Summary: In addition to coverages A, B, and C, described in Farms A.3 (see Farm Personal Exposures, Form FP 00 12), Insurance Services Office farm property form FP 00 12 09 03 provides several coverage extensions—each applicable to one or more of these three coverages—and four additional coverages. This article discusses these extensions and additional coverages.
Topics covered:
Trees, shrubs, plants, and lawns
Household personal property—off-premises; owner or tenant
Refrigerated products coverage; owner or tenant
Extension for tenant—building additions and alterations
Additional coverage—removal of fallen trees
Additional coverage—credit cards, etc.
Additional coverage—water damage
Trees, Shrubs, Plants, and Lawns
A. Trees, Shrubs, Plants And Lawns
This Coverage Extension applies to Coverages A and C.
Trees, shrubs, plants and lawns located within 250 feet of a covered “dwelling” are Covered Property but only if loss or damage is caused by or results from any of the following Covered Causes of Loss: fire or lightning, explosion, riot, civil commotion, aircraft, vehicles not owned or operated by a resident of the covered “dwelling”, vandalism, or theft.
For all damaged or destroyed trees, shrubs, plants or lawns located within 250 feet of a covered “dwelling”, the most we will pay under this Extension is:
1. 5 percent of the Coverage A Limit of Insurance shown in the Declarations for the “dwelling”; or
2. 10 percent of the Coverage C Limit of Insurance shown in the Declarations if the dwelling is not covered under Coverage A.
However, we will not pay more than $500 for any one damaged or destroyed tree, shrub, plant or lawn.
This Extension is additional insurance.
We will not pay for loss of or damage to trees, shrubs, plants or lawns grown for business or farming purposes.
Analysis
Extension A., trees, shrubs, plants, and lawns, extends the protection of coverage A to cover trees, shrubs, plants, and lawns within 250 feet of a covered dwelling. This coverage is an additional amount of insurance and protects against only the following causes of loss: fire, lightning, explosion, riot, civil commotion, aircraft, vehicles not owned or operated by a resident of the covered dwelling, vandalism, and theft.
Two limits apply to loss for each occurrence under extension A: 5 percent of the dwelling limit or 10 percent of the personal property limit, when the policy does not cover the dwelling. However, the most payable for any one tree, shrub, plant, or lawn damaged or destroyed is $500.
These limits are similar to those of coverage extension three of the ISO homeowners or tenants policy, except that lawns, under those forms, are not subject to the $500 limit.
Household Personal Property—Off-Premises; Owner or Tenant
B. Household Personal Property Of “Insureds” Away From The “Insured Location”
Covered Property is extended to mean household personal property anywhere in the world, provided it is owned or used by you or members of your family who reside with you on the “insured location”.
But an “insured percents” household personal property at any “insured percents” residence away from the “insured location” shown in the Declarations is subject to a Special Limit of Insurance equal to:
1. 10 percent of the Limit of Insurance shown in the Declarations for Household Personal Property; or
2. $1,000;
whichever is greater.
However, if a higher limit of insurance is shown in the Declarations, the higher limit applies.
The only such property not permanently subject to the Special Limit is household personal property:
1. Moved from the “insured location” shown in the Declarations because the residence is being repaired, renovated or rebuilt and is not fit to live in or store property in; or
2. At a newly acquired principal residence. For a period of 30 days immediately after you begin moving it to the newly acquired principal residence, this property will be subject to the Limit of Insurance shown in the Declarations for Household Personal Property. That Limit will apply on a pro rata basis during the thirty-day period to personal property at both locations.
Analysis
This coverage extension applies for either an owner or a tenant. It provides coverage for household personal property away from the insured location.
The provision extends worldwide coverage for household personal property owned or used by the named insured or resident family members. The full limit of insurance for coverage C applies to such property. However, coverage at any insured residence away from the insured location, other than property that has been moved from the insured location because the residence is being repaired and is not fit to live in or store property in or a newly acquired residence is limited to the greater of 10 percent of the coverage C limit or $1,000.
For a newly acquired principal residence, coverage applies on a pro rata basis between the old and new residence for the first thirty days immediately after the insured begins to move into the new dwelling. After thirty days, the ten percent or $1,000 limit applies at the new dwelling, unless the new location is added to the policy.
