for which a percentage of 25% applies.

This extension does not apply to property stored or being processed in manufacturing plants, public elevators, warehouses, seed houses or commercial drying plants, in public sales barns or public sales yards, or in transit by common or contract carrier. It also does not apply to certain livestock and individually insured farm machinery and equipment.

Any loss under this extension is pro-rated with any other policy that also covers the property involved. This extension does not increase the limit of insurance.

If an insured wants 100% of his personal property to be covered on and off premises, FP 05 20–Scheduled Farm Personal Property Away From the Insured Location must be attached to the policy.

C. REPLACEMENT MACHINERY, VEHICLES AND EQUIPMENT NEWLY PURCHASED

This extension applies only to Coverage E.

If the insured purchases replacement machinery, vehicles or equipment, the limit for that scheduled item applies, plus an additional $75,000. The additional $75,000 is available for only 30 days after the date the property is purchased or when the policy expires, whichever occurs first. Coverage applies only to the extent that there is no coverage on the same property provided by another policy or elsewhere.

D. ADDITIONAL MACHINERY, VEHICLES AND EQUIPMENT NEWLY PURCHASED

This extension applies only to Coverage E.

Any newly purchased additional item of farm equipment, machinery or vehicles is covered for up to $100,000 for up to 30 days after the purchase or the policy expiration date (whichever occurs first). This extension does not apply to the following items:

Vehicles designed and licensed for road use but this does not apply to farm wagons or to farm trailer.
Automobiles, trucks, motorcycles, motorized bikes or tricycles, mopeds, dirt bikes, snowmobiles, four-wheel all-terrain vehicles
Mobile homes or house trailers
Watercraft, aircraft
Tires, equipment or parts of any of the four bulleted item groupings described above
Liquefied petroleum or manufactured gas or fuel
Towers, windmills windchargers
Brooders
Fences
Farm equipment, machinery, or vehicles that are purchased to replace any specifically described items.

Any coverage available under this extension is reduced by any coverage available in any other policy or coverage.

Note: This provision makes reference to new purchases, so some confusion might occur about new acquisitions that don’t involve purchase (such as inherited property, traded property, or gifts).

Example: Clem’s Machinery storage barn is demolished after a lightning strike-induced fire. He loses four of his tractors, including one received 15 days before the fire. It was a gift from his uncle who retired and sold his own farm. His insurer denies coverage for the gift tractor, but Clem demands an explanation of why the equipment extension coverage doesn’t apply.

E. ADDITIONAL ACQUIRED LIVESTOCK

This Extension applies only to Coverage E.

If coverage includes specifically declared livestock, or has a livestock class limit of insurance, this extension covers additional livestock purchased for up to 30 days after the purchase date. The most paid is the lesser of the actual cash value of the property or 25% of the total livestock coverage limit. Additional premium must be paid from the purchase date.

F. THIRTY-DAY ADDITIONAL LIMIT ON BORROWED OR RENTED FARM MACHINERY, VEHICLES, EQUIPMENT

This Extension applies only to Coverage E.

If there is a limit of insurance for Farm Machinery, Vehicles, Equipment Borrowed or Rented With Or Without A

Written Contract, an additional $10,000 per occurrence is available for items that are either rented or borrowed after the beginning of the policy year. This additional limit applies for up to 30 days. If the insured keeps the property for more than 30 days, additional premium is due starting with the 31st day of possession.

Example: During harvest time, Abe didn’t think about the impact of having planted an additional hundred acres of soybeans. He was running behind in his harvesting, so he borrowed equipment from a neighbor. One night, the borrowed equipment was vandalized. Since he had possession of the equipment for less than a month, his policy extended coverage for the damage.

G. FARM PRODUCTS IN THE OPEN–COVERAGE AGAINST CERTAIN CAUSES OF LOSS

This Extension applies only to Coverage E.

For only the perils of fire, lightning, windstorm, or hail, vehicles and theft, up to 10% of the limit of liability shown for farm personal property is available to apply to the following property in the open:

Grain in piles, shocks, stacks, or swaths.
Hay, straw and fodder in stacks, windrows, or bales but with another limit of no more than $10,000 for any one stack of hay, straw, or fodder.

The coverage also extends to unharvested barley, corn, oats, rye, wheat, and other grains, flax, soybeans and sunflowers but only for the perils of fire or lightning. This Extension does not apply to seed or forage crops.

This extension does not increase the limit of insurance.

SECTION III–ADDITIONAL COVERAGES

A. COST OF RESTORING FARM OPERATIONS RECORDS

Up to $2,000 is available for the research, replacement, or restoration of farm records lost due to a covered cause of loss. This is similar to Valuable Papers coverage. A higher limit can be entered on the declarations. No deductible applies to this additional coverage.

B. EXTRA EXPENSE

This coverage assists with the necessary and actual documented extra expenses incurred by the named insured in order to continue or resume normal farming operations. The operations must be interrupted by damage to or loss of covered property caused by the occurrence of a covered cause of loss. Coverage ends when the time needed to rebuild, replace, or repair the covered property ends. No deductible applies to this coverage. This coverage does not apply to any expenses for the testing or monitoring for pollutants.

