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.
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
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.
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:
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 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."
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."
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