The worldwide coverage on household personal property is similar to the ISO homeowners worldwide coverage, with the following exceptions:
a. The 10 percent or $1,000 limitation applies to all property rather than only property “usually located” at the other residence (the homeowners language).
b. There is pro rata rather than full coverage as with the homeowners form at both new and old locations for thirty days after the move begins.
Refrigerated Products Coverage; Owner or Tenant
C. Refrigerated Products – Not “Farm Personal Property”
This Coverage Extension applies to Coverage C, whether you are the owner or tenant, and is part of (no in addition to) the applicable Limit of Insurance.
We will pay up to $500 for loss of or damage to contents of a freezer or refrigerated unit, in the “dwelling” you occupy or a structure appurtenant to it, caused by a change in temperature due to:
1. Interruption of electrical service to refrigeration equipment, caused by damage to generating or transmission equipment; or
2. Mechanical or electrical breakdown of a refrigeration system.
Under this Coverage Extension we will not pay for loss of or damage to: “farm personal property;” or to property not owned by you.
This Coverage Extension will not apply unless you maintain the refrigeration equipment in proper working order.
No deductible applies to this Refrigerated Products Extension of Coverage.
Analysis
Called “consequential loss coverage” by most homeowners carriers, the current farm property form provides some protection if the insured percents own refrigerated/frozen property is damaged because of interruption of electricity or mechanical breakdown of the refrigerator/freezer. The refrigerator/freezer must be located in the dwelling or a structure appurtenant to it.
This extension does not cover farm personal property or property the insured does not own. The intent is to cover the family percents own frozen goods, including products raised on the farm but intended for family use—not farm products intended for sale.
The coverage does not apply if the named insured does not maintain the refrigeration equipment in “proper working order.” This provision may well be subject to varied interpretation. At the least, failure to follow manufacturer percents specifications for maintenance of the equipment, with a following equipment failure, could well be considered failure to maintain “in proper working order.” At worst, almost any malfunction, other than from a power surge or similar outside cause, might be considered by some as not maintaining the equipment in proper working order.
Extension for Tenant—Building Additions and Alterations
D. Building Additions And Alterations
This coverage applies to Coverage C, but only if you are a tenant.
1. Coverage
Your insurance under Coverage C - Household Personal Property includes building additions, alterations, fixtures, improvements or installations made or acquired at your expense to that part of the “dwelling” used exclusively by you.
The Limit of Insurance for this Coverage Extension is 10 percent of the Limit of Insurance that applies to Household Personal Property. But if a higher Limit of Insurance is shown in the Declarations, the higher Limit applies.
This Extension is additional insurance.
2. Loss Settlement
If the 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.
If the 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. This proportion will equal the ratio of Paragraph a. below to Paragraph b. below.
a. The period of time from the loss or damage to the expiration of the lease.
b. 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 Paragraphs a. and b. above.
If repair or replacement is done at the expense of others for the use of the “insured”, we provide no insurance.
Analysis
Under this coverage extension, tenants receive coverage for building additions and alterations coverage. The limit provided—as additional insurance—is 10 percent of the coverage C limit. A higher amount may be purchased.
This extension covers building additions, alterations, fixtures, improvements, or installations, made or acquired at the named insured percents expense, to that part of the dwelling used exclusively by the named insured.
This coverage differs from the comparable coverage in the ISO tenants HO-4 form in only one respect, and this probably with no practical difference in meaning. The tenants form covers only “improvements or installations” but not “additions, alterations, or fixtures,” but most work of this type done or acquired by the tenant will fit easily into the concept of “improvements or installations.”
This extension also has its own loss settlement provision:
1. If repair or replacement is done at the insured percents expense within twelve months after the loss, payment is on the basis of actual cash value.
2. If repair or replacement is not done within twelve months after the loss, payment is on the basis of the unamortized value of the improvements for the remainder of the lease. Such a settlement is calculated in this fashion: time from loss to lease expiration divided by time from installation of the improvements to lease expiration, times the cost of repair or replacement of the lost or damaged improvements;
3. If repair or replacement is done at the expense of others—typically the landlord—for the further use of the insured, there is no coverage under this extension.