Coverage applies only if there is a limit of insurance entered on the declarations for Extra Expense.

C. OTHER ADDITIONAL COVERAGE

Other additional coverages will be discussed in the section on FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Condition and Definitions below.

SECTION IV–OTHER PROVISIONS

A. Covered Causes of Loss, Exclusions and Limitations

A policy is incomplete without the Causes of Loss section. These provisions will be discussed in the section on FP 10 60–Causes of Loss Form–Farm Property below.

B. LIMITS OF INSURANCE

This is discussed below under the section on FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Condition and Definitions.

C. DEDUCTIBLE

This is discussed below under the section on FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Condition and Definitions.

FP 00 14–FARM PROPERTY–BARNS, OUTBUILDINGS AND OTHER FARM STRUCTURES COVERAGE FORM

SECTION I–COVERAGES

Coverage G–Barns, Outbuildings and Other Farm Structures A.

A. COVERAGE

The insurance company pays for direct physical loss or damage due to a Covered Cause of Loss to covered property.

1. Covered Property

The following property is covered property under Coverage G but only when a limit of insurance is shown in the declarations for it:

Farm buildings and structures. This includes all attached sheds and permanent fixtures. It does not include dwellings. Dwelling should be covered under FP 00 12.
Silos when they are individually listed and described in the declarations or schedule. A silo can be attached to a building but is not required to be.
Structures and buildings that are portable.
Fences, corrals, pens, chutes, and feed racks. Field and pasture fences are not included in this item
Radio and television equipment, antennas, masts, and towers provided they are outdoors.
Improvements and betterments. These are additions, alterations, fixtures, or installations made to the described building for the benefit of the tenant that must remain with the building when that tenant leaves. When the named insured is a tenant, the use interest in those improvements and betterments is covered.
Building materials and supplies for use in building, altering or repairing farm buildings and structures are covered but only when kept on or adjacent to the insured location.

2. Property Not Covered

The following property is excluded under Coverage G:

Land, including the land on which any structure is located
Water
Field fences or pasture fences
Foundations of buildings or structures that are below ground level. Coverage may be provided using FP 14 01–Coverage G–Damage to Below-Ground Foundations of Buildings or Structures, and Related Consequential Expenses.
Pilings, piers, wharves, or docks.
The cost to excavate, grade, fill or back fill.

B. COVERAGE G–CONDITIONS

LOSS CONDITIONS

1. Fences, Corrals, Pens, Chutes, Feed Racks

The amount paid for loss or damage to any covered fence, corral, pen, chute, or feed rack is the proportion the limit of insurance shown on the declarations bears to the actual value of the sum of all covered items.

Example: One of a farmer’s corrals is damaged and he turns in a claim that the insurer determines to be $2,200. The insurer investigates further and discovers that the value of all of such property owned by the farmer was $60,000, but the limit written for that property was only $30,000. He is paid only $1,100 for the loss.

2. Portable Buildings and Portable Structures

The amount paid for loss or damage to any portable building or portable structure is the proportion the limit of insurance shown on the declarations bears to their actual value. If the policy limit is only 50% of the actual value, only 50% of the loss is paid. However, if a particular portable building or structure has a specific limit shown on the declarations, this condition does not apply.

3. Valuation–Property Other than Improvements and Betterments

Valuation can be on the basis of either replacement cost or actual cash value.

Actual Cash Value – If replacement cost option does not appear on the policy declarations, then losses are paid based upon actual cash value as of the date of loss. However, payment will not exceed the amount required to replace or repair the damaged property. The cost to repair or replace does not include any increase in the cost to meet ordinance or law construction or use requirements.

Replacement Cost – This applies only if replacement cost valuation is entered on the declarations. Under this basis, the insurance company can either pay an amount to replace damaged or lost property with property of like kind and quality, repair the structure, or pay the limit of insurance, whichever is the least expensive option. Even if the replacement cost is entered on the declaration, the valuation will only apply if the limit on the declaration is 80% or more of the values at the time of loss. The value of underground excavations, basements, foundations, and structures are not included in determining the replacement cost values to use in the 80% calculation.

Two important provisions apply. One is that the structure can be rebuilt at another location but the company pays only the amount it would have cost to rebuild on the original location. The other is that if there are any ordinances that require changes in construction when damaged property is repaired or replaced, the company does not pay for any additional construction costs. FP 04 04–Ordinance or Law is available to address this situation.

Example: The roof on Fernie’s riding arena collapsed due to the weight of ice and snow, for a loss of $50,000. It was insured on a replacement cost basis for $90,000. The actual replacement cost is $100,000, but Fernie is informed that the building must be brought into compliance with state building code requirements because of the extent of the loss. The additional cost for the code compliance is $15,000. As a result, the claim is $50,000 for the roof and other damage and $15,000 for building code enforcement. The insurance company informs Fernie that they will only pay the $50,000 and she is on her own for the $15,000.

