10/25/2017 WHEN THE INSURED HAS OUTGROWN THE FARM PROGRAM EVOLUTION OF THE FARM PROGRAM WHAT IS A FARM?

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1 WHEN THE INSURED HAS OUTGROWN THE FARM PROGRAM Presented By: Cheryl Koch CPCU, CIC, ARM, AAI, API, AAM, AIM, AIS, ARP, AINS, ACSR, AFIS Agency Management Resource Group #IRMI2017 EVOLUTION OF THE FARM PROGRAM Farmowners Ranchowner Program 1987 Farm Coverage Forms 1998 ISO Farm Program Revisions 2016 ISO Farm Program Revisions AAIS and ISO Farm Programs WHAT IS A FARM? 1

2 WHAT ISN T A FARM? WHAT ABOUT? 2

3 WHAT IS FARMING? Farming means The operation of an agricultural or aquacultural enterprise, and includes the operation of roadside stands, on your farm premises, maintained solely for the sale of farm products produced principally by you. Unless specifically indicated in the Declarations, farming does not include: a. Retail activity other than that described above; or b. Mechanized processing operations. VERTICAL INTEGRATION Many states outlaw such operations as a meat processor owing or operating a feedlot for cattle or hogs, so called vertical integration The stated purpose of these limitations is to preserve free and private enterprise, prevent monopoly, and protect consumers Many courts are declaring these laws unconstitutional and in restraint of trade rather than promoting it BUT WHAT EXACTLY IS VERTICAL INTEGRATION? 3

4 UNDERSTANDING THE INSURED S OPERATIONS: A Risk Management Approach Agricultural operations, other than traditional farming / ranching Retail activities Mechanized processing Warehousing Winery Hauling / transportation Farm management Source: Devex.com Property restrictions FP Coverage B Other Private Structures Appurtenant to Dwellings, Property Covered Private structures you own that are appurtenant to a covered dwelling FP Coverage B Other Private Structures Appurtenant to Dwellings, Property NOT Covered Structures (other than private garages) that you use principally for farming purposes FP Coverage C Household Personal Property, Property Not Covered e. Business property except under Special Limits* k. Agritainment property Special Limits of Insurance Under Coverage C $2,500 on business property on the insured location $1,500 on business property off the insured location FP Definitions Business property means property pertaining to any trade, profession or occupation other than farming. Business property does not include agritainment property. FP Farm Personal Property Coverage Form Coverage E Covered Property all of the following assuming a limit is shown: Grain, Hay, Farm Products, etc. Property Not Covered agritainment property FP Farm Personal Property Coverage Form Coverage F Any of the following while being stored or processed in manufacturing plants, public elevators, warehouses, seed houses, or commercial drying plants: Grain, threshed seeds, threshed beans, hay, straw, fodder, silage, ground feed, herbicides, fertilizer, manufactured or blended livestock feed. 4

5 Liability restrictions FL Farm Liability Coverage Form Exclusion i. Bodily injury or property damage arising out of or in connection with a business engaged in by an insured. This exclusion applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed or implied to be provided because of the nature of the business. Business means a trade, profession, occupation, enterprise or activity, other than: Agritainment Farming Custom farming FL Farm Liability Coverage Form Coverage H Bodily Injury and Property Damage Exclusion k. Bodily injury or property damage arising out of the rendering of, or failure to render, professional services. Exclusion bb. Bodily injury or property damage arising directly or indirectly out of any agritainment. FL Farm Liability Coverage Form Coverage I Personal and Advertising Injury Liability Exclusion b. (1) Business Pursuits Arising out of or in connection with a business engaged in by an insured. Exclusion b. (4) Agritainment Arising directly or indirectly out of any agritainment. 5

6 FL Farm Liability Coverage Form Coverage J Medical Payments Exclusion a. Any person injured while on the insured location by reason of: (1) Professional services being rendered there or (2) Business being engaged in there Exclusion f. Any person injured while on the insured location by reason of agritainment being engaged in there OTHER ISSUES INADEQUATELY ADDRESSED IN THE FARM PROGRAM Non agricultural operations Business in / from the home Rental of premises Amusement park Other Additional non farm exposures Event cancellation EPLI Cyber / Internet liability Food spoilage / contamination Business income Liquor liability Garage liability Other WHAT COVERAGE OPTIONS ARE AVAILABLE? What does the Farm underwriter think? Endorsements to the Farm policy Agritainment Employment in Non Farm Business Other BOP (Caution!) CGL Business Auto Pollution /Environmental EPLI / Management Liability Throughput / COP 6

7 HAS THE FARM PROGRAM OUTLIVED ITS USELFULNESS? 7