INTRODUCTION

This is not a separate coverage part. Earthquake coverage is provided by modifying the following sections in the American Association of Insurance Services (AAIS) AG 0100–Agribusiness Property and Income Coverage Part:

· Property Not Covered

· Perils Covered

· Perils Excluded

· How Much We Pay

· Additional Property Not Covered or Subject to Limitations

This endorsement’s terms apply to only property described at locations listed on AG 0173–Earthquake Schedule. All other terms in AG 0100 continue to apply.

EARTHQUAKE SCHEDULE

AG 0173–Earthquake Schedule must be attached. This endorsement requires specific information. You must fill in the covered location, covered property, limit, and either a dollar amount or percentage for the deductible in the designated spaces. Coverage applies to damage to exterior masonry veneer only when "Included" is marked in the masonry veneer column.

Note: “Not Included” or “Excluded” should be entered in the masonry veneer column when coverage is not provided to avoid ambiguity. It should not be left blank.

PROPERTY NOT COVERED

AG 0100 Property Not Covered 10. – Foundations is removed. This means foundations are included as covered property.

Note: Because of this covered property inclusion, the limit of insurance for earthquake should be higher than the limit of insurance on the policy declarations for the covered building; otherwise, a coinsurance penalty might be triggered.

PERILS COVERED

Scheduled Earthquake Coverage

Coverage applies to direct physical loss caused by earthquakes and volcanic eruptions. A volcanic eruption is an eruption, explosion, or effusion of a volcano.

All earthquakes or volcanic eruptions occurring within 168 consecutive hours are treated as a single event. The expiration date does not limit or affect this time period.

PERILS EXCLUDED

1. Earth Movement or Volcanic Eruption

AG 0100 Perils Excluded – 1.b. Earth Movement or Volcanic Eruption is deleted. The following replaces it.

b. Earth Movement or Volcanic Eruption

The following causes of loss are not covered:

· Eruption, explosion, or effusion of a volcano or an earthquake that begins before this endorsement’s inception date.

o The only exception to this exclusion is if this is a renewal policy that does not provide earth movement or volcanic eruption coverage beyond the renewal date. In this case, if the volcano or earthquake activity started no more than 72 hours prior to this policy’s inception date, there is coverage for the damage that occurs during this policy term.

· Blasting (excluding volcanic explosion), mudflow, mudslide, landslide, or mine subsidence. This applies even if caused by volcanic eruption or earthquake.

· Direct or indirect loss from flood, tidal wave, or tsunami. This applies even if an earthquake or volcanic eruption is considered the proximate cause of the events.

2. Collapse

AG 0100 Perils Excluded – 2.b. Collapse does not apply to the coverage this endorsement provides.

HOW MUCH WE PAY

The following are added to AG 0100 – How Much We Pay but only for the coverage this endorsement provides.

1. Earthquake Deductible, Property Coverages

The Deductible section is replaced in its entirety. The deductible for earthquake must be shown on the schedule of coverages and can be either a dollar amount or a percentage.

If a percentage is shown, the deductible amount is calculated by multiplying the percentage by the limit of insurance for non-reporting properties. For reporting properties, the percentage is multiplied by the most recently filed report of values.

If the full value of property is not shown on the latest report of values, the earthquake deductible percentage is multiplied by the full value, regardless of the reported values. However, if the loss occurs before the first report has been filed, the percentage is multiplied by the limit of insurance on the earthquake schedule.

Note: In this section of the endorsement, the Rough Notes Technical and Educational team is unable to verify how the insurance company determines the full value and how it relates to the AG 0100 – Agribusiness Property and Income Coverage Part, the Scheduled Earthquake Coverage – AG0172, and AG0173 Earthquake Schedule.

2. Earthquake Deductible, Income Coverage

This condition applies only to buildings over four stories tall. Earnings coverage is subject to a waiting period of 168 consecutive hours from the time and date of the loss. This means that coverage will only apply to loss of earnings incurred after 168 consecutive hours.

3. Limits That Apply To Scheduled Earthquake Coverage

The most the insurance company will pay in a single event is the limit of coverage on the Earthquake Schedule for each item of covered property.

However, if fire, explosion, or volcanic action occurs as a result of a covered earthquake, coverage for loss or damage due to these perils is available under AG 0100 – Perils Excluded 1.b. section “we do cover.”

This indicates that coverage may be available under this endorsement and AG 0100. To avoid any duplication, this endorsement does not apply, and the only limit available is the limit on AG 0100. The limit for this coverage will not be added to the limit of AG 0100.

Example: Gregory’s Grain’s building limit is $1,000,000. Gregory also has earthquake coverage on the building under AG 0172 for a $1,200,000 limit. An earthquake breaks the building’s gas main, and the resulting fire destroys the entire building. The total loss is $1,250,000, but only $1,000,000 is available to pay for the fire loss.

4. Excess Insurance and Other Insurance

The insured has permission to purchase excess limits for earthquake and volcanic eruption. However, that source of protection will not be considered under the AG 0100 How Much We Pay – 7. Insurance Under More Than One Policy condition or any pro rata or proportional provision.

This recognizes that many insureds purchase a Difference In Condition (DIC) policy as excess over their primary earthquake protection.

ADDITIONAL PROPERTY NOT COVERED OR SUBJECT TO LIMITATIONS

Masonry Veneer

Masonry Veneer is not covered under this provision for earthquake or volcanic eruption. Therefore, any damage from these actions to masonry veneer attached to wood frame walls are not covered.

Since masonry veneer is not covered, its value is removed from any deductible or coinsurance calculation.

There are three exceptions to this limitation:

· Stucco is not considered masonry veneer.

· When the masonry veneer is on less than 10% of the wall area, that veneer is not subject to this limitation.

· When the masonry veneer is shown as included on the Earthquake Schedule – AG 0173 for the covered location, that building is not subject to this limitation.

Note: Masonry Veneer is a non-structural material. Typically, it is brick applied to a wood frame.