If the policy includes replacement cost valuation but is not insured to 80% of the replacement value, the policy pays on an actual cash value basis or the proportion of the actual limit to 80% of replacement cost, whichever is larger.

Example: Fred insured his barn for $15,000. At the time that it was damaged by a windstorm, it had a replacement cost of $30,000. Though his policy indicated replacement cost settlement, it was subject to a penalty for underinsurance. The proportional loss basis is determined as follows:

Replacement cost at time of loss = $30,000
Required limit is 80% of replacement cost is $30,000 X .80 = $24,000
Proportional penalty is $15,000/$24,000 = .625
Amount of payment available under proportional is $10,000 X .625 = $6,250.

Actual Cash Value = $4,500.

Because the proportional settlement is greater than the actual cash value, the settlement is $ 6,250 which must then be further reduced by the deductible amount.

In any replacement cost loss payment situation, the insurance company does not pay on a replacement cost basis until the repairs are completed. The company pays the actual cash value until the repairs are completed and then provides a final payment to reach the final replacement cost figure. The insured must tell the company within 180 days after the loss whether or not rebuilding will occur. However, if the loss is less than $2,500, or 5% of the total applicable property limit, the replacement cost is paid prior to repairs being made to expedite the claims handling process.

Example: Fernie from a previous example decides not to rebuild because she had no coverage for the mandatory ordinance upgrade. She is surprised that instead of being paid replacement cost settlement of $50,000, the company offers to pay the Actual Cash Value of only $25,000,

4. Valuation–Improvements and Betterments

This coverage applies only if the named insured is a tenant. Damaged improvements and betterments that are repaired or replaced by the insured within 12 months after the loss occurs are paid on an actual cash value basis. If the repairs are not completed within 12 months, the company pays only a proportional amount based on the remaining lease period. There is no coverage for repairs or replacements made by anyone who is not an insured.

5. Valuation–Glass Replacement

When glass is replaced, the cost of safety glazing material is included but only when laws require replacement with such material. This replacement provision applies even if the original glass was not glazed.

SECTION II–COVERAGE EXTENSIONS

A. PRIVATE POWER AND LIGHT POLES

Private power and light poles, including the equipment mounted on them, are covered for direct physical loss or damage up to a $1,000 limit. This is an additional amount of insurance and is subject to the policy deductible. If power and light poles are listed on the declarations, with a limit also shown, this limit is in addition to those limits. These items must be on a covered location and owned by the named insured.

B. NEW CONSTRUCTION

A $100,000 limit is available for covered loss or damage to newly constructed permanent farm structures at the insured location. Coverage includes materials and supplies used in the construction. This extension applies only to structures that are not covered elsewhere. The causes of loss are limited to only loss or damage caused by aircraft, explosion, fire, lightning, riot or civil commotion, smoke, vandalism, vehicles, windstorm or hail. The coverage on each farm structure under this extension ends when the values are reported to the insurance company, at the end of 60 days, or when the policy expires, whichever occurs first. This is not an additional amount of insurance.

SECTION III–ADDITIONAL COVERAGES

A. EXTRA EXPENSE

When a limit for extra expense is shown on the declarations, the insurance company pays the necessary and actual expenses incurred by the named insured in order to continue or resume normal farming operations after a covered cause of loss damages covered property.

Example: Nanci’s Vanilla Hills Dairy Farm’s milking needs are handled by equipment that was paid off a couple years ago. However, when her largest barn was struck by lightning, her entire inventory of machines was fried and had to be replaced. Due to a backorder situation, it would be several weeks before she could get replacements delivered. Until that time, she rents some milking machines from a dairy cooperative. Nanci’s insurance policy covers this extra expense as part of the loss.

Coverage ends when the time needed to rebuild, replace, or repair the covered property ends. No deductible applies to this coverage. This coverage does not apply to any expenses for the testing or monitoring for pollutants.

B. WATER DAMAGE

C. Other Additional Coverages

Other additional coverages are described FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Conditions and Definitions.

SECTION IV–OTHER PROVISIONS

A. COVERED CAUSES OF LOSS, EXCLUSIONS AND LIMITATIONS

A policy is incomplete without the Causes of Loss section. These provisions will be discussed in the section on FP 10 60–Causes of Loss Form–Farm Property.

B. LIMITS OF INSURANCE

This is discussed below under the section on FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Condition and Definitions.

C. DEDUCTIBLE

This is discussed below under the section on FP 00 90–Farm Property–Other Farm Provision Form–Additional Coverages, Condition and Definitions.

FP 10 60–CAUSES OF LOSS FORM–FARM PROPERTY

This form has been updated to a 02 09 date. The only significant changes are in the water related causes of loss and exclusions. These changes will be highlighted.

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 a 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 buildings or contents that are typically found in a tobacco barn, when it results from the use of open fires for curing or drying tobacco in the structure, or during the five-day period following open-fire curing or drying.

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; ice, snow or sleet, even if wind-driven.
The interior of buildings and structures and any personal property located in those buildings is 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 is 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.

