Farm Insurance

1. Farm Insurance

2. Introduction

3. Types of Insurance provided

4. Eligibility • Farmer must live and conduct business on the insured property. Properties not eligible: • Farms that manufacture or process goods • Farms for raising race or show animals • Some vacant farm properties

5. Farm Property Coverage Forms

6. Coverage A - Dwelling • For main dwelling, attached structures, and necessary materials • UP to $5000 for damaged grave markers • Not covered: trees, shrubs, plants, or lawns (except with endorsement) • Coverage extensions • Debris removal • Pollution clean-up • Reasonable repairs • Fire department service charge • Consequential loss

7. Coverage B – Other Private Detached Structures • Detached garages or porches • Guesthouses • Patios • Sheds • Outdoor antennas (up to $1000 per occurrence) • Limit: 10% of Coverage A limit

8. Coverage C – Household Personal Property • Covers theft or damage of personal property • Includes personal property of family and guests staying on the premises • Has a limit of 50% of Coverage A • Sets special limits for some items

9. Coverage C – Items w/ Special Limits

10. Coverage C – Special Limits for Theft

11. Coverage D – Loss of Use • Pays additional living expenses resulting from a covered peril • Includes fair rental value If insured had tenants • Applies when civil emergency, such as fire or flooding, makes home uninhabitable • Sets a limit of 10% of Coverage A

12. Farm Commercial Coverage

13. Scheduled Farm Personal Property Unscheduled Farm Personal Property Insures all farm Property Provides blanket coverage for all items together Single Causes of loss form for all items covered • Insured selects items from a farm inventory • Policy insures only selected items, each for an assigned value • Separate Causes of Loss forms for each insured item

14. Coverage E – Scheduled Farm Personal Property

15. Unscheduled Farm Personal Property

16. Coverage G – Barns, Outbuildings, and other farm structures covers: • Barns, silos, and granaries • Pens and fencing • Corrals and livestock chutes • Feeding structures • Outdoor masts, towers, and antennae • Farming storage structures • Construction or repair materials kept on or adjacent to these structures • Valuation: ACV, unless noted otherwise

17. Extension and Exclusions

18. Inland Marine Forms • Two forms commonly added: • Mobile Agricultural Machinery and Equipment form • Livestock floater • Available alone or with farm policy

19. Mobile Agricultural Machinery and Equipment • Covers agricultural machines and their tools and equipment • Allows higher limits of insurance than other forms • Provides scheduled or unscheduled (blanket) coverage • Requires coinsurance for full coverage to apply • Gives open-peril coverage with ACV Property not covered • Equipment for sale or on consignment • Machinery used in logging or forestry

20. Livestock Floater • Covers horses, mules, cattle, swine, sheep and goats • Provides schedule or unscheduled coverage • Includes animal injured or killed while in transit • Provides named-peril coverage • Requires coinsurance from the insured

21. Causes of Loss Forms

22. Farm Covered Perils (BASIC) • Fire • Lightning • Smoke • Wind • Hail • Explosions • Riot • Vandalism • Civil Commotion • Theft • Aircraft • Vehicles • Sinkhole collapse • Volcanic activity • Loss of livestock by flood • Loss of livestock by earthquake

23. Covers all Basic Form perils, plus: • Falling objects • Weight of ice, sleet, or snow • Glass breakage • Sudden & accidental tearing apart • Accidental discharge or leakage of water or steam • Sudden and accidental discharges of electricity • Collapse • Electrocution of covered livestock • Attack of covered livestock (excluding sheep) by wild animals • Drowning of covered livestock • Accidental shooting of covered livestock • Loading and unloading acccidents

24. Special Form Exclusions

25. For example, if the insured is careful, he can avoid damage from rust and corrosion or rodent infestations. He can also avoid irresponsible decisions like leaving the property vacant for over a month, which increases the risk of vandalism.

26. Private Farm Insurance Farm Property where a farmer or rancher both lives and conducts business Farm Insurance Insurance that combines homeowner’s and commercial coverages Private Coverage Forms: Coverage A: Dwelling Coverage B: Unattached structures Coverage C: Personal property Coverage D: Loss of Use

27. Commercial Farm Insurance

28. Farm Liability Coverages Farmers face the same liability risks as any other business Farm Liability Insurance • Protects the farmer against liability for harm caused to other • Includes attorney fees and court costs • Is available in several different types

29. Farmers, like all business owners, must face the risk of being held liable if someone is injured on their property, or because of their actions. Consider the many hazards involved with using massive plows, harvesters, and threshers, or with raising large animals such as cattle or horses. • Farm liability insurance helps protect farmers and ranchers from this financial risk. It includes coverage for attorney fees and the costs of defending the farmer and his property in court. • There are several different types of farm liability insurance, and each one is designed to protect against a specific liability that farmers face.

30. Coverage H – Bodily Injury & Property Damage Liability:

31. Coverage I – Personal & Advertising Injury

32. Coverage J – Medical Payments Coverage

33. Farm Product Liability • Covers injury or illness caused by eating the farmer’s products • Because many farmers produce and sell food to the public, they risk being liable for illnesses or injury that people could get from eating their products. For example, if a farmer sells a truckload of tainted tomatoes, he will be liable if those tomatoes cause a salmonella outbreak. • Farm Product Liability Insurance protects farmers against this liability, covering any illness or injury caused by eating products from the insured's farm or ranch. Some wholesalers require farmers to have sufficient farm product liability insurance before agreeing to distribute their products.

34. Farm Pollution Liability

35. Custom Farming Liability

36. Farm Employees Liability • Is available by endorsement • Covers employee injuries not allowed under Worker’s comp

37. Paying Farm Insurance Claims • Loss Settlement Valuations • Actual cash valuation, unless noted differently • If replacement cost coverage, coinsurance is required As an adjuster, when you receive a farm insurance claim, you will need to pay close attention to two details: valuation and coinsurance. Most Farm policies automatically use actual cash valuations, but this is not always the case. If replacement cost valuation is chosen instead, it will be expressly noted on the Declarations page. When an insured has replacement cost coverage, she must meet a coinsurance requirement in order to get full indemnification. That is, the limit of insurance must equal at least 80% of the insured item's full replacement cost at the time of the loss.

38. Farm insurance - Coinsurance • Insurer pays smallest of the following: -- the replacement cost of the damaged property -- the amount actually spent on necessary repairs r replacements -- the policy limit Coinsurance requirement not met: Insurer pays the larger of the following: • The actual cash value of the damaged property • A fraction of the replacement cost: based on how much insurance the claimant had compared to how much she should have had

39. Applying the Coinsurance Requirement: • Farmer Jones needs $100,000 coverage to have coinsurance • She buys only $50,000 (half of the required amount) • In the event of a claim, the insurer will only pay half of the replacement cost for damages. Since she has only purchased half of the required amount, her insurer will only pay half of the replacement cost for covered damages. So, if Farmer Jones files a claim for $30,000 of covered damage, the insurer will only pay $15,000 (that is, half of the covered loss).

40. RC Claim Process • Process for Paying Replacement Cost Claims: • Insurer pays actual cash value at first • Claimant has 180 days to say they will repair or replace damaged property • After completing replacement, claimant must submit another claim • Then insurer will pay for full repair or replacement cost

41. Farm Liability Coverage & Valuations Farm Liability Insurance: • Bodily injury and property damage • Personal and advertising Injury • Medical payments • Farm Product liability • Farm pollution liability • Custom farming liability • Farm employees liability

42. Loss Settlement Valuations