AG 0176–SCHEDULED FLOOD COVERAGE
(February 2025)
This is an optional endorsement but not a separate coverage part. Flood coverage is provided by modifying the following sections in the American Association of Insurance Services (AAIS) AG 0100–Agribusiness Property and Income Coverage Part:
· Definitions
· Additional Coverages
· Perils Covered
· Perils Excluded
· How Much We Pay
This endorsement’s terms apply to only property described at locations listed on AG 0177–Flood Schedule. All other terms in AG 0100 continue to apply.
AG 0177–Flood Schedule must be attached. It provides the information this endorsement requires. The covered location, covered property, the limit, and either a dollar amount or a percentage deductible must be entered in the spaces provided.
The definition of flood is added. It applies only to this endorsement.
Flood refers to the overflow or inundation of water into areas that are typically dry or previously not submerged. The flooding can be caused naturally, artificially, or accidentally by any of the following:
· Waves, tidal waves and tsunami
· Tidal water and tides
· A body of water that overflows
· Storm surge, storm tide, and tidal surge
· Surface water that runs off, collects quickly or unexpectedly from any source.
Note: Any of the above could include spray
and/or may or may not be accompanied by wind.
A major part of any flood loss is cleanup. Therefore, AG 0100 – Additional Coverages 2. Debris Removal is changed to include the following for only losses covered under this endorsement:
Debris
Removal, Scheduled Flood Coverage
The insurance company covers the costs to remove debris of covered property and debris from other property that a flood leaves on a covered location. It also covers the costs to remove the debris of covered property that floated or was swept away from a covered location as a result of flood.
However, the following is not covered:
· Mud or earth that needs to be removed from a covered location
· Pollutants that need to be extracted from land or water
· Polluted land or water that needs to be removed, restored, or replaced
This coverage is part of the total limit that applies to each item of covered property at each covered location on the Flood Schedule. It is not in addition to that limit.
Note: This is not a stand-alone
additional coverage. It is in addition to Debris Removal Additional Coverage,
whose provisions also apply to this coverage. This also appears to mean that covered
debris removal costs cannot be more than 25% of the covered loss’s value. In
addition, the named insured must report all expenses to the insurance company within
180 days of the date of loss.
Water is excluded as a peril under the AG 0100, including flood. This endorsement adds flood as a covered peril regarding the coverage it provides.
This endorsement covers direct physical loss caused by flood, as defined above. It’s important to understand there is no coverage afforded if a flood occurs within 72 hours of this endorsements inception date.
The same 72-hour rule applies to any request for a limit increase.
Flood begins when the body of water first overflows its banks.
Editor’s Note:
It is important to understand that the insurance company will not cover or
compensate for any flood-related losses or damages that occur before the
effective date of this endorsement or within 72 hours after that date. This
means that if a flood event happens before the endorsement is in effect or
during the specified 72-hour period, any resulting claims for damage will be
denied. Understanding this timeframe is essential for policyholders to ensure
they are adequately protected against potential flood risks.
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Example: Felix has been advised many
times to purchase flood coverage, but he continued to decline coverage until
he heard a major storm was coming his way. Concerned, he quickly called his
agent and requested flood to be endorsed onto his policy. He was quite
unhappy to learn the coverage could be bound as requested but would not apply
to any flood damage or loss within 72 hours of the endorsement inception time
and date. |
With this endorsement, the AG 0100 Perils
Excluded – 1.g. Water is deleted and replaced by the following:
The insurance company does not cover losses caused by any of the following:
· Water that discharges or overflows from or that backs up through:
o Sewer or drain
o Sump pump, sump, or related equipment
o Any other system intended to remove subsurface water drained from the foundation of a covered building
· Water beneath the ground’s surface that flows, seeps, or leaks into or through, or that exerts pressure on any of the following:
o Paved and unpaved basements
o Building openings such as doors and windows
o Paved surfaces, foundations, floors, and walls
o Septic tanks, swimming pools, and other structures
· Waterborne material present in, carried or moved by water described in either of the above bullet situations.
o However, under sewer or drain as stated above, coverage will apply to loss if a flood causes the backup, overflow, or discharge BUT ONLY IF such resulting loss occurs within 72 hours after the flood recedes.
Note:
Coverage applies to fire, explosion, or sprinkler leakage loss if it results
from any of the above.
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Example: The flood pours into the
basement and extinguishes the pilot light. The water subsides, but the gas
flow continues. A spark occurs, and the building explodes. Even though the
proximate cause of the loss is the flood, coverage is available for the
explosion because of this resulting loss exception. |
· This exclusion’s terms apply regardless of the cause of the water, the material carried or moved by the water described under any of the above, whether or not due to an act of nature subject to the described sewer or drain exception.
Regarding the sewer and drain inclusion provided by the endorsement, an additional peril is added under AG 0100 – 2. Perils Excluded.
When water accumulates underneath the earth's surface, causing it to become unstable, there is no coverage for any resulting loss or damage.
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Example: Fast and Furious Farms built its
barns on sloping land in an area with a high water table. The table overflows
after heavy winter snows and a rapid spring thaw, making the land very
unstable. The barns constructed on the destabilized land begin to slide.
There is no coverage for the damage to the barns or the property within the
barns. |
The following are added to AG 0100 – How Much We Pay but only for the coverage this endorsement provides.
The Deductible section is replaced in its entirety. The deductible for flood 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 flood 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 flood 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 Flood Coverage – AG0176, and AG0177 Flood Schedule.
The most the insurance company will pay in a single event is the limit of coverage on the Flood Schedule for each item of covered property.
However, if fire, explosion, or sprinkler leakage occurs as a result of a covered flood, coverage for loss or damage due to these perils is available under AG 0100 – Perils Excluded 1.g. 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.
The insured has permission to purchase excess limits for the flood schedule. 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 flood protection.