PROPERTY PROGRAM The Property Program provides property coverage, using the rules, forms and rates contained in the manual.

Transcription

1 General Instructions PROPERTY PROGRAM The Property Program provides property coverage, using the rules, forms and rates contained in the manual. UNDERWRITING AND POLICYWRITING INSTRUCTIONS a. The dwelling program is for residential and farms risks that are not written on the homeowners program. The Agent The primary underwriting responsibility in selecting risks rests with the agent. The agent s knowledge of applicants and community conditions can be invaluable. The agent s inspection of the property and complete reporting of the facts concerning the property and the applicant are particularly important when binding coverage. If the property is mortgaged, additional emphasis must be placed on the financial solvency and personal integrity. Credit scores and clue reports will be run on all applications. It is important that agents acquaint themselves with the cost of construction of different types of buildings so they can appraise the value of building already constructed. The cost of construction will vary with the size of structure, kinds, grades, and qualities of materials used, wage scales, availability of materials and various other factors such as transportation, weather conditions and competition. Cost estimator must be submitted with application. Consider the utility value of the building. If it has little or no utility value, do not insure rather than placing a token amount of insurance on such a building. *Any application submitted which is missing key underwriting information including, but not limited to, all applicable supplemental forms, all required application information, required photographs, or applicant s social security number will be rejected. b. GUIDELINES DO NOT INSURE: Applicants Applicant, spouse or any resident who has three or more losses of $3,000 or more in the last three years. Total losses not acceptable. Applicants with any water damage claims in excess of $1,000 or more, must show proof of professional restoration. Applicant, spouse or resident of household whose habits or living conditions show a lack of responsibility for property or respect for rights of others. Must demonstrate pride in ownership. Applicants who have a history of poor credit or a bankruptcy. Bankruptcies in last five years not acceptable. Applicant, spouse or resident who has been engaged in an illegal activity or who has been convicted of a felony. Applicant, spouse or resident who has a trained guard dog or a Staffordshire Terrier (Pit bull, American Bull or Yankee Terrier), a Rottweiler, Doberman, a wolf hybrid (Tundra Shepherd), an Akita, a Chow or Presco Canario, any dog who has bitten someone or any animal with vicious tendencies. 1

2 Dwellings - DO NOT INSURE: Dwelling that has incurred previous water damage over $1, in last five years. Property with a business exposure other than those permitted under business pursuit coverage. Vacant or unoccupied property. Property that isn t accessible at all times. Property for sale. Property with more than two mortgagees or additional interests. Property whose owner is not a member of a fire protection district when membership is a requirement for the fire department to respond. A dwelling constructed of logs or non-conventional materials. A dwelling containing more than two apartments. Property with the following criteria: Building and or roof not in good repair, peeling paint, decaying wood. Exterior: Property with debris or lack of yard maintenance. Interior: Property with basement, hallways or attic not kept clean and free of rubbish and debris. Buildings or structures having inadequate or defective foundations, or the contents thereof. Two layers of shingles must be ACV (HG 322); three layers exclude roof Property with unfenced in-ground or above ground swimming pools or any swimming pool with a diving board. Property with a trampoline without a fenced yard or safety enclosure and spring cover or pad. Seasonal or secondary dwellings, unless the primary dwelling is written. Barns or Outbuildings when dwelling is insured with another company. Livestock only, with no supporting coverage. A poorly built and poorly braced building. IF buildings are in good condition, but the roofs are old or metal roofs are badly rusted or insecurely nailed, make notation on application that roofs are in poor repair. The company will exempt roof until it is re-roofed. This also applies to siding, doors and Windows. (Do not use the word fair in describing condition of roof.) Building smaller and 8x10 (except pump houses), or any building for less than $ (If building is not worth $ to $ cash value, do not insure it.) 2 Obsolete, unused and out-dated farm buildings

