Insurance coverage Q&A: Is bull semen considered perishable stock?
Is there coverage for bull semen on a spoilage endorsement if it is not shown in the schedule?
We have a commercial policy written under a CP 00 10 04 02 Building Form; with a CP 10 30 04 02, Cause of Loss form; and a CP 04 40 06 95 Spoilage Coverage Endorsement added to it. The insured sells meat they raise on their farm from the location indicated on the declaration. (The business and home address are the same). The meat is processed elsewhere. The Decs identify “meat” as the Description of Perishable Stock within the CP 04 40 endorsement.
A loss occurs involving the refrigeration unit in the basement of the described premises. The refrigeration unit that malfunctioned or broke down was a unit that stored bull semen. The refrigeration units holding meat, in another part of the insured location continued to work and function properly. The insured uses the semen in his farming operation, to produce calves, which end up making up the meat he sells from his storefront. Can the CP 04 40 be used to provide coverage for this loss in semen?
The semen is not listed as perishable stock. At first glance, it would seem that there is no coverage, or at least, there is no intent to provide coverage. However, when reading the CP 04 40, I wonder if coverage could be extended.
According to part A.1. of the CP 04 40 endorsement – Covered Property – “Covered Property” means “perishable stock” at the described premises owned by you or by others that is in your care, custody and control.
Perishable Stock is defined as: personal property: a. maintained under controlled conditions for its preservation; and b. Susceptible to loss or damage if the controlled conditions change.
Both the semen and the meat are located at the same described premises. The semen may seem to qualify as covered property. I do not see language that specifies that Covered Property is the perishable stock that is identified in the declarations.
With that being said, the introductory paragraph of the endorsement states, — The Coverage Form to which this endorsement applies is extended to insure against direct physical loss or damage by the Covered Causes of Loss, but only with respect to Coverage provided by this endorsement.
Does the wording in the last part of the above paragraph point to the perishable stock in the declarations?
Please let me know your thoughts.
— Kentucky Subscriber
According to the ISO rules for endorsement CP 04 40, there is no need to schedule the “perishable stock;” as such, the bull semen would meet that definition and be covered by the endorsement. Nowhere in the endorsement does it refer to providing coverage only to scheduled property, but instead refers to scheduled covered causes of loss, selling price and similar details. We reviewed the ISO dec CP DS 00 10 00 and there is no place on that form for scheduling certain types of property. Your declaration may be different and we’re happy to take a look at it.
There is a need, however, to identify on the endorsement what covered causes of loss apply to the perishable stock. Based on paragraph C. of the endorsement, the causes of loss to be covered are identified by an “X” in the Schedule for either breakdown or contamination or power outage. Also, according to paragraph H. a refrigeration maintenance agreement may be required to be in place if indicated by an “X” in the schedule. If there are no such identifiers in the schedule, then the endorsement is ambiguous and as such, the insured should receive the benefit of the coverages provided.
The statement about the coverage form to which this endorsement applies simply means that the endorsement attaches to the policy forms; since the endorsement applies to “perishable stock,” which would be the bull semen, then coverage should apply unless the declaration has some contraindication.
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