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AAIS Files Enhancements to Farmowners Program

AAIS Press Release: May 6, 2015

Lisle, Ill., May 6, 2015--A national insurance advisory organization is introducing several enhancements to its program for insuring farms.

The enhancements come in a series of mandatory and optional endorsements being filed in most states as components of the Farmowners Program maintained by the American Association of Insurance Services (AAIS).

AAIS is a property/casualty advisory organization (bureau) that provides policy forms, rating information and automation support used by more than 700 insurers throughout the U.S. It has long been a leader in the design of insurance products for agricultural risks.

Among the enhancements are exclusions of liability coverage for bodily injury or property damage arising from asbestos, described canines, and the production, distribution, or consumption of raw milk.

Two optional endorsements are being introduced to modify liability coverage to provide additional insured status to equipment lessors. One option allows users to name lessors as additional insureds; the other establishes additional insured status automatically.

Also included are optional first-party property endorsements addressing wind and hail damage.

One of the property endorsements allows insurers to exclude coverage for purely "cosmetic" wind and hail damage to roofs, siding, and/or doors and windows. The other property coverage option allows insurers to amend the valuation provision to actual cash value (in place of replacement cost) for damage to roof surfaces caused by wind and/or hail.

The property coverage options were first introduced in the AAIS Homeowners Program, and respond to requests by some insurers in windstorm-prone regions for options other than rate increases to address a growing volume of wind and hail claims.

Similarly, the latest AAIS Farmowners enhancements include mandatory endorsements introduced in the AAIS Homeowners Program in 2014. These amendatory provisions clarify the intent of policy language with respect to property coverage for earth movement and collapse, and liability coverage with respect to intentional acts and "electronic aggression."

In particular, earth movement exclusions recently filed specify that the exclusions apply whether the earth movement results from a natural cause, a manmade cause, or some combination thereof. Also, incidental coverage for collapse is revised to specify that collapse means an abrupt caving in, falling in, or giving way of a part of a building.

The "electronic aggression" exclusion excludes coverage for bodily injury, property damage, and personal injury arising out of any means of electronic exclusion. This language was introduced in AAIS personal lines forms in response to reports that online harassment was contributing to suicide attempts by some victims of "cyber-bullying."

The filings have a proposed effective date of Oct. 1, 2015. Due to regulatory conditions in the various states, not all endorsements are filed in each state.

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Truman Esmond
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trumane@aaisonline.com