Summary: The Insurance Services Office (ISO) has revised the farm program. In the prior program, the causes of loss were contained in the farm property coverage form. Since that form has been restructured into five separate forms, the causes of loss are now found in the causes of loss form—farm property, FP 10 60 01 98.
The particular level of coverage is triggered for each item by showing “basic,” “broad,” or “special” in the “covered causes of loss” column on the “coverages provided” or schedule section of the farm property declarations. The insured may elect any of the three levels of coverage for each item of coverage, except that the special coverage may not be used for livestock, other animals, poultry, bees, fish, or worms.
Following is a discussion of the form.
Covered Causes of Loss
A. COVERED CAUSES OF LOSS
Covered Causes of Loss means the causes as described and limited under either B. or C. or D. below in accordance with a corresponding entry of either BASIC or BROAD or SPECIAL, respectively, on the Declarations opposite each Coverage or property to which this insurance applies. Covered Causes of Loss are also limited by the Exclusions in Section E.
However, certain property is covered only for particular causes of loss, as listed under the following items: the Coverage Extensions to Coverages A; 1.b., 1.c.(2), 1.e., 1.k., 1.l., 1.m., 1.n.. and 1.o. of Coverage E Covered Property; 1.b.(2) of Coverage F Covered Property; F. of the Coverage Extensions to Coverage F; and B. of the Coverage Extensions to Coverage G.
Analysis
This portion of the form clarifies that the causes of loss in this form do not apply to all farm property. The coverage forms themselves must be referred to. For example, 1.b. of coverage E—scheduled farm personal property (on farm property—farm personal property coverage form FP 00 13 01 98) states that the following is covered property: “grain in stacks, shocks, swathes or piles in the open, but for this property fire and lightning, vandalism, vehicles and theft are the only covered causes of loss.”
Basic Causes of Loss
B. Covered Causes of Loss—BASIC
Subject to the provisions in Section A., when BASIC is shown in the Declarations, Covered Causes of Loss means the following:
1. Fire or Lightning
We will not pay for loss of or damage to buildings, or contents usual to a tobacco barn, if that loss or damage:
a. Results from the use of open fire for curing or drying tobacco in the barn; and
b. Occurs during, or within the five-day period following, open-fire curing or drying.
2. Windstorm or Hail, but not including:
a. Frost or cold weather;
b. Ice (other than hail), snow or sleet, whether driven by wind or not; or
c. Loss of or damage to:
(1) The interior of any building or structure, or the property inside a building or structure, caused by rain, snow, sleet, sand or dust, whether driven by wind or not, unless the building or structure first sustains wind or hail damage to its roof or walls through which the rain, snow, sleet, sand or dust enters; or
(2) Watercraft or their trailers, furnishings, equipment or outboard motors unless within a fully enclosed building.
(3) Under Coverage E or Coverage F:
(a) ”Livestock” or “poultry” when caused by running into streams, ponds or ditches, or against fences or other objects; or from smothering; or resulting directly or indirectly from fright;
(b) ”Livestock” or “poultry” when caused by freezing or smothering in blizzards or snowstorms; or
(c) Dairy or farm products in the open other than hay, straw or fodder.
3. Explosion, including the explosion of gases or fuel within the furnace of any fired vessel or within the flues or passages of such a vessel from which the gases of combustion pass.
But under Coverages E, F and G this cause of loss does not include loss or damage caused by or resulting from:
a. Explosion of alcohol stills, steam boilers, steam pipes, steam engines or steam turbines owned or leased by you, or operated under your control;
b. Electric arcing;
c. Rupture or bursting of water pipes;
d. Rupture, bursting or operation of pressure relief devices; and
e. Rupture or bursting due to expansion or swelling of the contents of any building or structure caused by or resulting from water.
4. Riot Or Civil Commotion, including:
a. Acts of striking employees while occupying the “insured location”; and
b. Looting occurring at the time and place of a riot or civil commotion.
5. Aircraft meaning only loss or damage caused by or resulting from:
a. Contact of an aircraft, spacecraft or self-propelled missile with Covered Property or with a building or structure containing Covered Property; or
b. Objects falling from aircraft.
6. Vehicles, meaning only loss or damage caused by contact of a vehicle, or of an object thrown up by a vehicle, with Covered Property or with a building or structure containing Covered Property.
This cause of loss does not include loss or damage to
a. ”Livestock”; or
b. a fence, driveway or walk.
However, we will provide coverage under this cause of loss if the fence, driveway or walk is appurtenant to a covered “dwelling” and the vehicle that caused the loss or damage was not owned or operated by a resident of the “dwelling.”
7. Smoke, causing sudden and accidental loss or damage.
This cause of loss does not include loss or damage by smoke from agricultural smudging or industrial operations.
8. Vandalism
This cause of loss does not include loss of or damage to:
a. A building or structure, or its contents, if the building or structure has been “vacant” for more than thirty consecutive days immediately before the loss.
b. Any device or instrument, for the transmitting, recording, receiving or reproduction of sound or pictures, that is operated by power from the electrical system of a motor vehicle or mobile agricultural vehicle, unless it is:
(1) Covered Property; and
(2) Permanently installed in the motor vehicle or mobile agricultural vehicle.
c. While in or upon a motor vehicle or mobile agricultural vehicle, any tape, wire, record, disc or other medium for use with any device or instrument that transmits, records, receives or reproduces sound or pictures and that is operated by power from the electrical system of the motor vehicle or mobile agricultural vehicle.