3 Dwellings with flat roof other than on small additions. Dwellings in the course of construction unless the policy is to be issued in the name of the intended owner-occupant of the dwelling. Dwellings with wood shake roof or wood siding. Pictures Current pictures of the dwelling and all other structures covered by the policy are required. Two pictures of the dwelling are required, each from a diagonal corner, so we have a picture of the entire dwelling. Heating Systems Modern forced air thermostatically controlled gas and electrical systems are acceptable. A permanent Modern Electric heating system installed by competent personnel in accordance with code requirements is acceptable. Steam heat, oil systems, floor and wall furnaces, barrel stoves, wood stoves with triple lined chimneys and freestanding fireplaces are not acceptable. Wood stoves must be installed in accordance with NAMIC standards. Grinnell pamphlet GMRC 1163(7/04) and have a tile lined chimney to be acceptable as secondary heat only. Two photos of all wood burning units are required, one showing interior installation one showing the flue. Modular Homes Modular homes are acceptable as a dwelling risk under coverage A if they meet all underwriting rules. These homes differ from mobile homes in the following ways: Modular homes are subject to state and local building codes. Complete sections are shipped to the building site for set-down on permanent foundation and the separate modules are connected and finished by a contractor. Mobile Homes A mobile home is defined as a single or doublewide unit having the following characteristics: Homes built since June 15, 1975 conform with National Manufactured Home Construction and safety Standards. HUD administers these standards Mobile homes are assembled on their own steel chassis frame, which remains under the home as an integral part of the support system of the home. They are assembled and built as complete units with no further site construction is necessary. Mobile homes with limits in excess of $75,000 must be approved by home office 3

4 Heat Source for Mobile Home Central heating source consisting must be a permanently installed warm air furnace, gas or electric, on a fire resistant base. No other heating systems accepted. c. DO NOT INSURE Prohibited List: Accounts, Bills, Evidences of debt Airplanes, Automobiles, Trucks, Motorcycles, Mini bikes, or Snowmobiles. Airplane Hangers Aluminum awning installed with wood screws Antiques Boats and Motors (except while in an insurable building on the insured premises) Broiler Houses Bulldozers, Backhoes, Road Building Machines and Other Heavy Construction Equipment Bullion Canvas Umbrellas on Tractors Cloth Awnings Corn Cribs (Single)- 14x20 or less Cupolas (except as to aperture remaining after total destruction thereof) Currency Deeds Fences Filling Station Canopies Gates Grain Bins Unless securely anchored Grain unless enclosed in an insurable building Greenhouses Lighting Rods Manuscripts 4 Metal Stacks, metal or title flue extensions or tops

5 Metal or Steel Bins Unless securely anchored DO NOT INSURE-PROHIBITED LIST (CONTINUED) Mobile Homes Unless securely anchored Open Sheds Unless approved Pets and Game Animals (Rabbits, Chinchillas, Gamecocks, etc.) Plate Glass Windows Portable Building Unless anchored Poultry Signs Other than farm signs Skylights Standpipes Turkeys Wind driven generators and their towers Windmills Wind pumps Wood or stave silos whether attached to building or not Incidental Business Activities An insured or an occupant of the insured premises may engage in one of the following incidental business activities on the premises without affecting the eligibility status of the risk: a business or professional office, private school, studio, or day care facility where no more than two people work; a small service business, such as a barber shop, beauty parlor, dressmaker, tailor, or shoe repair where no more than two people work; or Endorsement FL-11 5

6 DWELLING PROGRAM LIST OF FORMS AND ENDORSEMENTS FORMS NAME PAGE # FL-1 Basic Form (ACV) 7,8,9,12,14,15,17,19 FL-502 Broad Form (ACV) 7,8,9,11,13,14,15,17,19 Other Endorsements FL-6 Farm Coverage 12,18,19,22 FL-11 Incidental Business Activities 18,19,22 FL-12 Earthquake 5, 13 FL-14 Contributing Insurance 10,13,20 FL-15 Higher Limit on Business Property 10,15,20 FL-20 Policy Condition 19 FL-27 Vendor s Single Interest 16 FL-30 Fire Department service Charge 15,16 FL-36 Credit Cards & Depositors Forgery 16 FL-41 Additional Interests 9,20 FL-45 Change Endorsement 20 FL-0055 Replacement Value 14 FL-75 Vacancy or Un-occupancy Penalty 21 FL-125 Theft of Building Materials 14 FL-155 Added Perils for Refrigerated Food Products 16 ML-170 Computer Coverage 15 FL-208 Water Damage 13 FL-216 Protective Devices 14 FL-257 Ordinance of Law 11 FHIC.CAT.END Catastrophe Endorsement 10 FL-304 Restriction of Coverage s 10,20 F0-323 Weight of Ice & Snow 21 FO-324 Winter Perils Livestock 22 FL-330 Fire Dept. Service Charge Higher Limit 23 FL-340 Theft Exclusion 23 FL-345 Theft of building materials 21,23 FO-363 Repair or Rebuilding Requirement 22 FL-350 Glass Breakage in Cabs 22 FO-356 Additional Perils-Livestock 22 FL-402 Policy Limits 17 FL-403 Lenders Loss Payable 20 Other Endorsements (Continued) FORMS NAME PAGE # FL-534 Broad Theft Coverage 13 FL-535 Limited Theft Coverage 14 FL-560 Roof Replacement 14 FL-561 Machinery Transportation endorsement 22 Vandalism must be shown on declaration page when Form FL-1 is used. 6 Additional Living Expense must be shown on declaration page when Form FL-1 is used.

