The world of farm property coverages is full of various forms, a number of which are required to be used with one another. For example, the FP 00 13 Farm Property—Farm Personal Property Coverage Form cannot be issued alone. It needs to coordinate coverage with other farm property forms such as the FP 00 90 Farm Property—Other Farm Provisions Form—Additional Coverages, Conditions, Definitions and the FP 10 60 Causes of Loss—Farm Property form.
Not so when it comes to the Mobile Agricultural Machinery and Equipment Coverage Form (MAMECF), FP 00 30 04 16. This form can be used monoline and does not rely on the Causes of Loss Form FP 10 60 nor the FP 00 90 for its use or interpretation. So, let's take a look at how this form does work and what is included when one uses the MAMECF. For our purposes, we will be looking at this specific form, FP 00 30 04 16, as provided by the good people of Verisk/Insurance Services Office, Inc. (ISO).
Coverage can be written in one of two ways.
This latter item (#2) includes property in one's care, custody, or control that has been borrowed or rented—regardless of whether a written contract was utilized—except when that property is on the owner's premises. Finally, one can show a single limit of insurance (again under item #2) for items like saddlery, harnesses, liveries, or blankets, and then coverage would apply for those things.
In other words, when using choice #2, one can use a specific amount of insurance for specifically listed items and include a single limit for items like saddlery, harnesses, liveries, or blankets. Note: The policy only lists those items as an example, not as a litany of the only items that can be covered there. Let your conscience and your agreement with your underwriter be your guide.
Of course, we are going to see certain items that are not eligible to be covered. That list includes the following five types or categories of equipment.
The laundry list shown in item #1 is obvious as to why items are not insured using this form—there are better places to insure them. These items are not considered "mobile agricultural equipment" and, as such, are better off insured under other coverage forms. Examples could include these policies: business auto, boat, and aircraft policies, where coverage is more specific and better designed for the coverage needs of the insured.
Item #2 shows things that can be provided for coverage under the FP 00 14, Barns, Outbuildings and Other Farm Structures coverage form.
Item #3 lists the following three specific items that need to be specifically listed and shown in the declarations for coverage to apply.
Item # 4 is short and sweet—not eligible for coverage is irrigation equipment.
Finally, and this should surprise no one, coverage will not be provided for contraband or property in the course of illegal transportation or trade. That is item #5.
At this point, it seems to make sense to review the definition of "mobile agricultural machinery and equipment." It is quite different from that which you may think. In other words, it is not the definition used in either the business auto or the farm liability coverage forms. Remember, we are looking at a property form. Here is how it is defined.
- 3. "Mobile agricultural machinery and equipment" means mobile devices used in the everyday operation of the farm including:
- a. Accessories, whether or not attached; and
- b. Tools and spare parts that are specifically designed and intended for use in the maintenance and operation of the mobile devices.
This is a pretty inclusive list of items; it is intended to be. At this point, our items that can be covered are those that are not specifically excluded under the "Property Not Covered" and that do not meet the definition of "Mobile Agricultural Equipment and Machinery." Other than that, as we said previously, let your imagination and your underwriter's agreement be your guide!
Since this is a stand-alone form, the causes of loss are shown in the form, and we do not need to consult other farm property coverage forms for their opinions. Here's what the MAMECF says.
- 3. Covered Causes of Loss
- Covered Causes of Loss means direct physical loss to Covered Property unless the loss is excluded or limited in this Policy.
Wow! We get open perils—or another way to state it, the insurer tells you what causes of loss are excluded. If it's not excluded, then it's covered!
So, what is excluded? Essentially, the things one may expect when looking at a "special form" type of causes of loss are excluded. As the movie director Bryan Singer would perhaps phrase it, "the usual suspects" are the following.
Of course, one needs to review the exact language of the policy, but these are commonly excluded.
Other exclusions are then listed that delineate areas where some special consideration may be needed. Briefly, those issues addressed as being additional excluded causes of loss include the following.
Then there are the following maintenance type exclusions (maintain your property because insurers are not going to pay for your maintenance or lack thereof).
And then, there are the following concurrent causation exclusions.
Yes, this is a long list of exclusions. It must be, as the insurers are specifying what is not covered as a cause of loss. If it isn't excluded, then consider it covered!
Seven additional coverages are listed in the form, along with two coverage extensions.
The following are the seven additional coverages.
The following are the two coverage extensions.
As this is a stand-alone form, it has its own set of loss conditions. Any reader familiar with a property coverage form will be aware of the need for these and what they address. So, we shall limit our discussion to a mere listing of these loss conditions.
Finally, we should review the general conditions—especially those that have a special concern or consideration. There is a total of seven general conditions. Our discussion will focus on two of the more concerning ones.
You may recall that we have the ability to either specifically list machinery/equipment or provide it on a "blanket" basis per se. When we specifically list and insure items, coinsurance is not a concern. However, when items are "not specifically declared and described in the Declarations," an 80 percent coinsurance factor will apply. This can be significant in the case of a loss, and the insured needs to be counseled to properly select a limit of insurance to allow for the application of coinsurance.
Note: coinsurance does not apply to "mobile agricultural machinery and equipment" "that is not specifically declared and described in the Declarations and for which a Limit of Insurance is shown for coverage not exceeding $3,000 on any one item."
The cost of mobile agricultural machinery and equipment is doing nothing if not getting more expensive for insureds to purchase and maintain. Because of these increasing values, the consideration of selecting a proper deductible should be addressed.
An insured's "skin in the game" is the deductible. This is also a very good risk management and loss-control tool to utilize. With the increasing expense of equipment, it is crucial to select an appropriate deductible. This allows insureds to better manage their insurance expense, share in a loss to an amount appropriate to the overall insurance limit, and to become more aware of properly maintaining their equipment. It makes no sense—and, in most cases, an insurer will not allow insureds—to select a $1,000 deductible on a piece of $300,000 equipment (or even greater amounts).
Agents need to help their insureds understand their part in the process of insurance by assisting them and counseling them in proper deductible selection and utilization; it's better for all concerned.
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