One year ago, I was privileged enough to write my first IRMI Expert
Commentary. The topic and title I chose at that time was "When
Farming and Entertainment Meet, It Ain't 'Farming.'" In
2016, Insurance Services Office, Inc. (ISO), issued an updated series of farm
forms, most with an edition date of April 2016 and two that deal with
agritainment.
As part of these revisions, ISO addressed "agritainment" as a
significant coverage topic in the following two new ISO agritainment forms.
- Agritainment—Property FP 05 05 04 16
- Agritainment—Liability FL 05 01 04 16
These two new forms provide us all—insurers and agents alike—with great
opportunities to better provide coverage for those farm operations that have
slid over the line into agritainment, with all its permutations. We'll
review each, their similarities as well as differences, all in the hopes of
providing greater understanding to the intent and coverages provided.
Agritainment Defined
In the past, agritainment was primarily defined for us by the use of
examples: corn mazes, weddings, pumpkin patches, bed and breakfasts, hunting,
and more. "Farming" is a defined term in the ISO forms and, as such,
pretty clearly—but not completely—excluded operations that did not meet the
definition of "farming." With the advent of these two new forms, we
have clarity as defined in the forms themselves as to what agritainment is and
isn't. In both coverage forms, it is defined as the following.
"Agritainment" means an agricultural or aquacultural related
activity or enterprise described in item B. of the Schedule
that is primarily operated on the "insured location":
- For the purposes of tourism or entertainment; and
- Engaged in for monetary or other compensation.
Finally, a definition of what agritainment is, at least in the eyes of ISO.
Let's note just a few items regarding this definition.
- It is the same definition whether we are speaking of property or
liability coverages.
- It states "primarily operated on the 'insured
location.'" Not "solely" or "only" operated on
an "insured location," but "primarily."
Merriam-Webster's online dictionary defines
"primarily" as meaning "for the most part."
- Our farmer does not need to make money pursuing this agritainment. It
requires only that it is "engaged in for monetary or other
compensation" and that it is done for the "purposes of
tourism or entertainment."
- It addresses the "schedule" in item B.
The Schedule—of Paramount Importance
Let's look at this schedule as it appears in another area where both the
property and liability forms have concurrence. The schedule requires the
following information in both the property and liability forms.
- "Insured location" number
- Building number
- Location description
- Description of "Agritainment"—item B.
The first concern is getting the schedule completed appropriately. Just
imagine for a moment that you have taken the time to complete the schedule, yet
you missed a building where the agritainment would be occurring, misstated a
"location number," or so narrowly defined the description of
"agritainment" that, after a loss, an insurer could come back and say
"that wasn't within the scope of your description."
This schedule is the same in both the property and liability endorsements.
So, please make certain that your answers are also the same on both forms.
The Property Schedule
Before we can get to what is covered and what is not, we need to look at the
remainder of the "property" schedule. We need to select the
"causes of loss" that are going to apply to the agritainment property
that is other than "livestock," "poultry," bees,
fish, worms, and other animals (think machinery, equipment, vehicles, etc.) and
also then select the "causes of loss" that are going to
apply to those same animals. A reminder that for "livestock,"
"poultry," bees, fish, worms, and other animals, the only causes of
loss available are basic or broad. Basic, broad, and special are all options
for agritainment property that is not an animal.
We can then provide separate limits of insurance for property of
the following types.
- "Agritainment property" consisting of
"livestock"
- "Agritainment property" that is machinery, vehicles, and
equipment
- "Agritainment property" other than
"livestock," machinery, vehicles, and equipment
After that part of the schedule (designated as E.), we have
the following parts to consider.
- F. A box to check if we want coverage for "theft of
"agritainment property" from part of an "insured
location" that is rented to others
- G. A box to check if food contamination coverage is not
to apply
- H. Property not covered section
- I. Loss valuation basis—actual cash value or replacement
cost
- J. An area to exclude certain designated
events
- K. A section for additional insured's as they relate
to property exposures only
With the exceptions of "food contamination" and the exclusion of
certain "designated events," I believe that most of these schedule
items are fairly self-explanatory. So, let's address the two that I believe
may initially raise some questions.
Additional Coverages
There are five additional coverages in the endorsement; I am going to focus
on one of them. Those five are the following.
- $3,000 credit cards and electronic funds transfer cards or other access
devices, forgery, or counterfeit currency
- $2,000 cost of restoring records pertaining to the scheduled
"agritainment"
- $1,000 extra expense to resume "agritainment"
- $10,000 borrowed or rented machinery, vehicles, and equipment coverage,
but limited to 30 days
- $5,000 food contamination coverage
Food contamination is defined in the property form to mean
"an incidence of food poisoning to one or more of your visitors as a
result of:
- Tainted food;
- Food, which has been improperly stored, handled, or prepared; or
- A communicable disease transmitted through one or more of your
employees."
There is a $5,000 limit to this additional coverage. It will provide for
payment, up to the limit, for five types of expenses. It pays with no
deductible applicable and as additional insurance. The five types of expenses
that it will respond to are the following.
- The insured's expense to clean their equipment as required by the
board of health or other governmental authority.
- Food replacement expense to food which is or suspected to be
contaminated.
- Expenses (that are not covered by workers compensation) to provide for
necessary tests or vaccinations for the insured's infected
employees.
- Loss of income the insured suffers because of the food contamination
incident. There is a 24-hour waiting period for this part of the coverage to
apply.
- Additional advertising expenses the insured incurs to restore their
reputation.
It does not take much critical thinking to realize that the insured will be
able to eat up (pun intended) this $5,000 limit for "food
contamination." So, when explaining this additional coverage to the
client, make certain that you do not "oversell" its benefit.