Analysis
The restrictive language used in conjunction with the causes of loss tailor coverage to the farm situation. For example, damage caused by “fire or lightning” is covered, except for loss caused by open fire drying of tobacco, a highly flammable substance. There is no coverage under the “windstorm or hail” cause of loss for livestock or poultry when caused by running into water (however, damage to livestock caused by flood is covered—see the exclusions, below) or fences or other objects, or when caused by freezing or smothering in blizzards or snowstorms. Dairy or other farm products in the open (other than hay, straw, or fodder) are not covered when damaged by windstorm or hail.
The “explosion” cause of loss includes explosion of gases or fuel within the furnace of any fired vessel, or within the flues or passages of such a vessel. However, there is no coverage for loss to property under coverages E (scheduled farm personal property), F (unscheduled farm personal property), or G (farm property—barns, outbuildings, and other structures) under this cause of loss when loss or damage is caused by explosion of alcohol stills, steam boilers, steam pipes or steam turbines whether owned, leased by, or under the control of the insured. There is no coverage for damage caused by electric arcing, rupture or bursting of water pipes or pressure relief devices, or by expansion of contents of any building or structure resulting from water. Though this might seem a strange limitation, one need only remember the nature of grain or grain dust to see the reason behind the limitation of coverage.
Note that the “aircraft” cause of loss is limited to loss caused by contact of the aircraft with covered property, or with a structure containing covered property, or to objects falling from the aircraft. So, if a sonic boom caused covered livestock to panic and run into a body of water, there would be no coverage under this cause of loss. It is conceivable such a loss could be covered under “explosion”; however, the use of the descriptive language following the cause of loss could be viewed as limiting coverage to damage caused by explosion of gasses or fuel. Compare the wording with the equivalent named peril of the homeowners form, which simply states “explosion” with no qualifying language.
The “vehicles” cause of loss is the same as “aircraft” in that direct contact must be made, except that there is no coverage for loss to livestock. (Loss to livestock caused by vehicle collision or overturn is covered under named peril 12., collision.) The current form has been changed so that if a vehicle not owned or operated by a resident of the dwelling damages a fence, driveway, or walk that is appurtenant to a covered dwelling, there is coverage that is otherwise excluded.
Coverage for damage caused by vandalism is not covered if the damaged building, structure or contents has been vacant (a defined term—see Farm Property—Other Provisions FP 00 90) for more than thirty consecutive days. Nor is there coverage for such items as CD players or TVs if not covered property and permanently installed in motor vehicles or mobile agricultural equipment, or tapes, CD's, etc., in or upon such a vehicle.
9. Theft, including attempted theft and loss of property from a known location when it is likely that the property has been stolen.
This cause of loss does not include loss caused by or resulting from theft:
a. Due to unauthorized instructions to transfer property to any person or to any place;
b. Under Coverage A, B or G:
In or from a building or structure under construction, or of materials and supplies for use in such construction, until the building or structure is completed and occupied;
c. Under Coverage A, B or C:
(1) from that part of your principal residence, including its grounds and appurtenant structures, which you rent to someone who is not an “insured”;
(2) With respect to household personal property away from the “insured location”, of:
(a) Property at any residence owned by, rented to, or occupied by, an “insured”, except while an “insured”, is temporarily residing there.
But property of a student who is an “insured” is covered at a residence away from home provided the student has been there at any time during the forty-five days immediately preceding the loss;
(b) Any watercraft, its furnishings, equipment or outboard motors; or
(c) Trailers or campers.
d. Under Coverage E or F:
(1) Discovered on taking inventory;
(2) Due to wrongful conversion or embezzlement;
(3) Due to disappearance of any “farm personal property” unless there is evidence that the property was stolen;
(4) Due to acceptance of counterfeit money, fraudulent post office or express money orders, or checks or promissory notes not paid upon presentation.
e. Of any device or instrument for the transmitting, recording, receiving or reproduction of sound or pictures, that is operated by power from the electrical system of a motor vehicle or mobile agricultural vehicle, unless it is:
(1) Covered Property; and
(2) Permanently installed in the motor vehicle or mobile agricultural vehicle.
f. While in or upon a motor vehicle or mobile agricultural vehicle, of any tape, wire, record, disc or other medium for use with any device or instrument that transmits, records, receives or reproduces sound or pictures and that is operated by power from the electrical system of the motor vehicle or mobile agricultural vehicle.
Analysis
Theft of materials or supplies from a building under construction or for use in such construction, until the building is completed and occupied, is excluded. Note that, unlike the similar ISO homeowners provision, this exclusion does not apply to personal property in the building other than materials or supplies for use in such construction. Therefore, theft of furnishings moved into the building before it is completed is not excluded from the farm coverage as it is under the homeowners form.
Theft from a part of the principal residence rented to someone who is not an insured is excluded, as it is under the homeowners. Similarly, the farm coverage form excludes theft from a secondary residence except while an insured is temporarily living there. Property of a student is covered if the student has been at the other residence at any time within the forty-five days immediately preceding the loss.
Many of the provisions governing theft coverage reflect the business nature of the farm. For example, there is no coverage under the scheduled or unscheduled farm personal property forms for theft discovered upon taking inventory, or for disappearance of any farm personal property unless there is evidence that the property was stolen. Application of exclusion d.(1) to actual losses may prove troublesome. The intent is to exclude losses where the only evidence of theft is a shortage discovered by taking inventory. But as written, it might also be interpreted by some as applying to any loss first discovered on taking inventory even where subsequent investigation discloses that a theft has in fact occurred. Commercial property causes of loss special form CP 10 30 10 91 expresses the intent of the inventory discovery exclusion more clearly in excluding “property that is missing but there is no physical evidence to show what happened to it, such as shortage disclosed on inventory.” As it stands, the insured who, upon taking inventory finds a loss with clear evidence indicating theft has occurred has good grounds for coverage.
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