Summary: Form FP 00 14 01 98 applies to buildings and structures, other than farm dwellings and other private structures appurtenant to dwellings. Among the features of coverage G is the availability of replacement cost coverage on farm buildings and structures. Coverage applies to farm buildings or structures under form FP 00 14, when a limit of insurance is shown for each item.
The coverage may apply to individual buildings or structures or to groups of similar buildings or structures. For buildings that are heated, the letter “H” must be entered on the declarations after the building description. Buildings or structures that are subject to replacement cost loss settlement, must also be indicated on the declarations.
Covered Property
COVERAGE G – BARNS, OUTBUILDINGS, AND OTHER FARM STRUCTURES
A. COVERAGE
We will pay for direct physical loss of or damage to Covered Property at the “insured location” described in the Declarations, or elsewhere as expressly provided below, caused by or resulting form any Covered Cause of Loss.
1. Covered Property
All of the following are Covered Property under Coverage G of this Coverage Form, provided a Limit of Insurance is shown in the Declarations for the specific type of property:
a. Farm buildings and structures other than “dwellings”, including attached sheds and permanent fixtures;
b. Silos individually described in the Declarations or on a schedule, whether or not attached to buildings;
c. Portable buildings and portable structures;
d. All fences (except field and pasture fences), corrals, pens, chutes and feed racks;
e. Outdoor radio and TV equipment, antennas, masts and towers;
f. Improvements and Betterments. Improvements and betterments are additions, alterations, fixtures or installations made part of the described building, but do not include items that may be legally removed by an “insured”. If you are a tenant, we cover your use interest in the improvements and betterments you make at your expense to a building you do not own at the “insured location”; and
g. Building Materials and Supplies:
(1) For use in building, altering or repairing farm buildings or structures; and
(2) Kept on or adjacent to the “insured location”.
Analysis
Coverage G subsection one, covered property, lists seven kinds of property eligible for coverage G:
1. Farm buildings and structures (other than dwellings), including attached sheds and permanent fixtures.
2. Individually described silos, whether or not attached to buildings.
3. Portable buildings and portable structures.
4. All fences (except field and pasture fences), corrals, pens, chutes, and feed racks.
5. Outdoor radio and TV equipment, antennas, masts, and towers.
6. Additions, alterations, fixtures, or installations that the insured makes part of a described building. However, this class does not include items that may be legally removed by an insured. A tenant may cover the use interest in improvements and betterments made to a nonowned building at an insured location.
7. Building materials and supplies for use in building, altering, or repairing farm buildings or structures, that are kept on or adjacent to the insured location.
Some similarities exist between some of these property items and items included in farm property coverages A and B, but there are important differences, as well. Among them:
Coverage A applies to a fence, attached at any point to a dwelling. Coverage B applies to a fence not so attached, if it is appurtenant to the dwelling and a limit of insurance is shown for coverage B. In order for coverage G to apply, fences (along with—or without—corrals, pens, etc.) must be specifically listed in the declarations with a limit of insurance specified, and subject to the equivalent of a 100 percent coinsurance clause (see discussion below).
Coverage A applies to materials (on the insured location) used in building, altering, or repairing the dwelling. In addition to building materials, section G covers supplies for the same use for farm buildings or structures. However, coverage G allows these items to be located on or adjacent to the insured location, but only if listed in the declarations with a limit of insurance shown for this item. This property is also eligible for coverage under either coverage E as miscellaneous equipment item G or unscheduled farm personal property coverage F. A general supply of materials kept on hand for use as needed in repair of either the dwelling or farm buildings might better be included in coverage E or F than relying on either coverage A or G.
Property Not Covered
2. Property Not Covered
Covered Property does not include:
a. Land (including land on which a building or structure is located);
b. Water;
c. Field or pasture fences;
d. Foundations, if below ground, of buildings or structures;
e. Pilings, piers, wharves or docks; or
f. The cost of excavations, grading, filling or backfilling.