For purposes of settlement provision (2), lease means the lease, whether written or oral, in effect at the time of loss. If the lease contains a renewal option and the insured exercises that option, the expiration date of the renewal option is considered the expiration date of the lease.
Additional Coverage—Removal of Fallen Trees
A. Removal Of Fallen Trees
1. We will pay the reasonable expense you incur removing any fallen tree from the grounds appurtenant to your principal residence, provided that, in falling, the tree damaged property covered under Coverage A, B or C, and provided further:
a. That the tree is located more than 250 feet from a covered “dwelling”, and the cause of its falling was a Covered Cause of Loss; or else
b. That the tree is located within 250 feet from a covered “dwelling”, and the cause of its falling was a Covered Cause of Loss other than fire or lightning, explosion, riot or civil commotion, aircraft, vehicles owned and operated by nonresidents of the covered “dwelling”, vandalism, or theft.
2. In the event of a Covered Cause of Loss, as described in Paragraph a. or b. above occurs, we will pay the reasonable expense you incur removing any fallen tree from the grounds appurtenant to your residence premises described in the Declarations provided that, in falling, the tree does not damage covered property, and:
a. The tree blocks a driveway on the residence premises preventing a motor vehicle, which is subject to motor vehicle registration, from entering or leaving the residence premises; or
b. The tree blocks a ramp or other fixture designed to assist a handicapped person who is an “insured” to enter or leave the residence premises.
3. The most we will pay under this Additional Coverage is $1,000 in any one loss regardless of the number of fallen trees. No more than $500 of this limit will be available for the removal of any one tree.
This Additional Coverage is additional insurance
This Additional Coverage, Removal of Fallen Trees, does not apply to trees covered under the Trees, Shrubs, Plants, and Lawns Coverage Extension under Section II – Coverage Extensions.
Analysis
Up to $1,000 per occurrence, as a separate item of coverage, is payable for the reasonable expense of removing a fallen tree from the grounds appurtenant to the insured percents principal residence. The $1,000 limit is subject to a per tree limit of $500. For this coverage to apply, the tree, in its fall, must damage property covered under A, B, or C, and either of the following two must apply:
1. For trees located more than 250 feet from the “dwelling,” the cause of the falling must be a covered cause of loss.
2. For trees located within 250 feet of the “dwelling,” the cause of the falling must be a covered cause of loss, other than fire or lightning, explosion, riot or civil commotion, aircraft, vehicles that nonresidents own and operate, vandalism, or theft.
The authors have distinguished between trees that serve the covered “dwelling” and those that are anywhere else. Those that are close to the dwelling must be felled by one of a few causes of loss, while trees elsewhere appurtenant to the dwelling may be felled by any covered cause of loss.
Form FP 00 12 adds coverage not found in the homeowners. If a fallen tree does not damage covered property but blocks a driveway or a handicapped ramp on the residence premises, the policy pays for removal of that tree.
Additional Coverage—Credit Cards and Electronic Fund Transfer Cards; Forgery; Counterfeit Currency
B. Credit Cards And Electronic Fund Transfer Cards Or Other Access Devices; Forgery; Counterfeit Currency
1. We will pay up to $500, unless a higher limit is indicated in the Declarations, for:
a. The legal obligation of any “insured” to pay because of the theft or unauthorized use of credit cards issued to any “insured” or registered in any “insured percents” name.
But this Additional Coverage will not apply if any “insured” has not complied with all terms and conditions under which the credit card was issued.
b. Loss resulting from theft or unauthorized use of an electronic fund transfer card or other access device used for deposit, withdrawal or transfer of funds, issued to any “insured” or registered in any “insured percents” name.
But this Additional Coverage will not apply if any “insured” has not complied with all terms and conditions under which the electronic fund transfer card or other access device was issued.
c. Loss to any “insured” caused by forgery or alteration of any check or negotiable instrument; and
d. Loss to any “insured” through acceptance in good faith of counterfeit United States or Canadian paper currency.