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.

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.

Aircraft

5. This cause of loss covers only losses or damages resulting from direct contact 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.

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, except for such items that are appurtenant to a covered dwelling and then only if the vehicle causing the damage is not owned or operated by a resident of that dwelling.

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

Vandalism coverage is excluded if a dwelling is vacant more than 30 consecutive days before a vandalism loss takes place.

Example: The Gleaner family farm is vacant for 40 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 25^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 35^th day of the vacancy period – this loss would not be covered.

There is no coverage for vandalism to sound or video equipment (including medium used with such equipment) located in a vehicle or mobile equipment when such property is powered by the motorized property’s electrical system. Exceptions exist when such items appear or are defined as covered property or it is permanently installed in the motorized vehicle.

This cause of loss may be excluded from the entire policy or from specific items by using endorsement FP 10 16–Vandalism Exclusion.

9. Theft

Theft includes attempted theft. It also includes loss of property from a place where it was known to have been when it appears likely that the property has been stolen. Theft coverage does not include:

Any transfer of property using unauthorized instructions.
There is no coverage under Coverages A, B, or G for theft of material from a building under construction until and unless the building is finished and occupied.
There is no coverage under Coverages A, B, or C for theft from the portion of the residence rented out to others (who are NOT insureds). No coverage is provided for household personal property while it is located at another residence owned by an insured, except if a loss occurs while the insured is using such property. Such property owned by an insured that is located at a remote residence is covered if a loss occurs and the student has resided at that location within 45 days of the loss date. No coverage applies to any watercraft, related furnishings, equipment, outboard motors, trailers, or campers.
There is no coverage under Coverages E and F for theft discovered while taking inventory. There is also no theft coverage due to wrongful conversion or embezzlement, escape, or farm personal property mysteriously disappearing. Coverage when counterfeit money, fraudulent post office or express money orders, checks or promissory notes are accepted is not provided.
Theft of electronic devices used for transmitting, recording, receiving or reproduction of sound or pictures operated by power from the electrical system is excluded when those devices are on, or are intended for use with, a motor vehicle, unless the device is permanently installed in the vehicle. Theft of tapes, wires, records, discs, or other medium used with electronic instruments outlined above is excluded the items are in or on a motor vehicle or a mobile agricultural vehicle.

This 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 livestock is struck and killed by a vehicle owned or operated by any insured.

· Damage to Other Farm Personal Property. Loss or damage to other Farm Personal Property, other than machinery or livestock, caused by collision is covered.

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. (02 09 addition)

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 only applies to the death or necessary destruction of livestock 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 on the premises. Coverage does not apply to sheep.

17. Accidental Shooting of Covered Livestock

Coverage by this cause of loss only applies 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 premises did the shooting.

18. Drowning Of Covered Livestock

Death by drowning is covered if it occurs due to external causes and the animal drowned 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. Breakage Of Glass

This cause of loss covers glass breakage, including the required use of safety glazing materials. Coverage does not apply if the building where the glass is broken is vacant more than 30 consecutive days before a loss occurs.

21. 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.

22. 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.

23. 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.

24. Accidental Discharge or Leakage of Water or Steam

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 that 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 30 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.

25. 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.

26. Sudden and Accidental Damage from Artificially Generated Electrical Current

This cause of loss applies only to 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 items 1. or 2. below or Section E. Exclusions.

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 by the policy’s additional coverage – collapse provision). If a covered cause of loss occurs after a collapse, coverage applies to the ensuing loss or damage caused by that covered hazard.

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 or to watercraft or their trailers, furnishings, equipment and motors, unless kept in fully enclosed buildings.

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

Coverage does not apply to any covered personal property stored in the open for loss or damage caused by, or resulting 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, unless the building first sustains damage and an opening is created that allows entry of the rain, snow, sand or dust.

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 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

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 is properly maintained or the water supply is shut off. All loss or damage caused by other than freezing is excluded if the building or structure is vacant more than 30 consecutive days (prior to a loss). 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.

h. The Following Exclusion Applies Only To Coverage G and Any Farm Personal Property:

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 is 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. The Following Exclusion Applies Only To Coverages A, B or C:

Theft from any portion of the principal residence 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. The Following Exclusion Applies Only To Coverages B or G:

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.

k. The Following Exclusion Applies Only To Coverages A, B and C:

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

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

· 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. Inventory Shortage

Loss that can only be proven through an inventory shortage is not covered. The inventory shortage can be part of the evidence to show that a loss has occurred, and for how much, but it cannot be the sole source for documenting a loss.

m. Disappearance

If farm personal property or a portable building disappears, coverage does not apply unless there is some other evidence that they were stolen. Disappearance is one part of the evidence but other evidence must exist to indicate that the items were taken. Part of the conditions section of the policy indicates that the police must be notified if a crime has occurred.

