2015 Farmowners Enhancements
In the spring of 2015, AAIS initiated a multi-state filing of enhancements to its Farmowners Program in a series of mandatory and optional endorsements.
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.
While agriculture is increasingly dominated by large commercial operations, the vast majority of farms are still family owned.
The AAIS Farmowners Program, with components designed to cover both property and liability, is the program of choice for hundreds of farm carriers and their reinsurers.
It was the first standard program to introduce modular components for writing residential property, farm property, and liability coverage for farms.
This program provides an endorsement option for insuring home-based businesses under a farmowners policy, plus equipment breakdown coverage options for both farm and household equipment.
The program also includes an income coverage option written to apply to specified farm activities identified on a schedule, thus avoiding open-ended exposure for random activities.
The AAIS Farm Umbrella Program complements the Farmowners Program by providing a choice of two base forms designed to fit with an underlying AAIS Farmowners policy:
- A personal farm umbrella, to be written over a Farmowners package that includes a personal liability form; and
- A commercial farm umbrella, to be written over a Farmowners package that includes a commercial liability form. Personal liability coverage for individuals and families residing on the insured premises can be added by endorsement.
Both the personal and commercial umbrella forms can be written over underlying policies from any source that cover liability arising from autos, recreational vehicles, watercraft, employment-related injury, and other causes.
Umbrella coverage for these exposures applies strictly on a "follow form" basis, thus protecting an umbrella carrier from exposure to liabilities that have not been underwritten and priced in the underlying layers.
The program includes sample rules and loss cost rating information that can be used as the basis of a company-specific manual. AAIS staff specialists are ready to help companies establish eligibility rules, final loss costs, minimum premiums, minimum underlying limits, and retained limits, and to file a company manual.
The AAIS Farmowners Program utilizes a three-tiered approach to policy construction:
- A choice among five residential property forms: basic perils, broad perils, open perils-dwelling, open perils-dwelling and contents, and tenants;
- One streamlined farm property form for insuring farm structures and scheduled and/or unscheduled farm property; and
- Two options for liability coverage: AAIS farm personal and AAIS farm commercial; the latter can be extended by endorsement to cover the personal liability exposures of those who reside on the farm premises.
At the option of the company, liability coverage can be omitted and a separate policy issued to cover liability exposures.
AAIS has monoline programs that provide the components insurers need to write farm accounts that don’t need or qualify for a farmowners package policy.
Farm Properties Program
This program provides forms, rules, and rating information for writing fire and extended coverages for farm dwellings, outbuildings, and farm personal property. These monoline policies help insurers write accounts that don't need or qualify for a package policy, such as farm rental properties and vacant farmsteads.
The Farm Properties Program includes three residential property forms that correspond with those in the Dwelling Properties Program, with an option to exclude a dwelling and insure only the farm property.
The forms provide five principal coverages: residence, personal property, additional living costs/fair rental value, farm personal property, farm barns/buildings/structures.
The program includes farm-specific coverage options, including coverage for added animal perils, livestock blizzard peril, and borrowed/rented/leased farm machinery.
Farm Personal Liability Coverage
This program can be provided under the Personal and Premises Liability Program for a person maintaining a residence in a 1-4 family dwelling and buildings or land used for farming.
Farm Inland Marine Program
This program provides standardized forms and rating information for insuring three classes of agricultural exposures:
- Farm Machinery;
- Livestock; and
- Farm Irrigation Equipment.
While the language in the Farm Inland Marine forms addresses both family farms and commercial farming ventures, the policy provisions are patterned primarily after those used in commercial lines.
Insurance companies seeking more information on AAIS products and services can contact Raul Socha, Director of Business Development, by completing our contact form or by calling 800.564.AAIS x3238.