Analysis
The policy specifies six items as not covered by section G:
1. Land (including land on which a farm building or structure is located).
2. Water (the former reference to whether or not above ground is deleted).
3. Field or pasture fences.
4. Foundations, if below ground, of buildings or structures.
5. Pilings, piers, wharves, or docks.
6. Cost of excavations, grading, filling, or backfilling.
Items 1. and 2. are similar to dwelling coverage A property not covered items.
Item 3. repeats and supports the exception of field or pasture fences found in covered property item d., fences, corrals, etc.
Items 4., 5., and 6. are excluded from coverage for any of the following reasons:
1. They are less likely to be damaged than the remainder of the building or structure.
2. They are usually reusable in reconstructing the building or structure after loss.
3. They are subject to unusual hazards of underground or water deterioration or damage.
This provision differs from the similar provision in dwelling coverage A and appurtenant structures coverage B in this fashion: under A and B such structures are covered. However, their values are not considered when calculating the replacement cost of the structure. Under coverage G there is no coverage at all for these items.
Note that these items may indeed be subject to damage, along with the building or structure, but that such damage is not insured. The ISO rules make no provision for extending insurance to any of these items, although some insurers might perhaps be willing to offer coverage on some of these items, if requested, on an individual basis.
Conditions—Coverage G
B. COVERAGE G CONDITIONS
Coverage G is subject to the following Loss Conditions as well as to the Farm Property Conditions and the Common Policy Conditions.
Loss Conditions
1. Fences, Corrals, Pens, Chutes, Feed Racks
The most we will pay in any one occurrence of loss of or damage to covered fences, corrals, pens, chutes and feed racks is the proportion that the applicable Limit of Insurance shown in the Declarations bears to the value of all covered fences, corrals, pens, chutes and feed racks you own as of the time of loss.
2. Portable Buildings and Portable Structures
The most we will pay in any one occurrence of loss of or damage to portable buildings or portable structures is the proportion that the applicable Limit of Insurance shown in the Declarations bears to the value of all portable buildings and portable structures you own as of the time of loss.
But this Condition does not apply to any portable building or portable structure individually covered under its own Limit of Insurance shown in the Declarations.
3. Valuation – Property Other than Improvements and Betterments
a. If the Replacement Cost Basis option is not expressly indicated in the Declarations, we will, in the event of loss or damage to Covered Property, settle at the actual cash value, as of the time of loss, of the destroyed or damaged part of the structure, but we will not pay more than the amount necessary for repair or replacement.
The cost of repairs or replacement does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use, or repair of any property.
b. If the Replacement Cost Basis option is expressly indicated in the Declarations, loss valuation will be determined as provided below:
(1) The basis for loss settlement will be determined by the ratio of the applicable Limit of Insurance for the specific building or structure to the full replacement cost of the destroyed or damaged Covered Property. When determining the full replacement cost, the values of the following will be disregarded:
(a) Excavations;
(b) Foundations; and
(c) Piers and other supports below the undersurface of the lowest basement floor; or, where there is no basement, those below the surface of the ground inside the foundation walls; also underground flues, pipes, wiring and drains.
(2) If the Limit of Insurance on the damaged building or structure is at least 80 percent of its full replacement cost as of the time of loss, we will settle the loss on the smallest of the following amounts:
(a) The cost to replace the damaged part of the structure with equivalent construction for use on the same premises.
(b) The amount actually and necessarily spent to repair or replace the structure.
(c) The applicable Limit of Insurance.
The cost of repairs or replacement does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use, or repair of any property.
(3) If the Limit of Insurance on the damaged building or structure is less than 80 percent of its full replacement cost as of the time of loss, we will settle on the basis of (a) or (b) below, whichever is larger:
(a) The actual cash value, as of time of loss, of the damaged part of the building or structure.
(b) A proportion of the cost to repair or replace the damaged part of the building or structure, without deduction for depreciation. This proportion will equal the ratio of the applicable Limit of Insurance to 80 percent of the cost of repair or replacement. The cost of repairs or replacement does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use, or repair of any property.
