14.5 Farm Insurance

Farm and ranch owners face unique risks that require specialized insurance coverage. Modern farms often combine residential and commercial exposures on the same property, making a comprehensive farm policy the most appropriate form of protection. Because of these combined exposures, farm properties are not eligible for coverage under Homeowners or Dwelling policies.

Farm insurance has evolved to reflect modern farming operations and offers a variety of coverage forms that can be customized to meet the specific needs of the insured farm or ranch.

The primary farm insurance coverage forms include:

• Farm Property – Farm Dwellings, Appurtenant Structures, and Household Personal Property Coverage Form
• Farm Property – Farm Personal Property Coverage Form
• Farm Property – Barns, Outbuildings, and Other Farm Structures Coverage Form
• Farm Liability Coverage Form

Additional specialized farm property coverage forms include:

• Mobile Agricultural Machinery and Equipment Coverage Form
• Livestock Coverage Form

Definitions

These coverage forms insure both residential and commercial property, so the policy defines each type of covered property. A dwelling is a building used primarily for family residential purposes, including mobile homes and modular homes. It does not include buildings used for agricultural operations, such as storing farm products, livestock, or poultry.

Business property is property used in a trade, profession, or occupation other than farming. Farm personal property consists of property used in farming or ranching operations, including:

• Feed, seed, and fertilizer
• Livestock, other animals, poultry, bees, fish, and worms
• Grain and produce
• Agricultural machinery and equipment
• Agricultural vehicles

The Farm Property forms distinguish between different types of animals. Livestock includes cattle, sheep, swine, goats, horses, mules, and donkeys. Poultry is defined separately and includes any fowl kept by the insured for use or sale.

Similar to a Homeowners policy, insureds under a Farm policy include:

• The named insured
• Resident relatives
• Anyone under age 21 in the care of the named insured or a resident relative
• Resident relatives under age 24 who are away at school

An insured location includes any location listed in the Farm Property Declarations.

Farm Property Coverage Forms

Farm property coverages were once combined under a single Farm Property form but are now provided through multiple coverage forms. These forms clearly identify the available coverages, specify how conditions and coverage extensions apply, and give policyholders greater flexibility in selecting the coverage that best fits their farming operation.

In general, the Farm Property forms cover direct physical loss or damage to covered property at the insured location or other locations when specifically provided, if the loss results from a covered cause of loss. Coverage applies only when a limit of insurance is shown in the Declarations.

Coverages

Form	Coverage	What Is Covered
Farm Property – Farm Dwellings, Appurtenant Structures, and Household Personal Property Coverage Form	Coverage A	Dwellings
	Coverage B	Other Private Structures Appurtenant to Dwellings
	Coverage C	Household Personal Property
	Coverage D	Loss of Use
Farm Property – Farm Personal Property Coverage Form	Coverage E	Scheduled Farm Personal Property
	Coverage F	Unscheduled Farm Personal Property
Farm Property – Barns, Outbuildings, and Other Farm Structures Coverage Form	Coverage G	Barns, Outbuildings, and Other Farm Structures

Coverage A – Dwellings

Coverage A protects residential dwellings owned by the insured and listed in the Declarations. Covered dwellings may be located at or away from the insured location.

Coverage A also includes:

• Attached structures
• Building materials and supplies intended for use in constructing, repairing, or altering the covered dwellings
• Outdoor equipment used to service the dwellings or their grounds

The following are not covered property under Coverage A:

• Land
• Water
• Trees
• Plants
• Lawns

Coverage B – Other Private Structures Appurtenant to Dwellings

Coverage B protects other structures that are separate from a covered dwelling, including structures connected only by a fence or utility line. Except for private garages, these structures must not be rented, held for rental, or used primarily for farming purposes.

Land and water are not considered covered property.

Losses under Coverage A and Coverage B are settled on a replacement cost basis, subject to an 80% coinsurance requirement.

Coverage C – Household Personal Property

Coverage C protects household personal property owned or used by the insured or members of the insured's family while the property is located at the insured location. After a covered loss, the insured may also request coverage for the household personal property of others while it is located in a covered dwelling or on the grounds of the dwelling.