7 PROGRAM DESCRIPTION This is a general description of the coverage provided by the Dwelling Properties forms. The policy forms state the complete conditions. Policy Forms A Dwelling Properties policy may be issued by using one of the following forms: FL-1 FL-502 Basic Form Broad Form Principal Coverage s Four principal coverages are available under a Dwelling Properties policy. Coverage A Residence Coverage A covers the dwelling, additions, built-in components, attached fixtures, and detachable building items. Coverage also applies to permanently attached appliances, carpets, and window coverings in rental portions of the dwelling. Tools and equipment used to service the premises are covered under Coverage A when the policy does not otherwise include coverage for personal property. Coverage B Related Private Structures Coverage B covers unattached structures related to the dwelling, including their additions, built-in components, fixtures, and detachable building items. Coverage also applies to fences, driveways, sidewalks, and other permanently installed outdoor fixtures. Coverage requires additional premium for FL-1 at same rate as dwelling. Building cannot be used for business purposes. Farming is considered a business. Farm buildings must be rated separately. Coverage C Personal Property Coverage C covers household contents and personal property usual to the occupancy of the dwelling as a residence. Coverage D Additional Living Costs and Fair Rental Value Coverage D covers increased living costs that occur when an insured loss makes a covered location unfit for use. Coverage must be added to FL-1, at the same as the dwelling. Loss Settlement Provisions Form FL-1 and Mobile Homes (All Forms) Covered losses are settled on an actual cash value basis. Forms FL-502 Covered losses are settled on an actual cash value. 7

8 Perils Insured Against Forms FL-1 and FL-502 Form FL-1 (Basic Form Fire and Basic Form Fire and Extended Coverage) and Form FL-2 (Broad Form) provides coverage for loss caused by the perils indicated below. Form Used: FL-1 FL-1 FL-502 Fire and Fire Extended Broad Perils Covered Coverage Fire or Lightning X X X Explosion X X X Windstorm or Hail X X Riot or Civil Commotion X X Aircraft X X Vehicles X X Smoke X X Volcanic Action X X Sinkhole Collapse X X Vandalism Optional X Burglary Damage X Falling Objects X Weight of Ice, Snow, or Sleet X Accidental Tearing Apart, Burning, or Budging X Accidental Discharge of Liquids or Steam X Freezing of Plumbing or Heating System X Sudden and Accidental Electrical Damage X Policy Limits FL-1 FL-502 Coverage A - Residence $25,000 Minimum $60,000 Minimum Coverage B- Related Private Rate 10% of limit Structures Separately on residence Personal Property R A T E S E P A R A T E L Y Coverage D- Addle Living Cost/ Rate 10% of limit Fair Rental Value Separately on residence Form FL-1 A policy may include Coverage A and/or Coverage C. Each is rated separately. The company determines minimum limits. Coverage B and/or Coverage D may be provided for an additional charge. 8

9 Form FL-502 A FL-502 policy may include Coverage A and/or Coverage C. Each is rated separately. Minimum limits are determined by the company. 10% of the Coverage A limit applies to Coverage B and to Coverage D without an additional charge. Payment of a loss under Coverage B or Coverage D will not reduce the Coverage A limit available for the same loss. Show the Coverage B and Coverage D limits on the declarations, if appicable. Inception Time Policy Term RULE 3 -- POLICYWRITING INSTRUCTIONS The policy will be issued to take effect at 12:01 A.M. unless otherwise indicated. Annual Policies are written on a continuous renewal basis. Each renewal on the anniversary of the policy effective date will be subject to the rules, forms, and rates then in effect. Additional Interests An additional owner s interest in a covered building may be covered without additional charge. Endorsement FL-41 e. Minimum Policy Premium The policy is subject to a minimum policy premium of $ The charge for any endorsement after the inception of the policy shall be in addition to the minimum premium. f. Changes involving Premiums REDUCTIONS: The unearned premium on any reduction will be returned if $ or more. g. Policy Cancellation Policies canceled at the request of either the insured or the company will be canceled pro-rata. If the insured requests cancellation, a signed request must be submitted to the company. The unearned premium on pro-rata cancellations will be returned if $ 5.00 or more. 9