2. But we will not pay for loss arising out of business pursuits or dishonesty of any “insured”.
3. No deductible applies to this Additional Coverage.
4. Defense
a. We may make any investigation and settle any claim or suit that we decide is appropriate. Our obligation to defend any suit ends when the amount we pay for the loss equals the applicable Limit of Insurance.
b. If a suit is brought against any “insured” for liability under the Credit Card or Electronic Fund Transfer Card Or Other Access Device Coverage, we will provide a defense at our expense by counsel of our choice.
c. We have the option to defend at our expense any “insured” or any “insured percents” bank against any suit for the enforcement of a payment under the Forgery Coverage.
5. This Additional Coverage is additional insurance.
Analysis
$500 of coverage, as a separate amount of insurance with no deductible, applies to loss involving:
1. theft or unauthorized use of credit cards or electronic fund transfer cards or other access devices (“other access devices” were added to the 2003 form, representing a slight broadening of coverage);
2. forgery or alteration of any check or negotiable instrument; or
3. good-faith acceptance of counterfeit United States or Canadian paper currency.
This coverage is similar to additional coverage six of the ISO homeowners policy, with the same inclusion of defense coverage and exclusion of business pursuits, dishonesty of any insured, and—for credit or electronic fund transfer cards—loss if any insured has not complied with all terms and conditions of the card.
However, the arrangement of the coverage descriptions and exclusions is different under the farm property coverage form. This difference in arrangement brings the policy percents intent into question: does the $500 limit apply in aggregate to all four items listed; or does it apply individually to items (a) and (b) and as a common limit to items (c) and (d)?
The homeowners language connects the four coverages by semicolon, with 'and percent connecting the third and forth items, linking all four items to the single $500 limit; the farm language completes coverages (a) and (b) (credit cards and electronic fund transfer cards or other access devices) each with a period and includes exclusionary language for each that begins, 'But this Additional Coverage. . . percent, seeming to suggest that each is a separate coverage with its own $500 limit. Only coverages (c) and (d) are linked by a semicolon and the word 'and, percent suggesting a common $500 limit for both.
Additional Coverage—Water Damage
C. Water Damage
In the event of water (or steam) damage not otherwise excluded, from a plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance, we:
1. Will also pay the necessary cost of tearing out and replacing any part of a covered building or structure so that the damaged system or appliance can be repaired, provided that Special Causes of Loss is shown in the Declarations for Coverages A and B under which the building or structure is covered; but
2. Will not pay the cost to repair any defect which caused water or steam to escape from a system or appliance containing water or steam.
In this Additional Coverage, a plumbing system does not include a sump, sump pump or related equipment.
This Additional Coverage will not increase the Limit of Insurance provided in this Coverage Part.
Analysis
Even though the homeowners policy has, for a long time, covered the cost of tearing out a wall and otherwise getting to a leaking pipe or appliance, it was never specifically covered by the farm property form. The current edition corrects this oversight, with the inclusion of additional coverage C.
As with the homeowners, the farm property policy promises to cover the cost of tearing out and replacing any part of a covered building or structure, in order to repair or replace the damaged system. The broken or leaking part, itself, is not covered. This coverage applies only when the insured has chosen “special” causes of loss.
Additional Coverage—Grave Markers
D.Grave Markers
We will pay up to $5,000 for grave markers, including mausoleums, on or away from the “insured location” for loss caused by a Basic or Broad Covered Cause of Loss.
In the event of loss or damage to grave markers, we will settle at actual cash value as of the time of loss.
Payment under this Additional Coverage will be subject to, not in addition to, the Limit of Insurance applying to the lost or damaged Covered Property.
Analysis
Because producers and insurers advised ISO that confusion existed over the classification of grave markers as personal or real property, ISO now provides this additional coverage for grave markers, added in the 2003 form.
The coverage tracks the same additional coverage in the homeowners forms and provides a broadening of coverage.
Grave markers, either located on the insured location or away from it, are covered for up to $5,000, not in addition to the form's limit of insurance. Mausoleums are also included under this coverage. Settlement is on an actual cash value basis.
Remainder of Policy
The rest of form FP 00 12 refers the reader to the “Other Farm Provisions Form,” FP 00 90 09 03. There, one finds other additional coverages; limits of insurance; and the applicable deductible. The form also refers the reader to the “Causes of Loss Form,” FP 10 60 09 03, for the applicable causes of loss.
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