The following are not covered under Coverage C:

• Aircraft
• Trees and plants
• Animals
• Farm personal property
• Motor vehicles and electronic equipment used exclusively with them
• Credit cards
• Data processing media
• Property separately described and insured under this policy or another policy (such as a Personal Articles Floater)

Like Coverage C of a Homeowners policy, Coverage C under the Farm Property form includes special limits of insurance for certain types of property, including:

• Securities
• Watercraft
• Trailers
• Business property

Special limits also apply to theft losses involving:

• Furs and jewelry
• Firearms
• Electronic apparatus

Losses under Coverage C are settled on an actual cash value (ACV) basis.

Coverage D – Loss of Use

Coverage D provides:

• Additional Living Expense (ALE): Covers the necessary increase in living expenses when the insured's principal residence becomes uninhabitable due to a covered loss.
• Fair Rental Value: Covers the loss of rental income when a covered dwelling or other structure held for rental becomes uninhabitable because of a covered loss.

Coverage is limited to the amount necessary to maintain the household's normal standard of living.

Loss and Expense Due to Emergency Prohibition Against Occupancy coverage pays Additional Living Expenses and Fair Rental Value for up to 2 weeks when a civil authority prohibits occupancy of a dwelling or other structure because neighboring property was damaged by a covered cause of loss.

Coverage E – Scheduled Farm Personal Property

Coverage E applies only to the types of property that have a limit of insurance shown in the Declarations. Covered property may include:

• Grain, feed, hay, straw, and fodder stored in buildings, structures, sacks, wagons, or trucks (coverage for property in the open is limited).
• Farm products, materials, and supplies listed in the Declarations.
• Trays, boxes, and box shook (parts used to make barrels or packing boxes).
• Computers and software used for farm management.
• Miscellaneous equipment normally used in farm operations.
  • Excludes: tractors, combines, harvesters, hay balers, vehicles covered by an auto policy, watercraft, aircraft, fences, windmills, and irrigation equipment.
• Borrowed or rented farm machinery, vehicles, or equipment.
  • Excludes: vehicles covered by an auto policy, watercraft, and aircraft.
• Owned portable buildings and structures.

The following property is insurable only under the Basic or Broad Causes of Loss forms:

• Poultry (except turkeys), but only if specifically listed.
• Livestock, whether on or away from the insured location.
  • Not covered while in the custody of a common or contract carrier, at public sales yards, or at packing plants.
• Bees, worms, fish, and other animals.

The following are not covered under Coverage E:

• Growing crops
• Private light poles

Coverage E includes the following special limits of insurance:

• Hay, straw, or fodder in the open: $10,000 per stack unless a different stack limit is shown in the Declarations.
• Miscellaneous equipment: $3,000 per piece of equipment.
• Covered poultry: Covered for its cash market value at the time of loss.
• Covered livestock: Maximum of $2,000 per head.

Losses to farm personal property are settled on an actual cash value (ACV) basis

Coverage F – Unscheduled Farm Personal Property

Coverage F provides limited coverage for certain unscheduled farm property, including:

• Grain, feed, fertilizer, hay, straw, fodder, and pesticides
• Livestock, subject to the same conditions and $2,000 per head maximum limit that applies under Coverage E
• Farm machinery, equipment, implements, tools, and supplies

The following are not covered under Coverage F:

• Vehicles covered by an auto policy
• Watercraft
• Aircraft
• Fences
• Windmills
• Irrigation equipment
• Poultry
• Bees, fish, and worms
• Racehorses and show ponies
• Data processing media
• Equipment located in manufacturing plants
• Trees and lawns
• Growing crops in the open, such as tobacco and cotton

Losses to unscheduled farm personal property are settled on an actual cash value (ACV) basis and are subject to an 80% coinsurance provision.