Example: When Paul went to get his small tractor out of storage, he was surprised to discover the shed door open. When he looked around, he noticed the tractor was missing, along with some other items. He took a second look at the door and noticed deep scratches on the lock and surrounding wood. He contacted the police and notified the insurance company. Since he reported the loss to the police and could provide information concerning the possibility of theft, there was coverage under the policy.

Note: In the after-effect of a theft, if the items turned up, either through police activity or because they were merely misplaced, the insured would have to either surrender the property or return the claim payment to the company.

n. Voluntary Parting

If an insured gives away any property for any reason, even if a trick or fraud is involved, there is no coverage. 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 recently bought a neighboring farm and were in a hurry to get the equipment they needed at a good price. Fred and the couple man 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.

o. Unauthorized Instruction

If an employee agrees to transfer property to another individual without appropriate instructions, the loss is not covered. If an employee gives property away voluntarily, there is no coverage.

p. Theft or Vandalism to Electronic Equipment in Motor Vehicles or Agricultural Equipment

Electronic equipment, including radios, tape recorders and players, compact disc players, portable televisions, cell phones and similar equipment operated by power from the vehicle are not covered for theft or vandalism, unless the property is permanently installed in the vehicle. Theft or vandalism of any property (media) used in these devices is not covered when in either the vehicle or agricultural equipment.

q. Vandalism, Breakage of Glass

There is no coverage for glass breakage or any other vandalism if the building is vacant for a period of 30 or more consecutive days prior to the loss.

r. Employee or Insured Dishonesty

Losses caused by or resulting from dishonest or criminal acts committed by the named insured, employees, partners or anyone else entrusted with covered property are not covered. This exclusion applies to both individual and group efforts, even when the other participants are neither insureds nor persons entrusted with property. Regardless the circumstances, coverage does not apply if committed by any of the parties listed above.

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 the collusion.

The one exception to this exclusion is for property destroyed by employees during a strike. However, theft losses to covered property caused by striking employees are still excluded.

s. 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.

t. Loss or Damage to Farm Machinery

Coverage does not apply to tires or inner tubes, unless there is first a collision, upset 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.

u. Artificially Generated Electric Current

Loss or damage to electrical and similar devices due to flowing electricity is excluded. Lightning damage is covered but losses or damages due to blackout, power surges, and similar events are not. Under Coverages A, B, C, and D, coverage does not apply to damage to electronic devices, such as computers, home entertainment units, transformers, resistors and other similar property. Under Coverages A, B, C and D, coverage does apply for sudden and accidental damage to appliances and electrical devices. In addition, if fire occurs after the artificial electricity event, coverage applies for the fire damage.

v. 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.

w. Loss Or Damage Limited To Resulting Specified Causes Of Loss And Glass Breakage Only:

Loss or damage to buildings, structures, or personal property due to wear and tear; rust, corrosion, fungus, decay, deterioration, hidden or latent defect, or any quality in property that causes it to damage or destroy itself is not covered. Coverage does not apply to smog; settling, cracking, shrinkage, or expansion; birds, vermin, rodents, insects, or domestic animals, nesting infestation or waste, mechanical breakdown, including rupture or bursting caused by centrifugal force; dampness or dryness of atmosphere; changes or extremes in temperature, marring or scratching. With regard to freezing to plumbing systems, coverage is still available in situations where heat has been maintained (particularly when a structure has a fire sprinkler system) or the water supply has been shut off and appliances have been drained.

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. 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.

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. Because there was no coverage for loss or damage as a result of mudslide, there was also no coverage under this exception to the exclusion.

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, not only because there was no flood coverage on the policy, but also 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. It 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 it 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 barn caught fire and was destroyed. The fire loss was covered.

3. 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 for the resulting damage.

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

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.

1. Ordinance or Law

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. There is also no coverage if undamaged property must be torn down. This exclusion applies to ordinances enforced both prior to damage to the property and to ordinances enforced after a loss.

Ordinance or Law coverage may be purchased 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

Earth movement includes quaking and shifting, land or earth moving, sinking, or rising, subsidence of earth into man-made mines and soil conditions that cause settling, cracking or other damage to foundations. The movement can be caused by a natural act or by human or animal forces. Any damage due to fire or explosion following earth movement is covered.

Earthquake damage to farm machinery, vehicles and equipment is covered but only the Special Causes of Loss applies to such items. Earthquake damage to livestock is also covered. However, only earthquake is covered, not the other types of earth movement.

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 includes blasts, shock waves, ash, particulate matter, and lava flow. Volcanic activity occurring within a 168-hour period qualifies as one occurrence.

3. Governmental action

There is no coverage for property destroyed by governmental decree and action, except for governmental action taken to stop the spread of fire and then only if the fire involved is 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 utility service is not covered. This includes both complete lack of service and insufficient service. This includes water flow that is little more than a trickle and is insufficient to power systems or electricity at low capacity that affects operation of the computer systems. However, if any part of the failure results in a covered cause of loss, coverage applies to that portion of the 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. Some time 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.