10 h. Transfer Or Assignment The company will not assign or transfer a policy from one insured to another. An insured may, however, request a policy transfer from one location to another location within the State of Missouri. Restriction of Coverage If a policy would not be issued because of unusual exposures, the applicant may request a restriction of coverage at no reduction in premium. The request, signed by the applicant, must be referred to the company. Endorsement FL-304 Contributing Insurance Coverage may be divided between two or more companies. All policies must contain the same deductible. All additional limits and coverages must be divided between the companies. Endorsement FL-14 Multiple Locations A single policy can be issued to cover property at different locations in the same state if the same form and same deductible option apply at each location. Describe each location and show the limits that apply. Use supplemental declarations if necessary. Indicate that the deductible applies at each location. Do not mix deductibles. j. Seasonal Risks A dwelling or mobile home will be considered seasonal if it is normally unoccupied for three or more consecutive months during the year. k. Dwellings Under Construction Dwellings under construction should be written at their completed value using the applicable rate based on FUTURE intended occupancy. Dwellings under construction that are not written at their completed value will be written at the Builder s Risk rate. l. Catastrophe Endorsement-FHIC.CAT.END This endorsement may be used to reduce the Company s wind or hail liability on a specific structure to a total loss only. In no case will a partial loss be paid. A total loss is defined as a building completely and totally destroyed and scattered as a result of a windstorm. The building must be specifically described on the endorsement. 10

11 RULE 5 DEDUCTIBLES A deductible amount is subtracted from all covered losses, except coverage for Emergency Removal, Fire Department Service Charge, Credit Cards and Depositors Forgery, Refrigerated Food Spoilage, Extra Expense, Signs, Glass Breakage in Cabs, and Farm Operations Records Expense if applicable. The deductible applies only once per occurrence, and separately at each covered location. When an occurrence affects two or more items at the same location with different deductible amounts, the highest deductible amount applies. Flat Deductibles All Perils/All Coverage s The policy may be issued with a single deductible amount that applies to all perils and all coverage s that are subject to the deductible provision. The following flat deductible options are available: Deductible Amount Credit $ Base 1, , , , Use the factors shown in this manual to adjust the premium and show the deductible amount on the declarations. A minimum of $1,000 Wind & Hail deductible applies to all property policies. The deductible amount is shown on the declarations; no endorsement is needed. CAUTION: Do not mix deductibles on a policy. Payment Options Three payment options are offered: Annual No Fee Semi-Annually $16/year Quarterly $32/year *Payments received after the cancellation date, are subject to reinstatement, and once reinstated, a $50 reissue fee will be applied. Ordinance or Law Forms FL-502 Coverage can be added for increased costs that result from the enforcement of a code, ordinance, or law that regulates the construction, repair, or demolition of covered property. Apply the ordinance or law factors shown in this manual. The amount of insurance needed to cover the increased costs can be reflected in the Coverage A limit. Endorsement FL

12 Liability Base Premium There is a $30 base premium on all liability written. Vandalism Form FL-1 Only Earthquake COVERAGE OPTIONS Vandalism is an optional coverage under policy form FL-1. Make an entry on the declarations to show that FL-1 coverage applies with vandalism On farm coverage s add vandalism to the FL-6. Additional Living expense---fl-1 Only Additional is an optional coverage under form FL-1. Make an entry on the declaration page to show additional expense applies. Use same rate that applies to the dwelling. A deductible of 10% of the policy limit applies subject to a $250 minimum to Zone 1. A deductible of 10% of the policy limit applies to Zone 2.No deductible credit applies. Develop the premium as follows: a. Determine if Rate Table A, B, and /or C apply b. Determine the Earthquake Zone c. Select the rate(s) per $1,000 according to Construction d. Apply the rate(s) to the: 1. Coverage A, B, and C. (Except Contents Policies) Table Zone Deduct All Dwellings A 1/2 10% $.65 per$1,000 All forms except contents B Form 4 and Higher Cov. C 1/2 10% $.65 per $1,000 Limits for other Forms C Cov. D Limits and ML-48 1/2 10% $.65 per $1,000 If Exterior is Masonry Veneer---Rate as Masonry Indicate frame or masonry on endorsement. Zone 1(Counties) 12 Bollinger Dunklin Oregon St. Francois Butler Howell Ozark Scott Cape Girardeau Iron Pemiscot Shannon Carter Jefferson Perry Stoddard Crawford Madison Reynolds Texas Dent Mississippi Ripley Washington Douglas New Madrid St.Genevieve Wayne Wright

