15.1 Farm and Agricultural Coverage
Key Takeaways
- Farm policy combines personal (dwelling) and commercial (farm operations) exposures using Coverages A-E for property and H-J for liability.
- Coverage D is scheduled (itemized) farm personal property; Coverage E is unscheduled (blanket) farm personal property - both typically valued at ACV.
- Growing crops are excluded - that exposure goes to MPCI or Crop-Hail policies through the USDA Risk Management Agency.
- Farm Liability Form FL 00 20 uses Coverage H (BI/PD), Coverage I (personal/advertising injury), and Coverage J (medical payments).
- Coinsurance recovery = (loss x carried/required) - deductible; underinsuring triggers a proportional penalty.
Farm and Agricultural Coverage
The Farm Coverage program blends personal and commercial exposures into one policy because a farm is both a residence and a business. ISO publishes the program through the Farm Coverage Part structure, with the binding document being the Farm Liability Coverage Form (FL 00 20) and the property forms FP 00 12 (Farm Property - Farm Dwellings, Appurtenant Structures and Household Personal Property) and FP 00 13 (Farm Property - Barns, Outbuildings and Other Farm Structures). A common declarations page ties the coverages together, much like the commercial package policy (CPP) joins property and liability.
The farm policy uses five identifiable coverage groupings. Memorizing these by their lettered coverages is a frequent exam task.
The Five Farm Property Coverages
| Coverage | Insures | Typical Valuation |
|---|---|---|
| Coverage A | Dwellings (the farm residence) | Replacement cost if 80% coinsurance met |
| Coverage B | Other private structures appurtenant to dwellings | Replacement cost |
| Coverage C | Household personal property | Actual cash value (ACV) |
| Coverage D | Scheduled farm personal property | ACV or agreed value |
| Coverage E | Unscheduled (blanket) farm personal property | ACV |
Livestock, machinery, harvested grain, feed, and produce fall under Coverage D (scheduled, itemized) or Coverage E (blanket, one limit). Growing crops in the field are excluded under the standard farm property form - that exposure moves to federal Multiple Peril Crop Insurance (MPCI) or Crop-Hail policies underwritten through the USDA Risk Management Agency.
Farm Liability (FL 00 20)
The Farm Liability Coverage Form mirrors the homeowners and CGL structure with three coverages:
- Coverage H - Bodily Injury and Property Damage Liability (the farm equivalent of CGL Coverage A).
- Coverage I - Personal and Advertising Injury Liability.
- Coverage J - Medical Payments, a no-fault first-aid coverage that pays regardless of negligence, typically with a limit of $1,000 to $5,000 per person.
A key trap: the farm liability form covers incidental farming operations but excludes liability arising from a business pursuit unrelated to farming (such as a roadside antiques shop) unless endorsed. Custom farming done for others and migrant/seasonal worker exposures often require specific endorsements. Watercraft, aircraft, and most motorized vehicles licensed for road use are excluded - they belong on a commercial auto or watercraft policy.
Worked Coinsurance Example
Farm dwelling (Coverage A) insured for $160,000; replacement cost value is $250,000; the form carries an 80% coinsurance clause; a fire causes a $50,000 loss; deductible is $1,000.
Required amount = 80% x $250,000 = $200,000.
Coinsurance penalty factor = carried / required = $160,000 / $200,000 = 0.80.
Recovery = (loss x factor) - deductible = ($50,000 x 0.80) - $1,000 = $40,000 - $1,000 = $39,000.
Because the insured carried only 80% of what coinsurance required, the company pays only 80% of the loss before applying the deductible.
The Farm Coverage Structure
The ISO Farm Coverage program packages personal and commercial farm exposures the way a homeowners or CPP does, because a farm blends a residence, outbuildings, equipment, livestock, and a business operation. The standard farm policy is built from coverage parts that the exam expects you to recognize: Farm Property (Coverages A-H spanning the dwelling, other private structures, household personal property, scheduled and unscheduled farm personal property, and farm barns/outbuildings) and Farm Liability (premises and operations, products, and personal injury).
It blends homeowners-style and commercial-style coverage in one contract.
Farm Property Coverages A through H
Farm Property coverage uses lettered sections similar to homeowners but extended for the farm:
| Coverage | Insures |
|---|---|
| A | Dwelling(s) |
| B | Other private structures appurtenant to the dwelling |
| C | Household personal property |
| D | Loss of use / additional living expense |
| E | Scheduled farm personal property (named items) |
| F | Unscheduled farm personal property (blanket) |
| G | Other farm structures (barns, silos, pens) |
Livestock can be covered on a scheduled or blanket basis and is subject to specified perils (often including accidental shooting, drowning, electrocution, and attack by dogs/wild animals), not open perils.
Farm Liability and Key Distinctions
Farm liability resembles the CGL but is tailored to agricultural operations: it covers bodily injury and property damage arising from the farming business and the residence, medical payments to others, and personal injury. A frequent exam distinction is incidental farming versus a commercial agribusiness - a hobby farm may be handled by a homeowners endorsement, while a true commercial farm needs the Farm Coverage Part.
Note that crop insurance (multi-peril crop and crop-hail) is a separate federally supported program, not part of the farm property form, and farm autos and mobile equipment follow auto/equipment rules just as in commercial lines.
Mobile Equipment, Pollution, and Care-Custody Issues on the Farm
Farm policies must sort exposures the same way commercial lines do. Farm machinery and mobile equipment (tractors, combines) used off public roads are insured as property/equipment, while farm trucks licensed for road use need auto coverage. Farm liability addresses the care, custody, or control problem for livestock and equipment of others, and a custom farming endorsement covers a farmer who works neighbors' land for hire. Pollution from chemical and fertilizer application is a recognized farm exposure often requiring specific treatment.
Recognizing that a hobby farm may ride on a homeowners endorsement while a commercial agribusiness needs the full Farm Coverage Part - including separate auto and crop programs - resolves the typical farm scenario.
Under the ISO farm property program, growing crops in the field are:
A farm dwelling is insured for $180,000 but replacement cost is $300,000. The form has an 80% coinsurance clause. A covered loss of $60,000 occurs (ignore any deductible). How much does the insurer pay?