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 any 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 claims 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. (02 09 addition)

· 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 (02 09 addition)

· Water that backs up or is discharged from a sump, its pump and equipment (02 09 addition)

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

· Material that is borne by water, mud slides or mudflows (02 09 addition)

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. If farm machinery, vehicles, or equipment is covered under the Special Causes of Loss form, or if flooding kills livestock, coverage applies.

All exclusions above apply regardless of the extent or scope of damage. Even widespread or catastrophic damage has no effect on the application of the exclusion.

FP 00 90–FARM PROPERTY–OTHER FARM PROVISIONS FORM–ADDITIONAL COVERAGE, CONDITIONS, DEFINITIONS

This form applies to all Farm Coverages FP 00 12–Farm Property–Farm Dwelling, Appurtenant Structure and Household Personal Property Coverage Form, FP 00 13–Farm Property–Farm Personal Property Coverage Form and FP 00 14–Farm Property–Barns, Outbuildings and Other Farm Structures Coverage Form.

A. ADDITIONAL COVERAGES

1. Debris Removal

Coverage for removing debris resulting from loss or damage to covered property due to a covered source of loss has limitations.

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

· The most the insurance company pays is 25% of the direct damage loss.

· Debris removal does not include any costs associated with the cleanup of 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 debris removal. This protection can be increased using endorsement FP 04 21– Debris Removal Increased Limit of Insurance.

Example: Fran’s barn was insured for $60,000 when it was destroyed by fire. The estimate to rebuild it was $75,000. Fran was upset because nothing was left for debris removal. The adjuster calmed her by pointing out the additional debris removal coverage that applied. She realized she had $3,000 available ($60,000 X .05) to apply to the debris removal.

2. Reasonable Repairs

A policy condition requires the insured to take reasonable care to protect undamaged property from damage after a covered loss occurs. This additional coverage pays for those activities. The costs must be reasonable and are only paid after a covered loss occurs. This cost is not an additional amount of insurance, so anything paid under this provision reduces the limits available to respond to any other loss or damage.

3. Damage to Property Removed for Safekeeping

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

Example: Pearl sees wildfires heading in her property’s direction. She picks up everything she owns and heads to her sister’s place that is upwind of the fires. On the way, her vehicle overturns and all her possessions are destroyed. All covered property is covered for this damage, regardless of the causes of loss applicable to the property up to the limit of insurance.

4. Fire Department Service Charges

Some individuals and businesses enter into contracts for fire protection with local community fire departments when there is no public fire protection or under other circumstances. The costs or fees for this protection are due after the fire department responds to a call to protect the covered property. In that case, the insurance company pays those charges if the loss or damage is a result of a covered cause of loss. Payments under this coverage are additional amounts of insurance and no deductible applies.

5. Collapse

This coverage is available only for items covered by the Broad and Special Causes of Loss forms. This peril has become increasingly complicated in recent years. 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. If the building is in danger of collapsing but has not done so, it is not considered to be in a state of collapse. Any part of the building that has not collapsed is not considered collapsed, even though the collapse of the other part might have caused it to be separated. 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, it is not a collapsed building.

In order for coverage to apply, collapse of a building must be caused by one of the following:

· A specified cause of loss or by glass breakage.

· Decay or damage by insects or vermin that is hidden from view. However, if the insured was aware of the damage before the loss occurred, there is no coverage.

· 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 situations indicated above.

A limited version of this coverage also applies to foundations, retaining walls, underground pipes, flues, drains, cesspools, septic tanks, walks, roadways, patios, paved surfaces, awnings, fences, outdoor equipment, swimming pools, bulkheads, docks, piers, and wharves. The collapse must be caused by one of the situations listed above, except for the specified causes of loss, and the loss must be a direct result of the collapse of a building insured under the policy. Collapse coverage applies only to insured property, but it does not provide additional limits of insurance. In other words, payment for collapse loss reduces the policy’s overall limit available for other loss that occurs at the same time.

6. Pollutant Cleanup and Removal

The policy pays up to $10,000 in the aggregate for expenses incurred to extract pollutants from land or water at the insured location, if the release of pollutants is caused by a covered cause of loss. There is no coverage for testing for pollutants but the company pays for testing done during the course of the extraction of pollutants. This limit is aggregated as it applies to all extractions at a location that occur during a 12-month policy period. The limit can be increased by using endorsement FP 04 22– Pollutant Clean Up and Removal Additional Aggregate Limit of Insurance.

Note: Such expenses MUST be reported to the insurer no later than 180 days from the date of the covered loss that created the extraction expense.

B. FARM PROPERTY CONDITIONS

Loss Conditions

1. Abandonment

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

2. Appraisal

If the insurance company and the insured disagree over the value of property, each side selects an appraiser. The two appraisers then choose an umpire. Both sides present their cases and the majority rules as far as establishing a final value. Each side pays their own appraisers and each shares the costs of the appraisal and the umpire. This appraisal condition establishes only the value of the loss. The insurance company continues to have the right to deny the entire claim.

3. Duties In The Event Of Loss or Damage

The insured has a number of duties that must be performed when a loss occurs. If they are not done, this can create problems for the insurance company, and they could be justified in denying the claim.