13 Zone 2: Farmers Home Insurance Company of Ray County Balance of state Use endorsement FL 12. Earthquake Moratorium Rule: New request for this option will not be accepted for 30 days following and earthquake occurrence with a magnitude of 5.0 or more on the Richter scale. The moratorium will apply only to risks located within a 150-mile radius of the earthquake epicenter. Zone 2 Balance of State Attach Endorsement FL-12 (10% deductible) If coverage is provided for exterior masonry veneer, make an entry that Exclusion 6 DOES NOT apply. Water Damage Coverage can be added for loss caused by water that backs up through sewers, drains, or sumps. A $5,000 limit and a $250 deductible apply. When added to a policy that includes both Coverage A and Coverage C, coverage for the back up of sewers or drains must apply to Coverage A and to Coverage C. Use the rating information shown in this manual. Premium $ Coverage available on FL- 502 only. Endorsement FL-208 Specific Structures Coverage may be provided for a specific private structure adjacent to a covered dwelling for an additional charge. To be eligible for coverage under this rule, a private structure cannot be: Used for business purposes; or Rented or held for rental to anyone other than a tenant of the residence, except for use solely as a private garage. Use the Coverage A rating information for a one-family, owner-occupied dwelling in the applicable territory, construction, and protection classification; apply the deductible factors; and apply the Coverage B factors shown in this manual. The perils and deductible option must be the same for all Coverage A and Coverage B structures insured under the same policy. Describe the structure (Coverage B) on the declarations and show the limit that applies. Theft Coverage Broad Theft coverage can be added to policies that insure personal property in owneroccupied dwellings. Off-premises theft coverage cannot be added to the policy unless on-premises theft coverage also applies. Use the rating information shown in this manual. Endorsement FL

14 Limited Theft On-premises theft coverage can be added to policies that insure personal property in non-owner-occupied dwellings. Use the rating information shown in this manual. Endorsement FL-535 Protective Devices The protective device factors shown in this manual may be applied to the premium determined for on-premises broad or limited theft coverage when an approved and properly maintained burglar alarm system has been installed. A five percent credit will be applied to dwellings with a central alarm. FL-502 ONLY Endorsement FL-216 Replacement Value Personal and Miscellaneous Property Personal property and other miscellaneous property can be insured for its replacement value. Use the rating information shown in this manual. Must have minimum of $10,000 to use endorsement. Endorsement FL-55. Dwelling On Roof Replacement Cost-ACV Forms FL-1 and FL-502 Replacement cost roof coverage without deduction for depreciation can be placed on the dwelling. The endorsement applies to WIND OR HAIL losses. Coverage shall not exceed the smallest of the following amounts: (1) 15% of the limit of liability under the policy applying to the dwelling; Or (2) The amount actually and necessarily spent to repair or replace the damaged roof. Requirements: (a) Available only on Dwelling roofs. (b) Roofs consisting of composition shingle over wood shingles are ineligible. (c) Roofs must not be beyond ten years of age. You must show which dwelling the FL-560 applies to on the Declaration Page. Endorsement FL- 560 Theft Of Building Material Coverage can be added for theft of materials and supplies used in construction of buildings covered under Coverage A or B. Refer to the Rate Pages for applicable rate. Describe the building under construction and show the limit that applies on the endorsement. Endorsement FL