Also, make certain that you read and understand the additional coverages
portion of the endorsement so that your explanation to your farmer/agritainment
provider will not have them believing that we are providing the world to them
when it comes to coverage. We are, however, providing them with far
more than we would without the endorsement.
Designated event exclusion is defined as if item
J. designated event exclusion in the schedule applies, the
provisions of this endorsement do not insure against loss or damage to
"agritainment property" at the "insured location" shown in
the schedule resulting from the designated event described or named in item
J. of the schedule.
That seems pretty self-explanatory.
Agritainment Property Reminder
This is an eight-page endorsement. I cannot provide you with all the nuances
that are in the form in this brief commentary. Suffice it to say that the only
way for you to completely understand the form is to read it and break it down
on your own. I am hoping, however, that this commentary will provide you with a
solid background on things to look for in the form as well as for areas that
may require further discussion—be that with an underwriter or the end purchaser
of the coverage.
The Liability Schedule
As way of a reminder, both the property and liability endorsements
for agritainment use the same two items in the first parts of their schedules:
A.1. Insured Location Number, A.2. Building
Number, A.3. Location Description, and B.
Description of "Agritainment." In my opinion, you have got to have
these areas agree in their entirety on the schedules. Any deviation may result
in coverage applying in one area—say the property section—but then not applying
in the other ... all because we didn't practice due diligence when
completing the schedules.
The liability schedule then adds five areas that need to be addressed. They
are the following.
- C. A box to be checked if we want the liquor liability
exclusion to not apply
- D. A box to be checked if we want the mobile equipment
exclusion to not apply
- E. A box to check if we want the use of livestock or
other animals exclusion to not apply
- F. A box to check if we want coverage to be provided for
the rental of a part of an "insured location" to others
- G. The designated event exclusion box wherein we can
describe and exclude liability coverage for designated events shown in the
box by name or by description
Seven Liability Coverages
Following are seven coverages that require a bit of discussion.
- The liquor liability exclusion applies unless
the box is checked on the schedule indicating that it does not. Liquor
liability is addressed as bodily injury or property damage for which an
"insured" may be held liable because of the following.
- Causing or contributing to the intoxication of any person including
allowing people to bring alcoholic beverages with them to the event
- Furnishing of alcoholic beverages to a person under the legal
drinking age or under the influence
- Liability one enjoys because of a statute, ordinance, or regulation
relating to the sale, gift, distribution, or use of alcoholic
beverages
-
- It then further states that the exclusion applies (as we would
expect) to the alleged negligence or wrongdoing of an insured in the
hiring, supervision, training, employment, or monitoring of others
or for providing or failing to provide transportation to one
under the influence of alcohol.
- This exclusion simply deletes the language in the farm liability form
that would have excluded liability for "agritainment."
- If the "agritainment" involves the use of farm wagons or farm
trailers to provide rides to any visitor, then coverage does apply as long as
we have checked the box under item D. of the schedule.
- Similarly, if the "agritainment" involves the use of livestock
or other animals—with or without an accessory vehicle (think hay wagons as
one simple example)—we can provide liability coverage as long as the box
under item E. of the schedule is checked. A brief reminder
here, "livestock" on the property side of coverage is a defined
term and includes only these seven types of animals: cattle, sheep, swine,
goats, horses, mules, and donkeys. On the liability side of the coverage,
livestock is not a defined term. So, it potentially has a far broader
application. Last note in this regard, you will not find the definition of
"livestock" in the "agritainment" coverage forms. For
that, you will have to review the Farm Property—Other Farm Provisions
Form—Additional Coverages, Conditions, Definitions (FP 00 90
04 16).
- Item F. of the schedule provides us with the opportunity
to remove the exclusion that would otherwise apply if the insured rents a
part of the "insured location" to others.
- Item 6 replaces the employers liability language in the farm
liability coverage form with this new definition/exclusion. Essentially it
deletes from the employers liability exclusionary language any reference to
"residence employees."
- Lastly, item 7 provides for "personal injury" coverage if it is
caused by an event that occurs during the policy period and that arises out
of the "agritainment" operations of the insured.
Medical Payments
Medical payments coverage is provided by the form. It is also modified to
provide coverage when the injury is sustained because of the activities of an
"insured" or by an "agritainment employee" while in the
course of employment by an "insured."
Definitions
Lastly, the "agritainment liability" endorsement provides us with
some definitions of which we should take note.
- It revises the definition of "advertisement" to include the
"agritainment" operations of the insured.
- It revises the definition of "agritainment" in the farm
liability form so that we now have coverage.
- Revisions are also provided for the definition of "insured" as
it applies to partnerships, joint ventures, and limited liability
companies.
- There is a revision to the definition of "insured location" to
include "agritainment" locations that are rented to others.
- The part of the "motor vehicle" definition that applies to golf
carts is revised so that coverage will apply when they are being used to
transport a person on the location where the "agritainment" is
taking place.
- "Residence premises" is redefined to include
"agritainment."
- A definition is added for an "agritainment employee."
Finally, don't forget the usefulness of the "designated event
exclusion," as you may have an insured that undertakes certain pursuits
that are fine with your underwriter but may on occasion do something that your
underwriter finds unpalatable.
And yes, the agritainment liability is subject to premium audit.
So, What Is Agritainment?
After all of this, you may still be asking yourself, "Casey, what then
is agritainment?" My answer would be the following—especially when it
comes to providing coverage under the new endorsements of the FP 05 05 04 16
and the FL 05 01 04 16. "Agritainment"—when it comes to coverages
provided under the ISO farm policy—is anything that meets the definition of
"agritainment" and that my underwriter and I can agree to is
"agritainment."