The insured must notify the police if a law is broken. This applies regardless of any inconvenience or preference by the insured to do otherwise. If a law has been broken, the police must be notified.

The insured must give the insurance company prompt notice of the loss and provide as many details as possible as soon as practicable. The insured must take reasonable steps to protect property, keep track of expenses made to protect the property, separate damaged property from undamaged property and set aside damaged property for examination. The insured must provide an inventory of both damaged and undamaged property that includes values, quantities, costs, and amount of loss when the insurance company asks for this information. The company must be allowed to inspect and test the property and all records that validate the claim and make copies of any records they require. A signed and sworn proof of loss must be submitted to the company within 60 days of their request for it, on the forms they provide. The insured must cooperate with the insurance company in all matters concerning the loss throughout their investigation.

The company has the right to question insureds under oath apart from other insureds. The questioning can occur as often as is reasonably required, as long as the questions relate to the loss.

4. Insurance under Two or More Coverages

If loss or damage occurs to an item insured under two or more coverage parts in the policy, the insurance company is only obligated to pay the actual amount of the loss.

5. Legal Action Against Us

Any legal action against the insurance company can only be made after the insured has complied with all conditions of the policy. In addition, the action must be brought within two years after the date of loss. Some state laws preempt and replace this condition with different time periods.

6. Loss Payment

The insurance company decides how to pay a covered loss. It can pay the value of the property, pay the cost of repairing or replacing the property, take all the property at its agreed or appraised cost or repair or replace the property.

The value of the property is determined by the valuation clauses in the coverage forms.

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

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

The insurance company informs the insured of the manner in which they will pay the loss within 30 days after receiving an acceptable proof of loss. Payment is also made within 30 days after receipt of the sworn proof of loss, provided all terms of the policy have been fulfilled and an agreement as to the value of the property has been reached.

Payments to parties other than the named insured are handled separately and are solely for the interest of those parties.

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

7. Pairs, Sets or Parts

If one part of a pair or set is damaged, the company either repairs or replaces the part or pays the difference between the value of the pair or set before the loss and the value of the remaining parts.

Example: The dining room set consisted of a table and eight matching chairs. A fire damaged three of the chairs beyond repair. The remaining five chairs could be repaired but the value of the full set was lost because the style was no longer made or available. The settlement was reached based on the full value of the set, minus the value of the five chairs as stand-alone pieces.

However, if Covered Property consists of many parts and one of the parts is damaged, the company pays only to replace the particular part.

8. Other Insurance and Service Agreement

If other insurance subject to the same agreements, terms, and conditions exists, this policy pays only its portion of any loss. For all other insurance, this policy pays only on an excess basis. When a Coverage E loss involves other insurance on equipment borrowed or rented, this policy responds on a proportional basis.

This insurance pays in excess over any service or warranty agreement in place.

9. Recovered Property

If lost property is recovered after the loss has been paid, the insured and the insurance company must inform one another of the recovery. The insured may take the property back but then must return the amount the insurance company paid for the loss settlement on it. Regardless of the decision, the insurance company pays the recovery expenses and the costs of repairing the property.

10. Transfer of Rights of Recovery Against Others To Us

The insured’s rights of recovery are transferred to the insurance company if it pays the loss. The insured must do everything possible to secure the rights for the company and do nothing to compromise those rights. The insured can waive any rights of recovery against third parties provided it is prior to the loss and that it is in writing. The insured can waive rights after a loss only if the party is another party insured on the policy, involves a business owned by the insured or that owns the insured or involves a tenant. Such waivers must be in writing. Waiving rights as described above does not affect the insurance.

11. Unoccupancy and Vacancy

If a building is vacant or unoccupied for over 120 consecutive days, the limit of insurance is automatically reduced by 50%, unless the period of vacancy or unoccupancy is extended by endorsement. There are additional penalties in the FP 10 60–Causes Of Loss Form–Farm Property that may apply in the case of a vacant building. Please refer to the Definitions Section for the definition of unoccupancy and vacancy. These restrictions can be waived by using endorsement Form FP 04 75–Unoccupancy and Vacancy Permit.

GENERAL CONDITIONS

1. Concealment, Misrepresentation or Fraud

Any fraud on the part of the named insured or any other insured voids the policy. In addition, any misrepresentation of a material fact relating to the policy, the covered property, the insured’s interest in the property or any claim also voids the policy.

2. Control of Property

Any act of neglect or other acts by a person over whom the named insured has no control, or who is beyond the direction of the named insured, does not affect this insurance. In addition, a breach of a condition at one location does not adversely affect insurance at another location, if that other location has not breached a condition.

Example: Fernando’s insured farming operations have three separate locations. Break-ins occurred at two of the locations on the same evening but the property taken was substantially different in the two cases. Fernando reported the first location break-in to the police but decided to handle the second one alone. The decision to not report the second break-in is a breach and results in no loss payment by the insurance company. The insurance company will handle the first claim as long as Fernando continues to cooperate with them in the investigation and adjustment.

