(December 2022)
This endorsement is used with Insurance Services Office (ISO) AG 00 01–Agricultural Capital Assets (Output Policy) Coverage Form and covers a variety of livestock against direct physical loss resulting from certain specified causes of loss.
Covered Property
Covered property can be insured on a Blanket Class Basis, a Scheduled Type within a Class Basis, or a Specifically Scheduled Animal Basis.
1.
Blanket Class Basis
There must be a limit of insurance per animal and a total limit of insurance per class. The types of animals per class on the endorsement schedule are Cattle, Sheep, Swine, Goats, Horses, Mules, Donkeys, and Other Animals.
2.
Scheduled Type within Class Basis
This approach insures covered property based on certain types of animals within a given class. It is subject to a total limit of insurance for each type within each class. The class that this approach covers are Cattle, Sheep, Swine, Goats, Horses, Mules, Donkeys, Bees and Bee Larva, Insects other than bees or bee larva, Fish, Worms, Birds, and Other Animals.
Note: There is no explanation in the form as to what qualifies as a type. It could mean gender, age, breed, or whatever the named insured uses to differentiate between animals within a specific class If this method is used it is very important that each type is described in enough detail to prevent confusion at the time of settlement. The naming and limit selected should track with the named insured’s record keeping.
3.
Specifically Scheduled Animal Basis
This approach lists and describes individual animals and states a specific limit of insurance on each. This part of the endorsement schedule also has provisions to cover livestock while with common or contract carriers, to include a coinsurance percentage, and to enter the deductible that applies.
Note: The value of any animal entered in this item should not be included in the limit selected in either of the two prior methods because the named insured will not be able to collect twice for the same animal.
This information may be entered on the declarations if it is not on the endorsement schedule.
The term loss is not a defined term. However, under this endorsement that term includes, but is not limited to, the destruction and/or death of livestock.
Note: The AG 00 01 does not contain any limitation that only death or destruction of animals is covered as a loss.
1. The Covered Property description in the policy is replaced by the following but only for this endorsement. Covered Property in this endorsement means only the following
The following livestock is NOT
covered property even if they would meet the criteria above:
· Any livestock that has been slaughtered for manufacturing or processing purpose.
· Any livestock during the time period it is in the custody of common or contract carriers. This only exception is the coverage provided in the Livestock in the Custody of a Common or Contract Carrier Additional coverage below.
Note: Slaughtered livestock is an exception in the Property Not Covered section in the coverage form, so it must be eliminated from coverage in this endorsement to prevent duplicate coverage.
The following is added to the Property Not Covered section of the policy. This restriction in coverage applies only to the coverage provided in this endorsement.
Livestock that is located at public stockyards, sales barns, sales yards, slaughterhouses or at packing plants are not covered property.
The covered causes of loss in the policy are deleted and only the causes of loss described in this endorsement are covered causes of loss. The insurance company pays for only direct loss or damage to covered livestock when it is caused by or that result from any of them. In addition, direct loss or damage that is made necessary (such as destruction or death) by any of the following is also covered:
1.
Fire or Lightning
Related Article: Fire – A Discussion
2.
Windstorm or Hail
Related Article: Windstorm or Hail – A Discussion
Loss from any of the following are not covered under this cause of loss:
There is no coverage for ice, snow, or sleet losses, even if the loss is due to those items being wind driven.
3.
Explosion
This cause of loss is expanded to include that loss or damage that is due to the explosions of gas or fuel in the furnaces of fired vessels. Such explosions in the flues and passages of those fired vessels are also covered.
Loss or damage when steam boilers, generators, pipes, engines, turbines, and alcohol stills explode is not covered if the named insured owns, leases, or operates the item. However, there is coverage for any fire or combustion explosion that results from the excluded explosion.
Loss or damage due to electric arcing, rupture, or bursting of water pipes or pressure relief devices is not covered.
When the loss or damage results from water-caused expansion or swelling of contents that are contained within any building, there is also no coverage.
Related Article: Explosion – A Discussion
4.
Riot or Civil Commotion
This cause of loss is expanded to include those acts of employees who are on strike at the time if they occupy a covered location. Any looting that takes place during a riot or civil commotion is considered part of this cause of loss. Only looting that occurs at the same time and place as that riot or civil common is covered, though.
|
Example: The mayor of Lexington,
Kentucky declares that Man of War wasn’t truly a Triple Crown winner and so
orders that the name of the Man of War Boulevard is changed to Fillydale Road
instead. Horseracing fans, jockeys, and horse farm workers are furious and use
their employers’ horses to take over Man of War Highway to prevent the name
change. Damage to the horses that occurs during the rioting is covered.
However, the injury to horses at the Kentucky Horse Park that occurred
because the stable hands were not onsite is not considered riot or civil
commotion because it took place at a distance from where the civil commotion
was taking place. |
Related Article: Vandalism, Riot or Civil Commotion – A Discussion
5.