However, we will not pay more than the applicable Limit of Insurance, regardless of whether (a) or (b) above applies.
(4) If your loss qualifies for payment on a replacement cost basis, but the cost of repair or replacement is more than either $1,000 or 5 percent of the applicable Limit of Insurance, the only basis on which we will settle pending completion of repairs or replacement is actual cash value, as of time of loss, of the damaged part of the building or structure. In case of such a loss you can make an initial claim for payment on the actual cash value basis, and later make a supplementary claim for replacement cost payment. If you elect to exercise this option, you must notify us of your intention in writing within 180 days of the occurrence of the loss.
The cost of repairs or replacement does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use, or repair of any property.
4. Valuation – Improvements and Betterments
a. If repair or replacement is done at the expense of the “insured” within twelve months after the loss, we will settle the loss on the basis of actual cash value as of time of loss.
b. If repair or replacement is not done within twelve months after loss, we will settle on the basis of a proportion of the cost of repair or replacement. The cost of repairs or replacement does not include the increased cost attributable to enforcement of any ordinance or law regulating the construction, use, or repair of any property. The applicable proportion will equal the ratio of (1) below to (2) below.
(1) The period of time from the loss or damage to the expiration of the lease.
(2) The period of time from the installation of the improvements to the expiration of the lease.
Lease means the lease, whether written or oral, in effect at the time of the loss.
If your lease contains a renewal option and if you exercise that option, the expiration of the renewal option period will replace the expiration of the lease in (1) and (2) above.
c. If repair or replacement is done at the expense of others for the use of the “insured”, we provide no insurance.
5. Valuation – Glass Replacement
We will settle on the basis of the cost to replace damaged glass with safety glazing material, if required by law.
Analysis
Five coverage conditions—all described as loss conditions—apply only to coverage G. These conditions apply in addition to other conditions found in the common policy conditions form IL 00 17 11 98 and the farm property conditions.
1. Fences, corrals, pens, chutes, feed racks. The insurer will pay no more in any one occurrence for loss to this property than the proportion of the limit of insurance shown in the declarations bears to the total value of all covered fences, corrals, pens, chutes, and feed racks owned by the insured at time of loss. While the wording is similar to a pro rata clause, this clause, although not identified as such, operates as a 100 percent coinsurance clause.
2. Portable buildings and structures. This clause, which limits recovery of loss to portable buildings and structures to the same proportion of the loss that the limit of insurance for all portable buildings and structures bears to their total value at time of loss, is similar to the same clause found in the coverage E conditions, with one exception. Under the coverage G clause, this clause does not apply to individually scheduled portable buildings and structures.
3. Valuation – Property Other than Improvements and Betterments. The valuation clause previously had three subsections.
Actual cash value loss settlement applies to property other than improvements and betterments, unless the declarations page indicates replacement cost. If replacement cost is selected, the method for determining it will be the same as for coverage A. The current edition of the form adds the wording that excludes costs attributable to the enforcement of any building laws.
The intent is to cover full cost of replacement up to the limit of insurance when the limit of insurance is at least 80 percent of the replacement cost of the building or structure. The insurance pays the smallest of (1) cost to replace with equivalent construction on the same premises; (2) the amount actually spent to repair or replace (note that replacement on another site is permitted); or (3) the limit of insurance.
Again, the current edition of the form adds the wording that excludes costs attributable to the enforcement of any building laws.
When the insured carries less than 80 percent insurance to replacement, the insurer will pay the higher of (1) the actual cash value of the loss or damaged property (2) that portion of the replacement cost that the limit of insurance bears to 80 percent of the replacement cost of the building or structure, but never more than the limit of insurance.
4. Valuation – Improvements and Betterments. For loss to improvements and betterments, there are three alternative methods of valuation:
A. If the insured repairs or replaces the property at his or her own expense within twelve months after date of loss, the insurer pays the actual cash value of the improvements and betterments.