15 Money and Securities Computers The limit for money and related items can be increased. Optional theft coverage does not apply to any increased limits. Use the rating information shown in this manual. Endorsement FL-15 Coverage for computer data processing equipment and software can be provided for all risks of direct physical loss, with certain exceptions. Use the rating information shown in this manual. Attach Endorsement ML-170 and describe the covered property Business Property The limit for business property on the premises can be increased. The limit for business property away from the premises is automatically increased to 10% of the total limit for business property on the premises. Use the rating information shown in this manual. Endorsement FL-15 Coverage D - Additional Living Costs Form FL-1 The policy does not automatically include Coverage D, however, coverage for additional living costs and fair rental value of $5,000, can be provided for an additional charge. Rate is the same as Dwelling Rates Per Thousand. Forms FL-502 Increased Limit When the policy automatically includes coverage for additional living costs and fair rental value, the Coverage D basic limit can be increased for an additional charge. Use the rating procedure for form FL-1 described above. The Coverage D perils must be the same as the Coverage A perils. The additional charge applies only to the amount of insurance in excess of the basic limit. Show the Coverage D limit on the declarations. Tenant s Improvements Forms FL-1 and FL-502 When form FL-1 or FL-502 is issued to cover a tenant s personal property, incidental coverage for the tenant s interest in permanent fixtures, alterations, decorations, and additions is automatically extended for up to 10% of the Coverage C limit. Loss settlement is on an actual cash value basis. No additional charge applies and no endorsement is needed. 15

16 The limit that applies to tenant s improvements can be increased for an additional charge. Use the Each Add l $1,000 rating information for the perils and the territory, construction, protection, and occupancy classification that apply to Coverage C and apply the deductible factors. The additional charge applies only to the amount of insurance in excess of 10% of the Coverage C limit. Endorsement FL-30 Fire Department Service Charge The limit for fire department service charges can be increased, up to $500. Use the rating information shown in this manual. Endorsement FL-30 Refrigerated Food Products Coverage can be added for loss or damage to food products contained in a freezer or refrigerated unit. A $500 limit applies. No deductible applies to this coverage. Use the rating information shown in this manual. Endorsement FL-155 Credit Cards and Depositors Forgery Coverage can be added for loss by forgery or alteration of credit cards, checks or drafts, or acceptance of counterfeit money. No deductible applies to this coverage. Use the rating information shown in this manual. Endorsement FL-36 Mobile-Home Options Vendor s Single Interest (Optional at Lienholder s Request) Coverage can be provided for the interest of the lienholder. Use the rating information shown in this manual. Endorsement FL-27 (Collision, Upset, Conversion, Embezzlement, or Secretion) Fire Protection Definitions Protected Building is located within five road miles of a responding fire department and: within 1,000 feet of a fire hydrant; or within 1,000 feet of a year-round water source of at least 3,500 gallons and the responding fire department is equipped to respond with pumper truck capabilities; or the responding fire department is equipped to respond with pumper/tanker truck capabilities of at least 3,500 gallons. Partially Protected Unprotected Building is located within five road miles of a responding fire department, but does not otherwise qualify for Protected status. All others. 16

17 Supplemental Heat Source Wood burning stoves are not permitted as primary heat, but are acceptable as a secondary heat source, as long as they have an approved system. It must have a tile lined chimney built from the ground, or a UL-approved metal chimney that has been professionally installed. The Wood Stove Questionnaire must be completed. $50 charge for wood burning stoves. Construction Definitions Building or Fire Division One part of an enclosed structure that is separated from other parts of the structure by space or by masonry walls that are at least eight inches thick and that go through or to the underside of the roof. Any openings through such masonry walls must be protected by fire doors that are approved for installation on fire walls. Fire Resistive A dwelling with exterior walls, floors, and roof constructed entirely of masonry or noncombustible materials on incombustible supports and having a Fire Resistance Rating of at least one hour. Frame Masonry Masonry Veneered Mixed A dwelling with exterior walls constructed of combustible materials, such as wood, or constructed of incombustible materials on combustible supports. A dwelling with exterior walls constructed of brick, concrete block, concrete, tile, or other masonry materials or constructed of incombustible materials on incombustible supports. A dwelling with exterior walls constructed of a combustible material covered with masonry. Dwellings of masonry veneered construction will be classified as masonry for rating purposes. Dwellings of mixed frame and masonry construction will be classified as frame for rating purposes if walls of frame construction exceed 33-1/3% of total exterior wall area. 17