Aircraft
Not all aircraft damage is covered under this cause of loss. The cause of loss applies only when the loss or damage is caused by an aircraft, spacecraft, or missile making contact with a covered building or structure or one containing covered property. In addition, coverage applies when the loss or damage to a covered building or covered items inside a building is the result of an object falling from such aircraft making contact.
6.
Smoke
Only loss or damage
caused by sudden and accidental smoke is covered. Examples are smoke emissions
from a boiler, furnace, or related equipment, such as puff back of smoke, soot,
fumes, or vapors. However, smoke losses that
are due to agricultural smudging or industrial operations are not covered.
7.
Theft
Theft and attempted theft are covered causes of loss. When property that is at a known location is no longer at that location and was probably stolen there is also coverage. However, there is no coverage for a loss that is discovered only as a result of taking an inventory or that is due to property simply disappearing without any evidence that it was stolen. In addition, when property is transferred to other persons or places off premises because of unauthorized instructions to do so, there is no coverage.
Note: This can be a difficult cause of loss to prove if property that was at a location is no longer at that location. There must be some sort of evidence to show that the property was at that location and that someone other than an employee took it.
8. Sinkhole Collapse
These losses are caused when land suddenly sinks or collapses into empty spaces or underground voids. The voids must not be manmade but instead had been created by water action on limestone or dolomite. This cause of loss does not include the cost of filling the sinkhole.
9.
Volcanic Action
Loss or damage by a volcanic eruption is not covered, but loss or damage resulting from volcanic action is covered. The covered action is only:
Note: The 168-hour one occurrence rule is not part of this cause of loss. This means that each volcanic action would be adjusted as a separate cause of loss that is subject to a separate deductible.
10. Collision Causing
Death of Covered Livestock
This cause of loss pays for the death of livestock that results when the vehicle that is transporting covered livestock collides with another vehicle or object or the vehicle overturns. This cause of loss also pays when livestock run into vehicles or when vehicles strike them while they are crossing, moving beside, or standing on public roads.
This cause of loss does not apply if the vehicle causing the transport vehicle’s collision or overturn is owned or operated by the named insured. If a named insured owned or operated vehicle causes the damage to the livestock on the road there is also no coverage.
11.
Vandalism
This is destruction of or willful and malicious damage to livestock.
Note: It does not state that vandalism that results in the livestock escaping is covered. Instead, it states that only vandalism that is focused on the animals is covered.
Related Article: Vandalism, Riot or Civil Commotion – A Discussion
12.
Earthquake
This endorsement lists earthquake as covered with no further explanation. It is important to note that the cause of loss is an earthquake, not earth movement.
Note: The 168-hour one occurrence rule
is not part of this cause of loss. This means that each earthquake and each aftershock would be adjusted as a separate
cause of loss that is subject to a separate deductible.
13.
Flood
This cause of loss is explained in more detail than earthquake above. Flood is covered, as is other action of water, such as tidal waves and tsunamis, tides and tidal water, surface water, and overflow of any body of water. Storm surge and spray from any of these events, whether driven by wind or not is also covered.
Note: There is no 72-hour requirement for this flood coverage. This means that coverage could be purchased using this endorsement as the flood waters were starting to rise.
14.
Accidental Shooting
This cause of loss does not cover situations where the shooter is the named or any other insured, an employee of the named insured, or anyone who lives at the covered location.
15.
Drowning from External Causes
Loss or damage because livestock is drowned by an external cause is covered with one exception: if a swine that is less than 30 days old dies from drowning there is no coverage.
Note: There is no explanation as to how this cause of loss works with the flood cause of loss.
16. Electrocution
This cause of loss is presented without any explanation. However, a common definition of electrocution is a fatal injury from electric shock that usually causes electrical burns, arc burns, and thermal contact burns.
Note: Non-fatal exposure to electricity is usually referred to as electric shock. A question may arise as to whether damage due to stray electrical current could be covered under this cause of loss.
17. Attack by Dogs or
Wild Animals
This cause of loss does not apply to loss to sheep. Losses to livestock, other than sheep, that are caused by dogs or wild animals that are owned by the named or any other insured, employees of the named insured, or others who live at the covered location are also not covered.
18. Loading/Unloading
There is coverage for sudden and unexpected accidents that occur during the loading or unloading livestock from transporting vehicles. Payment occurs only if animals die or must be destroyed due to the accident.
There is no coverage for any such loss that results from disease.
Note: This disease exclusion appears out of place unless the concern is that during the loading or unloading process the livestock comes in contact with a diseased animal or bacteria/virus on the loading or unloading equipment.
The Debris Removal Additional Coverage in the policy is deleted and replaced with the following:
1. The insurance company pays the named insured's expenses to remove debris when the debris is the result of a covered loss that damaged or destroyed covered property. The loss must occur during the policy period. The cost of the debris removal must be incurred and reported to the insurance company no later than 180 days after the date of loss.
