(December 2022)
This endorsement covers loss or damage to poultry and eggs. The endorsement provides coverage through exceptions and deviations from the AG 00 01–Agricultural Capital Assets (Output Policy) Coverage Form. This analysis examines each of them.
Note: This endorsement has an edition date of 10 10.
Coverage can apply to any of the following but only when a limit of insurance is entered next to it:
This information may be entered on the declarations if it is not on the endorsement schedule.
The covered property is only the poultry listed and described on the endorsement schedule for which there is a limit of insurance. Poultry that has been slaughtered in order to be used in processing or manufacturing operations is not covered property under this endorsement.
Note: Slaughtered poultry 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.
1. Contaminated, diseased, or sick poultry, unless a covered cause of loss directly caused the condition
2. Poultry that has not been listed and described on the endorsement schedule. This provision does not include poultry slaughtered to use in processing or manufacturing operations.
Note: Slaughtered poultry is not considered Covered Property under this endorsement. The described slaughtered poultry is considered covered property under the coverage form.
There are two additional coverages.
1.
Eggs
Coverage applies to loss or damage by a covered cause of loss to eggs that have been packed and crated and are awaiting transportation to market. However, this coverage applies only when there is a limit of insurance for eggs on the endorsement schedule.
2.
Decrease in Value to Poultry
Coverage applies only if there is a limit of insurance on the endorsement schedule for the particular type of loss.
The
insurance company pays for the decreased value of covered poultry when either of
the following occurs.
a. Market Transport Loss
This is when the vehicle that transports the poultry to market overturns or collides with an object or vehicle and damage or injury to the poultry occurs.
Note: This does not cover the damage or
injury to the poultry – that is covered elsewhere. This covers a decrease in
the value of the poultry to the seller because of the collision. The buyer may
not pay full value for the poultry due to the trauma or injury the bird
sustained.
b. Housing Damage–Resultant Loss
When a covered cause of loss damages the poultry house, this coverage pays for the decreased value of the poultry because the poultry may need to be sold early due to lack of available housing.
The named insured must do everything it can to protect the poultry affected by the loss, repair the damage, and to relocate the affected poultry to temporary housing. Reasonable efforts must be made to minimize the loss by selling the poultry at their current market value. The current market value at the time of loss is the most the insurance company pays in case of loss or damage.
Note: This does not cover the damage or injury to the poultry. It covers only their decreased value because they may need to be sold early due to lack of appropriate housing.
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Example: The housing for the young chickens is destroyed. McMillan has no acceptable housing for them and must sell them immediately. The current market value of the flock is $25,000, but because they must be sold immediately, the best price McMillan can secure is $15,750. McMillan researches available temporary housing and other solutions, but the only solution is quickly selling the chickens. The loss is valued at $25,000 - $15,750 = $9,250. |
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 poultry when it is caused by, or that results from any of them. The 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.
There is
also no coverage for damage to covered property that is within a building caused
by rain, snow, sleet, sand, or dust unless
the building’s walls or roof are damaged by wind or hail damage which then allows
these elements to enter.
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. Nevertheless, 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 not 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.
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.
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Example: A drone controlled by a distant neighbor made frequent low flights over Pelican, Inc.’s free-range chickens. Scenario 1: The chickens panic and attempt to escape. The injuries sustained by the chickens are not covered because no contact with the aircraft occurred. Scenario 2: The camera on the drone dropped from the drone and struck four chickens. The injuries to the chickens are covered because direct contact with a part of the aircraft occurred. Scenario 3: The pilot of the drone lost control and crashed the drone into and through the poultry barn. Several chickens inside the building were damaged. The injuries to the chickens are covered because of direct contact with the drone. |
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.
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.
8.
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.
9. Collision Causing
Death of Covered Poultry
This cause of loss pays for the death of poultry that results when the vehicle that is transporting covered poultry collides with another vehicle or object or the vehicle overturns. This cause of loss of loss also pays when poultry run into vehicles or when vehicles strike them while they are crossing, moving besides, 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 poultry on the road there is also no coverage.
10.
Vandalism
This is the destruction of or willful and malicious damage to poultry.
Note: It does not state that vandalism that results in the poultry escaping is covered. Only vandalism that is focused on the poultry is covered.
130.6-6, Vandalism, Riot or Civil Commotion – A Discussion
11.
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.
12.
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.
13.
Theft
Theft and attempted theft of poultry and eggs are covered causes of loss. When the eggs or poultry that was 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.
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 poultry 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 the 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 the 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 still covered but only if it is due to a cause of loss in this endorsement.
These exclusions are added to the Exclusion Section in the policy but only for this endorsement.
1.
Sonic Boom
Loss or damage that results from sonic boom is excluded.
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 poultry 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.
2.
Freezing or Smothering
Poultry 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.
H. Limits of Insurance
The Limits of Insurance Section in the policy is replaced. The most the insurance company pays in a single occurrence is the limit of insurance on the endorsement schedule.
1. Photographic
Evidence
This condition is added to the Duties in the Event of Loss or Damage Loss Condition in the policy.
The named insured is required to send pictures, video, or other satisfactory photographic proof to document any single occurrence loss of 100 or more poultry.
2.
Valuation
Losses to poultry and eggs 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 of $2,500, only is paid.
The term loss as used in this endorsement relating to poultry means only death of that poultry. To be considered a loss, the death must be due to a covered cause of loss and must occur within 48 hours of the covered cause of loss occurrence.
The necessitated destruction of living poultry is also covered, but only when it is the result of a covered cause of loss. This destruction must be ordered by a public health officer, an attending veterinarian, or an authorized representative of the insurance company. The destruction must occur within 48 hours of the covered cause of loss occurrence. The insurance company authorized representative is permitted to extend the time frame if warranted.
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Example: One evening, thieves stole
the entire poultry inventory at Heritage Chickens. Twenty-four hours later, a
semi-trailer is found containing the chickens. The temperatures in the
trailer were over 120 degrees, the chickens were severely dehydrated, and
many had already died. A veterinarian is called in, and a decision is made to
humanely destroy all of the chickens rather than allow them to suffer. The
entire loss is covered subject to policy limits. |