Farm Dwellings

There are many variations available as to settlement options and perils covered. Generally the broader the coverage the better. In addition to the typical named perils for farm buildings, most policies also cover: water escape within the dwelling from heating or plumbing systems; theft, and may include building collapse. Various items of personal property are also insured, including contents and other personal property that you own, use or wear. Limits are generally placed on items such as jewelry and furs, collections, securities, money and garden equipment unless specifically listed. Many policies also cover theft and forgery of credit and debit cards.

Farm Buildings

The following is a typical list of named perils which is the most common coverage for farm buildings:

• Fire, lightning, explosion, smoke, falling objects, impact by aircraft or land vehicle, riot, vandalism or malicious acts, windstorm or hail.

It's important to determine the appropriate coverage, which is the level of insurance needed to survive a major loss.

Exclusions/Limitations

Subject to certain exclusions and limitations within the peril description, the insurer will pay for physical loss or damage to the building caused by one of these events. Disasters like flood, earthquakes and collapse from snow and ice are not included. Flood coverage is not readily available for buildings. Coverage for loss or damage caused by earthquakes or collapse caused by weight of snow or ice may be added by endorsement, if the buildings are eligible.

Check the Definition of Farm Building

Stabling, heating and ventilating equipment are generally part of the building and their value should be included in the calculation of the building value. Stable cleaners, milking equipment and coolers, silos and silo unloaders are not considered to be part of the building and need to be specifically insured.

Rebuilding Clause

Most policies contain rebuilding clauses. Usually the building must be rebuilt within 100 m (300 ft) of the insured building. Rebuilding at a greater distance may be allowed at less than full settlement, e.g. at 75%. If legislation exists prohibiting rebuilding on the same site, some companies allow rebuilding further away without imposing a penalty. If, when you insure, it is obvious that it is impractical to rebuild on the same property, some companies will agree, at that time, to rebuilding on another property you own, within distance limits.

Farm Contents

Contents, as specified on your declaration page, are covered. Contents can include tenants' improvements, livestock, machinery and equipment, and produce. Tenants' improvements means improvements made to a rented building that are not covered under any other policy and would have to be specifically insured.

Produce

Produce includes farm inputs like commercial feeds, commercial fertilizers and pesticides, and harvested farm products like milk, eggs and anything that is an agricultural product of the soil. Produce is covered for more causes of loss (perils) than buildings. Named perils that apply to produce only include:

• earthquake, collapse of building, bridges or culverts, flood, collision, derailment or overturn of vehicles on which insured produce is being shipped, loss of produce when vehicle is on board a ferry that is stranded, burns, sinks or involved in a collision, theft, vandalism or malicious acts.

If your produce is refrigerated be sure that you have coverage for the loss or damage if the refrigeration units fail. Also, insure the value of your harvested produce. A coinsurance clause will apply generally at the 80% level.

Livestock

The declaration page of your insurance policy will show the "classes" of livestock you are insuring (cattle, horses, swine, poultry, sheep, etc) separately. If you are buying/selling animals, be sure you are aware of the notification requirements.

Market or cash value is normally used to determine the value of dead livestock at the time of a loss. The policy will have an upper limit, such as $4,000 for an individual animal. Individual animals with a higher value listed separately. The named perils list is much longer. In addition to those listed above for buildings and produce, livestock is also covered for:

• accidental shooting, drowning, electrocution, attack by wild animals and non-owned dogs, blizzard,, snowstorm, sleet storm or rainstorm, falling or collapse of buildings and trees, entrapment, piling, smothering, fumes

Some endorsements offer coverage for such perils as ingestion of hardware, power interruption and heat prostration.

The coinsurance clause will usually apply to livestock. If the value of your livestock varies constantly over your policy term ask about a "stock reporting option". Any compensation by government for livestock loss will be deducted.

Machinery and Equipment

Machinery and equipment includes any piece of machinery or equipment that is used in your farm operation. The policy definition excludes such items as aircraft, vehicles subject to registration according to the Highway Traffic Act, Off Road Vehicle Act or Snow Vehicle Act and equipment used in lumbering activities. If you will be buying or selling machinery or equipment during the term of your policy ask about the notification requirements. You should also make sure that coverage is in place for non-owned equipment, whether borrowed or rented.

The machinery and equipment can be listed, or scheduled in the insurance policy, or covered on a blanket basis by class. Because of the huge investment many farmers make in machinery and equipment, you should carefully review your coverage. A loss of use endorsement may be available to cover renting a replacement unit until the damaged or destroyed unit was repaired or replaced. You likely need to request this as an additional endorsement

Optional Endorsements to Consider

Weather extremes are a reason to consider special endorsements for such things as power interruption, poultry heat prostration and business disruption.

Power interruption insurance is common on specialized poultry and swine farms. The birds and animals are insured against death and destruction from lack of heat or ventilation due to power interruption. It is normal for the insurance company to request a standby generator and alarm system that is tested on a monthly basis.

Heat prostration for poultry applies when ventilation is working and stocking rates are not excessive.

Business interruption/loss of income endorsements consider the ability of your business to survive if the cash flow is interrupted because of an insured loss. The purpose of this endorsement is to replace the income that the farm business would have made if the insured property had not been damaged or destroyed by an insured peril (cause of loss). Expenses that do not continue after the property loss would be deducted from the calculation. Expenses that are incurred to allow the farm operation to continue immediately following the damage or destruction of insured property would be included in the calculation of the loss.

Some forms of this endorsement respond only if the building is damaged or destroyed, some if only the livestock is destroyed and some if either event happens. The benefit will only be provided for a reasonable amount of time to repair or replace the property, usually subject to a maximum time period of up to 12 months. The endorsement usually provides for professional fees, subject to a cap, to assist with presentation of financial information to substantiate the claim. As the trend to larger, more specialized farms increases, it is suggested this endorsement be carefully considered.

Power Surge endorsement is offered by some companies. It is available for residence and farm buildings.