Potholes

Agricultural Insurance Potholes

Potholes in life come in various sizes and shapes, much like when you stumble across potholes in insurance. As you probably know, there are are times when an insurance policy doesn’t meet the expectations of the policy holder. We’re here to ensure it always does!

Continue reading below as Kingsgate Insurance goes on to explain some common roadblocks, or potholes, you may or may not have experienced and how you may be able to prevent them.

Actual Cash Value vs. Replacement Cost

Actual Cash Value (ACV) is the value of an item at the time of the loss. It includes any depreciation for age, wear and tear from use, physical deterioration, market conditions and all forms of obsolescence. Your insurance policy is designed to pay for damaged property at its actual cost value.

Replacement Cost (RC) is an optional coverage you may be eligible for. If you meet the replacement cost eligibility requirements, your policy will cover the cost to repair or replace up to the policy limit.

It is important to know what coverage you have so you know what you can expect at the time of a claim.

Basic, Broad, Special Form

There are distinct differences between three cause of loss forms when a policy is written: basic, broad, and special. When “special” form is chosen, the insurance company is in the position of only being able to deny coverage if a specific exclusion or limitation applies. When named perils approach of “basic” or “broad” is chosen, the insured is in the position to prove the cause of loss was a specific cause shown in the form.

Farm Property – Basic Causes of Loss

Farm Property – Additional Broad Causes of Loss

Drowning of Covered Livestock from External Causes
Accidental Shooting of Covered Livestock
Loading/Unloading Accidents
Falling Objects
Sudden and Accidental Tearing Apart
Accidental Discharge or Leakage of Water or Steam
Attacks on Covered Livestock by Dogs or Wild Animals
Electrocution of Covered Livestock
Weight of Ice, Snow, or Sleet
Sudden and Accidental Damage
Freezing of Plumbing, Etc.

Special form is the broadest form of coverage. It includes everything except for what is specifically excluded in the policy. It includes, but is not limited to, what is listed above in basic and broad forms.

Below are examples of coverages that are typically excluded from the farm policy.

Farm Property – General Exclusions Applicable to Basic, Broad, and Special

Types of Business Activities

The typical farmowners insurance policy excludes liability coverage for agritainment. Agritainment means an agricultural or aquacultural related activity or enterprise that is primarily operated on the insured location for the purposes of tourism or entertainment and is engaged in for monetary or other compensation.

Agritainment can mean opening the use of private property to the public for hunting, fishing, horseback riding, and other recreational activities. The use of land for educational purposes can be considered agritainment as well. More examples are corn mazes, renting of buildings for events such as weddings, hayrack rides, haunted house, etc.

Talk to your agent for more information on how to add coverage for these types of activities.

Pollution Liability

Pollution is an increasing risk that can occur due to the improper storage or application of pesticides and fertilizers, runoff and above or underground storage tanks. Ownership of livestock can create a pollution issue as well. It is difficult to control pollution risks on your farm, but it is not impossible. You can protect yourself against this type of risk by obtaining environmental insurance that provides protection from both bodily injury and property damage caused by a farm pollution incident.

Note: Actual policies must be consulted for specific terms and conditions.

Liability Exposure and Coverage Limit

As one looks at liability exposure and coverage limits there are many factors that can prove to be of concern or even misinterpreted on a policy that you might not be aware of. Below you will find a few that you may want to consider looking further into on your policy.

Potential Pollution Exposures

Without modifications, the farm liability coverage form has a pollution exclusion for bodily injury and property damage arising out of pollution and pollution clean-up costs except for certain, limited, circumstances. A couple examples of pollution losses are:

Physical injury to crops or animals of others caused by chemical drift.
Bodily injury or property damage caused by heat, smoke, or fumes from a crop stubble fire.

Personal Injury

Under the farm liability coverage form, personal injury can be defined as including malicious prosecution, invasion of privacy, and oral or written publication of material that slanders or libels a person or organization.

Vacant Land

Liability coverage is automatically provided to vacant land owned by or rented to an insured. If any type of structure exists on owned or rented land, review that with your agent to avoid potential coverage gaps.

Custom Farming

When custom farming operation receipts exceed $5,000 in 12 months, policy endorsements are necessary to cover bodily injury or property damage under the farm liability coverage form.

Livestock

The farm property insurance policy form defines livestock as cattle, sheep, swine, goats, horses, mules, and donkeys. If livestock owned is another type of animal not listed, coverage may be available by endorsement. Coverage is typically limited to a specific dollar amount per animal on the base policy. Endorsements may be available to schedule coverage at a higher limit.