Coverage G – Barns, Outbuildings, and Other Farm Structures

Coverage G protects:

• Farm buildings and structures
• Attached sheds and permanent fixtures
• Described silos
• Portable buildings and structures
• Fences (excluding field and pasture fences)
• Corrals, pens, chutes, and feed racks
• Outdoor radio and television equipment and antennas
• Improvements and betterments to covered farm buildings
• Building materials and supplies used to construct, repair, or alter covered farm structures

The following are not covered under Coverage G:

• Land
• Water
• Underground foundations
• Piers
• Docks
• The cost of excavation or filling

Losses under Coverage G are settled on an actual cash value (ACV) basis unless the insured selects replacement cost coverage. When replacement cost is selected, an 80% coinsurance provision applies.

Causes of Loss

Farm Property forms allow the insured to choose among Basic, Broad, or Special Covered Causes of Loss options.

Covered Causes of Loss – Basic

The Basic Causes of Loss option covers the following named perils:

Fire or lightning	Windstorm or hail	Explosion
Riot or civil commotion	Aircraft	Vehicles
Smoke	Vandalism	Theft
Sinkhole collapse	Volcanic action	Collision (Coverages E and F only)
Earthquake loss to livestock	Flood loss to livestock

Many Basic Causes of Loss include exceptions that are common to property policies, while others are specific to farm risks:

• Fire or lightning: Does not cover losses occurring during or within 5 days after open-fire curing or drying of tobacco.
• Windstorm or hail: Covers damage to personal property only if the building's exterior is first damaged, allowing rain, snow, or dust to enter and cause damage.
• Explosion: Does not include steam boiler explosions or the bursting of water pipes.
• Aircraft: Includes damage caused by falling objects from aircraft.
• Vehicle: Does not cover damage to livestock, fences, or driveways.
• Collision: Covers damage to covered farm machinery caused by collision or overturn, damage to farm personal property being transported in a motor vehicle due to collision or overturn, and death of livestock being transported in a vehicle because of collision or overturn.
• Smoke: Does not cover smoke from agricultural smudging or industrial operations.
• Vandalism: Does not apply to buildings that have been vacant for more than 30 consecutive days before the loss.
• Theft: Does not cover watercraft or trailers away from the premises, or buildings under construction. Under Coverages E and F, theft also excludes losses discovered through inventory, losses due to wrongful conversion or embezzlement, and mysterious disappearance.

Covered Causes of Loss – Broad

In addition to the Basic Causes of Loss, the Broad Causes of Loss option also covers the following named perils:

Electrocution of covered livestock	Attacks on covered livestock by dogs or wild animals	Accidental shooting of covered livestock
Drowning of covered livestock from external causes	Loading/unloading accidents	Falling objects
Breakage of glass or safety glazing material	Sudden and accidental tearing apart of hot water system or appliance	Accidental discharge or leakage of water or steam from a system or appliance
Weight of ice, snow, or sleet	Freezing of systems or appliances	Sudden and accidental damage from electrical current

Covered Causes of Loss – Special

The Special Causes of Loss option provides open perils coverage for covered property. However, it is not available for:

• Livestock
• Poultry
• Other animals
• Bees
• Fish
• Worms
• Hay
• Plants, trees, and shrubs

In addition to many of the exclusions found under the Basic and Broad Causes of Loss options, the Special option also excludes:

• Criminal acts committed by the insured
• Wear and tear
• Rust
• Hidden or latent defects
• Smog
• Damage caused by the nesting of vermin or insects
• Escape of pollutants or contaminants
• Mechanical breakdown

Exclusions

All Farm Property Causes of Loss options exclude the following perils:

• Ordinance or law
• Earth movement, including earth sinking or shifting, landslide, and mine subsidence
  • Exception: This exclusion does not apply to sinkhole collapse, earthquake losses to farm machinery insured under the Special Causes of Loss option, or earthquake losses to livestock.
• Water, including flood, tidal waves, mudslides, mudflow, and water backing up or overflowing from a sewer or sump pump
  • Exception: This exclusion does not apply to flood losses to farm machinery insured under the Special Causes of Loss option or flood losses to livestock.
• Governmental action
• Intentional loss
• Nuclear hazard
• Off-premises failure of power or utility services
• Neglect
• War and military action

Additional Coverages

Applicable to All Coverages

The following Additional Coverages apply to Coverages A–G:

• Debris Removal: Covers debris removal expenses up to 25% of the amount payable for the direct physical loss. This amount is included within the applicable limit of insurance, but an additional 5% of that limit is available if debris removal expenses exhaust the policy limit.
• Reasonable Repairs
• Damaged Property Removed for Safekeeping
• Fire Department Service Charges
• Collapse: Available only when the Broad or Special Causes of Loss option is selected.
• Pollutant Clean-up and Removal: Provides up to $10,000 per location during each 12-month policy period.