2. The most the insurance company pays is 25% of the sum of the paid direct physical loss or damage to covered property plus its deductible amount.
3. Debris removal does not apply to pollution expenses that the named insured incurs.
4. An additional 5% of the limit of insurance is available under two circumstances. The first is if the 25% debris removal provision does not cover the entire cost. The second is if the limit of insurance is not enough to pay both the debris removal and the loss.
This change applies only to this endorsement.
This additional coverage applies to livestock in the custody of common or contract carriers. The limit of insurance is $10,000 unless there is a higher limit on the endorsement schedule.
This limit is not an additional limit of insurance. It is subject to the limits on the endorsement schedule.
Note: Refer to Section B. Property Not Covered above because this is an exception.
The Exclusion Section in the policy is modified as follows:
1.
Earth Movement
The earthquake and volcanic eruption portions of the Earth Movement exclusion in the policy do not apply to loss to livestock that an earthquake causes.
Note: The earthquake cause of loss does not mention volcanic
eruption as being covered, only volcanic action so there could be some
ambiguity in coverage intent.
2.
Water
The first paragraph of the Water exclusion in the policy does not apply.
Note: This means that losses due to a mudslide, sewer backup, and flood and water that enter through foundations are still excluded.
3.
Smoke
The Smoke, Vapor, Gas exclusion in policy does not apply.
Note: The smoke
cause of loss specifically excludes smoke losses from agricultural smudging or
industrial operations.
4.
Explosion
The entire Explosion exclusion in policy does not apply.
Note: Pay attention to the limitations in the explosion cause of loss in this endorsement.
5.
Collapse
The entire Collapse exclusion in the policy does not apply.
Note: Collapse is covered only if it is due to a cause of loss in this endorsement.
These exclusions are added to the Exclusion Section in the policy:
1.
Loss or Damage Caused by Running Into or Against Items or Caused by Fright
There
is no coverage when the loss or damage to livestock is because they ran into
objects or bodies of water or because they were smothered. There is also no
coverage when the loss or damage is due either directly or indirectly by
fright.
|
Example: The sound of a wolf howling
spooks the sheep into running to and drowning in a pond. Was their death due
to fright or drowning? |
2. Freezing or
Smothering
Livestock in the open may succumb to freezing or smothering if a snowstorm or blizzard comes through. Damage or destruction in this manner is not a covered cause of loss.
Business Income and Extra Expense coverage in the policy is replaced with wording that is identical to that in the policy except that the paragraph excluding coverage for losses due to the suspension of poultry, growing crop, or livestock operations is removed.
J. Limits of Insurance
The Limits of Insurance section in the policy is replaced with the following.
The most the insurance company pays in a single occurrence of loss to any one animal not specifically listed or that does not have a specific limit of insurance is the least of the following:
· Its actual cash value
· $5,000
· 120% of the total limit of insurance at the time of loss divided by the number of head of the class and type
In all other cases, the most the insurance company pays in a single occurrence is the limit of insurance that applies on the endorsement schedule above.
The Deductible Section in the policy is replaced. The insurance company does not pay any loss, damage, or expense until it exceeds the deductible amount on the endorsement schedule. It then pays only the amount in excess of the deductible up to the limit of insurance that applies.
These two loss conditions are added to those in the policy.
1.
Additional Acquired Property
If the named insured acquires additional livestock of a class that is scheduled on this endorsement, coverage for that additional livestock applies automatically for up to 25% of the limit of insurance for that type of livestock. However, payment is limited to the actual cash value or that 25% amount, whichever is less.
The named insured is required to report the value of the acquired livestock to the insurance company within 30 days of the acquisition date and pay the appropriate additional premium based on the date of acquisition. Coverage for the newly acquired livestock ends if not reported within 30 days.
2.
Valuation
Losses to livestock are adjusted and settled based on their actual cash value on the date of loss. However, the payment will be for no more than the actual cost to replace them.
Note: The valuation establishes only the value of the loss. The payment of the loss is then subject to the limit available to pay for the loss. If the valuation is $5,000 but the limit is $2,500, only $2,500 is paid.
This condition applies only when there is a coinsurance percentage on the endorsement schedule. The insurance company does not pay the full value of a loss if the amount of loss multiplied by the coinsurance percentage exceeds the limit of insurance that applies to the property involved.
When the limit of insurance is less than the required coinsurance amount, coinsurance penalty is imposed that is calculated as follows:
Step 1: Multiply the covered property's time of loss value by the coinsurance percentage.
Step 2: Divide the limit of insurance by Step 1.
Step 3: Multiply the amount of the pre-deductible amount by Step 2.
Step 4. Subtract the appropriate deductible from Step 3.
This is the amount the company pays provided it is less than the limit of insurance. If it is more than the limit of insurance, the limit of insurance is the maximum payout. Any amount that is not paid is the named insured's responsibility.