18 Farm Coverages Policy Form and Principal Coverages Farm Form FL-6 provides the principal coverages described below: Coverage E Farm Barns, Buildings, and Structures: Coverage E covers additional farm dwellings, barns, portable buildings, and structures; other farm buildings and structures; and tenant s improvements in farm buildings for which a limit is shown on the declarations or a schedule. The limit shown on the declarations or a schedule for each covered item includes attached sheds and fixtures. Silos and related private structures which are not attached to a farm dwelling are covered only when specifically listed on the declarations or a schedule. Coverage F Scheduled Farm Personal Property: Coverage F covers classes or items of farm personal property for which a limit is shown on the declarations or a schedule. Coverage G Unscheduled Farm Personal Property: Coverage G covers farm personal property on a blanket basis. The Coverage G limit must be shown on the declarations or a schedule. The limit will not exceed the scheduled item s value on the farm personal property inventory sheet. *Any item under Coverage F or G valued at $1,000 or more must be listed individually (must have Serial Number, Model Number, etc if applicable) *Hay and Livestock must be broken down on a per bale/animal basis Loss Settlement Provisions Coverage E: Scheduled buildings and structures are covered on an actual cash value basis. Coverage F: The coverage provided under Coverage F applies on an actual cash value basis. At the option of the company, the following classes of scheduled property are also subject to a coinsurance clause or a pro rata distribution clause: Machinery Not Described Grain Hay in Barns Hay in the Open Farm Products and Supplies Livestock Make an entry on the declarations to activate the coinsurance or pro rata distribution clause. Also show the Coverage F coinsurance percentage on the declarations when the Coverage F coinsurance clause applies. Coverage G: The coverage provided under Coverage G applies on an actual cash value basis, subject to an 80% coinsurance requirement. 18

19 Perils Insured Against Farmers Home Insurance Company of Ray County Form FL-6 insures covered property against risks of direct physical loss. Basic Perils Coverage for the following perils must be included under Form FL-6: Fire or Lightning Explosion Extended Coverage Perils Coverage for the following perils may be added for an additional charge: Fire or Lightning Explosion Windstorm or Hail Riot or Civil Commotion Aircraft Smoke Theft Collision Electrocution of Livestock Vehicles Use the rating information shown in this manual. Make an entry on the declarations to show that Extended Coverage Perils apply to Form FL-6. Vandalism Coverage for the peril of vandalism may be added for an additional charge. Use the rating information shown in this manual. Make an entry on the declarations to show that vandalism applies to Form FL-6. Modular Policy Format Farm Properties policy forms may be combined to provide two types of policies. A Farm Properties policy that covers the principal farm dwelling and/or household personal property and farm exposures will consist of the following coverage parts: Dwelling Coverage FL-1, or FL-502 Farm Coverage FL-6 Optional Endorsements State Amendatory Endorsements The applicable state amendatory endorsements are shown on the Farm Properties Forms and Endorsements Listing. A Farm Properties policy that provides farm coverage only will consist of the following coverage parts: Farm Coverage FL-6 Policy Conditions FL-20 Optional Endorsements State Amendatory Endorsements The applicable state amendatory endorsements are shown on the Farm Properties Forms and Endorsements Listing. 19

20 Endorsements Information called for as entries on endorsements can be shown on the declarations or a supplemental schedule instead. Additional Interests The farm properties policy can be endorsed to cover the interests of co-owners, farm partners, farm corporations, executors, administrators, trustees, or beneficiaries in the farm premises and operations or the interests of other residents of the insured premises. There is no additional premium charge to cover the insurable interests of others. Attach Endorsement FO-41 and make entries to show the location of the premises, the names of the additional insured s, and the extent of their interests. Lender s Loss Payable The insurable interest of a lender may be covered for direct physical loss to covered property. Attach Endorsement FL-403 and name the lender on the declarations. Transfer or Assignment The policy may be endorsed to effect: transfer to another location within the same state; or When insured property is transferred to another owner a new policy must be written. Attach Endorsement FL-45. Restriction of Coverage If a policy would not be issued because of unusual exposures, the applicant may request a restriction of coverage at no reduction in premium. The request, signed by the applicant, must be referred to the company. Attach Endorsement FL-304 and describe the restrictions that apply. Cancellation or Reductions in Limits or Coverages If the policy is canceled or the limits are reduced, the amount of any return premium due is calculated on a pro rata basis. Contributing Insurance Coverage can be divided between two or more companies. All policies must contain the same deductible. All additional limits and coverages must be divided between the companies. Attach Endorsement FL-14 and make the necessary entries. 20