Applicable to Coverages A–D

The following Additional Coverages apply to Coverages A–D:

• Removal of Fallen Trees: Covers up to $1,000 per loss, subject to a maximum of $500 per tree.
• Credit Cards, Electronic Fund Transfer (EFT) Cards, Other Access Devices, Forgery, and Counterfeit Currency: Provides up to $500 for losses resulting from theft or unauthorized use.
• Water Damage: Covers water or steam damage from a plumbing, heating, air conditioning, or fire protective sprinkler system, or a household appliance, unless otherwise excluded.
• Grave Markers: Covers up to $5,000.

Applicable to Coverages E and F

The following Additional Coverages apply to Coverages E and F:

• Farm Operations Records: Covers the cost to restore farm operations records damaged by a covered cause of loss, up to $2,000.
• Extra Expense: Covers the additional expenses necessary to resume normal farming operations after a covered physical loss.

Applicable to Coverage G

Coverage G also includes the Water Damage and Extra Expense Additional Coverages.

Limits of Insurance

Coverage applies only when a limit of insurance is shown in the Declarations for the applicable class of property. If no limit is listed, no coverage is provided.

Deductible

The standard property deductible is $250.

Farm Property Conditions

The following standard property conditions apply:

Abandonment	Appraisal	Duties in the Event of Loss
Insurance Under Two or More Coverages	Transfer of Rights of Recovery Against Others to Us (Subrogation)	Concealment, Misrepresentation, or Fraud
Pair, Sets, or Parts	Other Insurance	Recovered Property
Legal Action Against Us	Loss Payment	Liberalization
Mortgage holders	No Benefit to Bailee

Under the Unoccupancy and Vacancy condition, if a building or structure is unoccupied or vacant for more than 120 consecutive days immediately before a loss, the applicable limit of insurance for the building, structure, or its contents is automatically reduced by 50%.

Additional Farm Property Insurance Forms

Livestock Coverage Form

The Livestock Coverage Form provides separate coverage for livestock and is similar to the other Farm Property forms. Coverage may be written using either:

• A per animal limit of insurance for each class of livestock shown in the Declarations, or
• A per class limit of insurance with a per animal sublimit.

Coverage does not apply to livestock located in public stockyards, sales yards, packing plants, or slaughterhouses. It also generally excludes livestock in the custody of a common or contract carrier. However, a Coverage Extension may be added to insure this exposure, with a $1,000 limit unless a higher limit is shown in the Declarations.

The Livestock Coverage Form uses the same Covered Causes of Loss – Basic as the Farm Property forms. Covered perils include Collision, which applies to the death of livestock resulting from a collision with a vehicle or the overturn of a vehicle transporting the livestock.

Limits of Insurance

For any one occurrence, the maximum payable for each declared animal is the limit of insurance shown for that animal in the Declarations.

For animals not specifically listed in the Declarations, the maximum payable for any one animal in a single occurrence is $2,000.

Selected Conditions

Most conditions in the Livestock Coverage Form are the same as those found in the other Farm Property forms, including the Abandonment, Appraisal, Duties in the Event of Loss, and Pairs and Sets conditions.

Under the Additional Acquired Property condition, if the insured acquires additional livestock during the policy period and that class of livestock is already insured, the newly acquired livestock is automatically covered for 30 days. To continue coverage beyond the 30-day period, the insured must report the livestock and pay any additional premium within those 30 days.

The Livestock Coverage Form is subject to an 80% coinsurance requirement.

Mobile Agricultural Machinery and Equipment Coverage Form

The Mobile Agricultural Machinery and Equipment Coverage Form insures mobile agricultural machinery and equipment used in the normal operation of a farm, along with their accessories, tools, and spare parts. Cotton pickers, harvester-thresher combines, and four-wheel ATVs are covered only if they are specifically listed and described in the Declarations.