3. Liberalization

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

4. Mortgageholders

Mortgageholders have special privileges because of their financial interest in the policy. Any loss is paid to them as their interest may appear. They receive payment even if foreclosure on the property has begun. Denial of claim to the named insured does not necessarily mean a denial to the mortgageholder, if they take appropriate actions directed by the insurance company that the insured refused to take. Under such circumstance, the mortgageholder assumes responsibility for following policy provisions such as cooperating with the insurer, submitting proof of loss and notification of change in exposures. If the insurance company pays the mortageholder, it becomes the mortgageholder with respect to the Covered Property.

Because of this unique relationship, the mortgageholder must receive a written notice of cancellation. They receive ten days notice for nonpayment of premium and 30 days for any other cancellation reason. Non-renewal notice must be sent ten days prior to policy expiration.

Important: Various state laws and statutes have different requirements concerning policy termination. In those instances, state law prevails and the notice periods indicated above may be changed.

5. No Benefit to Bailee

This insurance is only for the benefit of the named insured. As a result, this insurance does not relieve a bailee of their obligations relating to the handling and holding of property that belongs to their customers.

6. Policy Period

Only covered losses or damages that occur during the policy period shown on the declarations are covered.

C. DEFINITIONS

1. Business Property

Any property that is used in a trade, profession, or occupation other than farming operations.

2. Dwelling

Any building used for family residential purposes. This includes trailers, modular living units, and prefabricated buildings. It does not include buildings used to store agricultural products, livestock, or poultry.

3. Farm Personal Property

This is any equipment, supplies and products used in, or produced by, farming or ranching operations. Items of this type include feed, seed, fertilizer, livestock, other animals, poultry, grain, bees, fish, worms, produce, and agricultural machinery, vehicles and equipment. Other items may be included but are not listed.

4. Insured

Insured means the named insured (remember this includes the spouse if living in the same residence of the insured named on the declarations). If the named insured is an individual, it also includes everyone who lives in the house with the named insured. In order to qualify as an insured, any household resident must be related to the named insured or be younger than 21 years of age, with the named insured responsible for their care. A related person under the age of 24, or an unrelated person under the age of 21 for whom the named insured is responsible who usually lives in the house but is away at college, is also an insured.

5. Insured Location

This is any location listed on the declarations as an insured location, including any private approaches to the property.

6. Livestock

The animals considered as livestock are cattle, sheep, swine, goats, horses, mules, and donkeys. If other livestock is kept, such as llamas, bison, water buffalo and other exotic or unusual animals, a special endorsement is necessary to extend coverage by extending the definition of livestock.

7. Money

Money includes currency and coins. The term also applies to bank notes, scrip, debit or smart cards, money orders, register checks and travelers checks. All these items are easily used as substitutes for cash. The currency coins and bank notes must be in use and have a face value.

8. Pollutants

This term includes irritants and contaminants, including waste products.

9. Poultry

This term refers to any bird used to produce meat or eggs. The bird must be kept for use or for sale. This definition applies to chickens as well as ostriches.

10. Securities

Securities are instruments or contracts that represent money or other assets. These can be negotiable or non-negotiable items.

11. Unoccupancy and Unoccupied

These terms refer to a dwelling not being lived in or to a building or structure not being used. A structure is considered unoccupied even if it contains furnishings and other property related to the normal occupancy. The term is related to the actual, not the potential, use of a covered building. A building or dwelling under construction is not considered unoccupied.

12. Vacancy and Vacant

A dwelling or building is vacant when it no longer contains furnishings or property necessary for it to be used in the intended manner. A building or dwelling under construction is not treated as vacant.

13. Specified Causes of Loss

The specified causes of loss are 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. Some of these terms need additional explanation:

· Smoke includes puff back, soot, fumes, or vapors from furnaces.

· Sinkhole collapse is covered only when land suddenly sinks into an empty space created underground by water acting on limestone. It does not include the cost of filling the hole or any sinking into man-made spaces.

· Falling objects does not include coverage for property in the open or for the falling object itself. There is no coverage for damage to the interior of a building or personal property in that building unless the falling object first breaches and creates an opening in the building.

· Water damage is the accidental discharge or leaking due to breaking apart or cracking of different systems that contain water or steam. Damage related to sump systems is not considered water damage.

D. LIMITS OF INSURANCE

The policy pays the applicable limit shown in the Declarations or the special limit that applies to certain categories of covered property.

E. DEDUCTIBLE

The insurance company does not pay a loss until the amount of loss exceeds the deductible stated in the declarations. The company then pays until it pays the amount of the loss or reaches the limit of insurance or the special limit of insurance. If more than one deducible applies to one occurrence, only the highest deductible is used.

Example: A brushfire swept through the Bar Z ranch. Three barns, a donkey, ten horses, two tractors, the house, and all of its contents were destroyed. All the property was insured under the same policy. When the loss was adjusted, only the $1,000 deductible for the dwelling was applied, instead of having to satisfy a separate deductible for each type of property.