21 Vacancy or Unoccupancy Penalty At the option of the company,(must have company approval) coverage may be reduced for locations shown on the declarations which may become vacant or unoccupied for more than 120 days in a row. Attach Endorsement FL-75. Under certain circumstances, coverage for a vacant or unoccupied location can be provided without a reduction in coverage penalty. DEDUCTIBLES Farm A deductible amount is subtracted from all covered losses, except coverage for Emergency Removal, Fire Department Service Charge, Credit Cards and Depositors Forgery, Refrigerated Food Spoilage, Extra Expense, Signs, Glass Breakage in Cabs, and Farm Operations Records Expense if applicable. The deductible applies only once per occurrence, and separately at each covered location. When an occurrence affects two or more items at the same location with different deductible amounts, the highest deductible amount applies. Flat Deductibles All Perils/All Coverages The policy may be issued with a single deductible amount that applies to all perils and all coverages that are subject to the deductible provision. The following flat deductible options are available: Deductible Amount Factor $ Base 1, , , Use the factors shown in this manual to adjust the premium and show the deductible amount on the declarations. Weight of Ice, Snow, or Sleet Coverage for direct physical loss caused by the weight of ice, snow, or sleet can be added for property covered under Coverages E, F, and G. The limit for this coverage must be the same as the policy limit for the covered property. Use the rating information shown in this manual. Attach Endorsement FO-323 and describe the covered property. Theft of Building Materials Coverage for loss resulting from theft of building materials and supplies can be added for structures covered under Coverage E. The limit for this coverage must be the same as the policy limit for the covered structure. Use the rating information shown in this manual. Attach Endorsement FO-345 and describe the buildings under construction. 21

22 Repair or Rebuilding Requirement At the option of the company, loss to property covered under Coverage E will be settled for 50% of the adjusted loss prior to the actual repair or rebuilding of the damaged property. Additional payment will be made if the repair or rebuilding is completed within 12 months after the loss. Attach Endorsement FO-363 and describe the covered property. Rented or Borrowed Equipment Coverage for direct physical loss to farm machinery and equipment that is rented or borrowed from others can be provided by the policy. Use the rating information shown in this manual for Described Machinery. Make an entry on the declarations or a schedule to show the limit for the rented or borrowed equipment coverage in Form FL-6. Premium for Rented or Borrowed Equipment is Non-Refundable. Additional Perils Livestock Coverage for livestock covered under Coverage F is included for loss resulting from death caused by accidental shooting, drowning, attack by dogs or wild animals, and collapse of a building. The limit for this coverage is the same as the policy limit for the covered property. Winter Perils Livestock Coverage for livestock covered under Coverage F or G can be extended to include loss resulting from death caused by freezing or smothering in snowstorms or ice storms and falling through ice. This coverage is subject to a coinsurance provision. Use the rating information shown in this manual. Good to add with livestock coverage. Attach FL-324 Glass Breakage in Cabs Coverage may be provided to cover glass breakage in the cabs of mobile farm machinery. Use the rating information shown in this manual. No deductible applies. Attach Endorsement FL-350 and describe each covered unit. Machinery Transportation This special MAMIC endorsement is used to cover damage to mobile farm machinery and equipment in, on or towed by a vehicle caused by collision or overturn of the transporting vehicle. Machinery used for custom work must be noted on endosement. Attach endorsement FL-561 describe each covered piece of machinery. Fire Department Service Charge Higher Limit The limit that applies to Fire Department Service Charge can be increased. Use the rating information shown in this manual. 22 Attach Endorsement FL-330 and make an entry to show the amount of the increase and the total limit that applies.

23 Private Structures Specific private structures on the insured premises can be covered under Coverage E. Use the rating information for barns shown in this manual. Describe the structure on the declarations or a schedule and show the limit that applies. Theft Exclusion Type 1 FL-502 At the option of the company, the Perils Section of the FL-6 can be amended to delete the Theft Peril for Coverages F and G. Use the rating information shown in this manual. Attach Endorsement FL-340. DEFINITIONS APPLICABLE TO THE FARM DWELLING Dwelling must be in excellent repair, and so certified by the agent after careful inspection. Foundation under all exterior walls must be of continuous construction. Dwelling must have a central heating plant vented to an approved chimney built from the ground up or a venting system approved by a recognized testing authority. A properly installed electric heating system will also suffice. No space heaters or stoves. Dwelling must have modern electrical system in excellent repair. No exposed urethane or styrene insulation. Type 2 FL-1 Dwelling must be in good repair, and so certified by the agent after careful inspection. Foundation under all exterior walls must be of continuous construction. Dwelling must have a central heating plant vented to an approved chimney built from the ground up or a venting system approved by a recognized testing authority. A properly installed electric heating system will also suffice. Dwelling must have modern electrical system in excellent repair. 23