The following are not covered under the Mobile Agricultural Machinery and Equipment Coverage Form:

• Aircraft, watercraft, automobiles, motorcycles, trucks, mobile homes, dealer demonstration equipment, and vehicles primarily designed and licensed for public road use
• Barn cleaners, boilers, bulk feed and milk tanks, pasteurizers, and fixtures permanently attached to a building
• Irrigation equipment
• Contraband

The Mobile Agricultural Machinery and Equipment Coverage Form may be written with either:

• A blanket limit of insurance covering all insured machinery and equipment, or
• A combination of specific limits for individually described machinery and equipment and a separate limit for unspecified machinery and equipment.

The Mobile Agricultural Machinery and Equipment Coverage Form includes the standard property exclusions, such as losses resulting from:

• Earth movement
• Governmental action
• Explosion of steam boilers
• Mechanical breakdown
• Temperature changes

Farm Liability Insurance

The Farm Liability Coverage Form may be issued as a stand-alone policy or as part of a Farm Package policy. It includes three primary liability coverages:

• Coverage H
• Coverage I
• Coverage J

Coverage H – Bodily Injury and Property Damage Liability

Coverage H pays sums the insured becomes legally obligated to pay for bodily injury or property damage caused by an occurrence during the policy period. Coverage also includes:

• Fire Damage Legal Liability: Covers liability for fire damage to premises rented to or temporarily occupied by the insured.
• Products Liability: Covers liability arising from the sale of farm products.

Exclusions

Coverage H excludes a number of bodily injury and property damage liability exposures, many of which are common to other personal and commercial liability policies, including:

Expected or intended injury	Contractual liability, except for insured contracts	Rendering or failure to render professional services
Transmission of communicable diseases	Molestation, corporal punishment, or abuse	Controlled substances
Workers’ Compensation and Employers Liability	Damages arising out of buildings under construction	Bodily injury to an insured
Damage to the insured’s property, products, or work	Product recall	War

Other Coverage H exclusions apply to liability arising from:

• The actual or alleged release or escape of pollutants
• The release or discharge of any substance from an aircraft, such as crop dusting
• The use of livestock or animals in speed contests, stunt activities, or to provide rides for a fee
• The ownership, maintenance, use, operation, loading, or unloading of aircraft, motor vehicles, or motorized bicycles
  • Exceptions include certain vehicles used exclusively to assist people with disabilities and recreational motor vehicles owned by the insured when the occurrence takes place at the insured location.
• The transportation of mobile equipment
• The ownership, maintenance, use, operation, loading, or unloading of watercraft
  • Watercraft exclusions and exceptions are generally similar to those found in a Homeowners policy.
• Custom farming, meaning planting, cultivating, harvesting, or similar operations performed for another person at a location that is not an insured location
  • Custom farming does not include operations on premises rented by the insured, volunteer work, or neighborly exchanges of services.
  • This exclusion applies only if the insured's gross receipts from custom farming exceed $5,000 during the 12 months immediately preceding the occurrence.

Coverage I – Personal and Advertising Injury Liability

Coverage I pays sums the insured becomes legally obligated to pay for personal injury or advertising injury committed during the policy period. The personal injury must arise from personal activities or operations that are usual or incidental to farming, such as unknowingly slandering a neighbor's farm products.

Coverage I excludes liability arising from:

• Knowing violations of another person's rights
• Criminal acts
• Contractual liability
• Incorrect quotations or misrepresentations of prices or the quality of goods in advertisements

Coverage J – Medical Payments

Coverage J – Medical Payments to Others pays reasonable medical expenses incurred within 3 years of an accident causing bodily injury, regardless of fault.

Coverage applies to a person, other than an insured, who:

• Is on the insured location with an insured's permission.
• Sustains bodily injury because of:
  • A condition of the insured location
  • The activities of an insured
  • The activities of a farm employee or residence employee acting within the scope of employment
  • An animal owned by or in the care of an insured
• Is a residence employee who is injured in the course of employment.