15.1 Farm and Agricultural Coverage
Key Takeaways
- The ISO Farm program packages residence, farm structures, personal property, and liability (FL 00 20) into one policy with selectable basic, broad, or special cause-of-loss levels.
- Livestock is insured on named perils only (fire, electrocution, attack by animals, accidental shooting, drowning) - not on special form.
- Coinsurance commonly applies at 80% to farm buildings; the carried-divided-by-required fraction reduces the loss before the deductible is subtracted.
- Mobile agricultural machinery (FP 00 13) settles on ACV unless replacement cost is endorsed, while buildings can settle at replacement cost if coinsurance is met.
- FL 00 20 farm liability mirrors CGL Coverages A/B/C and retains the pollution and care, custody or control exclusions.
Farm and Agricultural Coverage
The ISO Farm program packages property and liability for a working farm or ranch into a single policy built around the Farm Policy Declarations plus the Common Policy Conditions. It mirrors a commercial package but recognizes that a farm is simultaneously a residence, a business, and a producer of crops and livestock. The core building blocks are the seven coverage forms that attach by selection.
The Farm Property coverage forms are designated FP 00 90 (Farm Property - Farm Dwellings, Appurtenant Structures and Household Personal Property), FP 00 91 (Farm Personal Property), FP 00 92 (Other Farm Structures), and the FP 00 13 (Mobile Agricultural Machinery and Equipment) schedule. Liability comes from FL 00 20 (Farm Liability Coverage Form), which functions like CGL Coverage A, B, and C adapted for farming operations, custom farming, and animal-caused injury.
Coverage A through D and named perils vs. special form
The dwelling and structures sections parallel a homeowners layout: Coverage A dwellings, Coverage B other private structures, Coverage C household personal property, and Coverage D scheduled or unscheduled farm personal property. The producer chooses the cause-of-loss level for each: basic named perils, broad named perils, or special (open peril) form.
A common exam trap is that livestock is rarely covered on special form — it is written on named perils only, typically limited to fire, lightning, smoke, windstorm, and a short list including electrocution, attack by dogs or wild animals, accidental shooting, drowning, and loading/unloading collision. Disease and freezing are excluded.
Key valuation and limit features:
- Coinsurance typically applies at 80% on farm buildings; replacement-cost settlement requires the insured to carry to the stated percentage.
- Blanket vs. specific insurance: scheduled (specific) limits apply per item; blanket spreads one limit across listed property and waives the no-coverage-shift problem.
- Mobile equipment (FP 00 13) is usually written on actual cash value (ACV) unless replacement cost is endorsed.
- Pollution and care, custody or control are excluded under FL 00 20, mirroring CGL.
A worked coinsurance / ACV example
A farmer insures a machine shed with a replacement cost of $200,000 and an 80% coinsurance clause. The required limit is 0.80 x $200,000 = $160,000, but the policy limit purchased is only $120,000. A windstorm causes a $50,000 loss; the shed is 10 years old with a 50-year life, so ACV depreciation is 20% (10/50).
| Step | Computation | Result |
|---|---|---|
| Required amount | 80% x $200,000 | $160,000 |
| Coinsurance fraction | $120,000 / $160,000 | 0.75 |
| Loss before penalty (ACV) | $50,000 x (1 - 0.20) | $40,000 |
| Apply coinsurance penalty | $40,000 x 0.75 | $30,000 |
| Deductible | (assume $1,000) | -$1,000 |
| Net payable | $29,000 |
The lesson: the coinsurance penalty is applied to the loss amount, then the deductible is subtracted. Because the farmer underinsured (carried $120,000 vs. the $160,000 required), only 75% of the otherwise-payable loss is recovered. Carrying to value would have removed the penalty entirely.
Under the ISO Farm Property forms, how is livestock most commonly insured against loss?
A farm building has an $200,000 replacement cost with 80% coinsurance, but only $120,000 is carried. Before the deductible, how is a covered loss settled?
The Farm Coverage Structure
The ISO Farm program combines personal and business exposures in one package. Coverage A insures the dwelling; Coverage B, other private structures; Coverage C, household personal property; Coverage D, additional living expense; and the Farm Personal Property coverages insure scheduled or blanket farm machinery, equipment, supplies, harvested crops, and livestock. Section II adds Farm Liability for both personal and farming operations.
Livestock is usually written on a named-peril basis (the broad form livestock perils include accidental shooting, drowning, electrocution, attack by dogs/wild animals, and loading/unloading accidents), not open peril.
Worked Coinsurance / ACV Example
A farm barn has a $200,000 replacement cost, an 80% coinsurance clause, and a $120,000 limit; a windstorm causes $60,000 damage with a $1,000 deductible. Required = $200,000 × 0.80 = $160,000. Factor = $120,000 ÷ $160,000 = 0.75. Indicated = 0.75 × $60,000 = $45,000, minus $1,000 = $44,000. The under-insured barn triggers a coinsurance penalty exactly as on commercial property. Note that farm liability also covers the farmer's products (e.g., produce sold at a stand) and that custom farming for others is a separate exposure often needing endorsement.
Mobile Equipment, Pollution, and Care of Animals
Farm liability distinguishes mobile agricultural equipment (tractors, combines) — generally covered for liability under the farm policy when used in farming, not auto — from licensed vehicles needing auto coverage. Watch the chemical/pollution exposure from fertilizers and pesticides, often limited or excluded without endorsement, and the animal liability exposure (an escaped bull causing an accident). The exam tests whether a given loss belongs under Section I farm property, Section II farm liability, a commercial auto policy, or requires a specific endorsement such as custom farming or incidental commercial operations.
Section II Farm Liability Scenarios
Farm liability blends Coverage H (bodily injury and property damage liability for both personal and farming operations), Coverage I (medical payments to others), and often Coverage J (additional farm employer liability for farm employees not covered by workers comp). The exam tests boundary cases: a guest injured at the farmhouse (personal liability), a customer hurt at a roadside produce stand (farm products/operations), a hired hand injured baling hay (workers comp if available, else Coverage J), and an escaped animal causing a highway accident (farm liability, possibly auto). Sort each loss to the correct coverage grant.