B. If not repaired or replaced within twelve months after date of loss, payment is based on the unamortized value of the improvements and betterments. This value is measured by the number of days from date of loss to expiration date of the lease, divided by the number of days from installation of the improvements to lease expiration date, multiplied by the cost of repair or replacement of the lost or damaged improvements and betterments. Again, the current edition of the form adds the wording that excludes costs attributable to the enforcement of any building laws.
C. If someone other than the insured (such as a landlord or tenant) pays for the repair or replacement—for the insured's use—there is no coverage.
If the lease contains a renewal option and the insured exercises the option, the option's expiration date is used as the expiration date of the lease.
The form does not, however, address the case where the lease is cancelled due to the loss, and the improvements and betterments are repaired or replaced for a new tenant. In such a case, provision (2) applies, as implicit in the improvements and betterments coverage is recovery of the unamortized value, unless repair or replacement is made for the benefit of the insured.
Recovery is limited to the unamortized value of the damaged portion of improvements and betterments only. Loss of use of the undamaged portion through cancellation of the lease is not covered. Leasehold interest insurance would be needed to cover this loss.
5. Glass Replacement. The provision is the same as under coverage A: when the law requires replacement of broken or damaged glass with safety glazing material, loss payment for any glass loss covered by the policy will be on the basis of the more expensive replacement required by law.
Coverage Extensions
A. PRIVATE POWER AND LIGHT POLES
We will pay up to $250 in any one occurrence as an additional amount of insurance for direct physical loss of or damage to private power and light poles, outside wiring and attachments. Attachments include attached switch boxes, fuse boxes, and other electrical equipment mounted on poles you own at the “insured location”. The $250 Limit applies in excess of any applicable Deductible.
If specific private power and light poles are shown in the Declarations, the Limits of Insurance shown for them will be in addition to the $250 Limit.
B. NEW CONSTRUCTION
1. We will pay up to $100,000 for direct physical loss of or damage to new, permanent farm structures at the “insured location” including materials and supplies for use in their construction.
2. This Coverage Extension applies only:
a. To structures that are not otherwise covered under this or any other policy; and
b. To loss caused by aircraft, explosion, fire, lightning, riot or civil commotion, smoke, vandalism, vehicles, windstorm or hail.
3. Insurance on each farm structure covered under this Coverage Extension will end as soon as any of the following takes place:
a. You report values to us. (We will charge you an additional premium for values reported from the date construction begins or the materials and supplies are delivered.)
b. sixty days have elapsed since the first date of delivery of the materials and supplies.
c. This policy expires.
4. This Coverage Extension is part of, not in addition to, the applicable Limit of Insurance.
Analysis
Section II of form FP 00 14 provides two extensions to coverage G, as follows:
1. Private power and light poles. The policy provides up to $250 per occurrence as additional insurance above any applicable deductible for direct physical loss of or damage to private power and light poles, outside wiring, and attachments. Attachments are defined as including attached switch boxes, fuse boxes, and other electrical equipment mounted on poles owned by the insured at the insured location. For any specific insurance on poles shown in the declarations, the amount of insurance shown is in addition to the coverage extension.
2. New construction. The current form provides up to $100,000 of coverage on new permanent farm structures at the insured location, including materials and supplies used in their construction. This coverage applies only if the new structures are not otherwise covered under this or any other policy and only for the perils of aircraft, explosion, fire, lightning, riot or civil commotion, smoke, vandalism, vehicles, windstorm, or hail.
This is temporary coverage, beginning with the first delivery of materials or supplies, and ending at the earliest of: (a) the date the insured reports values to the insurer to obtain permanent coverage; (b) sixty days following the date of first delivery of materials and supplies; or (c) expiration of the policy. Premium for the new construction is payable from date of first delivery of materials and supplies.
This extension is a part of rather than in addition to the applicable limit of insurance.
Other Provisions
The last section of FP 00 14 refers the reader to the causes of loss form or the other farm provisions form.
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