Managing Risk on the Farm - Ben Neville - American Heartland Insurance Agency, from the 2013 Missouri Pork Expo, February 13 - 14, 2013, Columbia, MO, USA. More presentations at http://www.swinecast.com/2013-missouri-pork-expo

1. 2013 MO Pork Expo

2.  Worked in the insurance industry for the last 14 years,
specializing in CAFO related risks.
 Active member of
◦ Independent Insurance Agents of Nebraska
◦ Platte Insurance Board
◦ Patriot Guard
◦ Eagles
◦ Elks
 An avid hunter & fisherman
 Live in Columbus NE with my wife Lisa and four children.
(Jackson, Grant, Taylor & Madison)

3.  Has specialized in insuring Concentrated Animal
Feeding Operations across the Midwest since
1981. Currently active in about 15 different states.
From North Dakota down to Texas & Colorado
over to Ohio
 Represent A rated carriers
 Offices in Nebraska & Iowa

4.  Blanket  Replacement Cost vs.
Actual Cash Value
 Co Insurance
 Inflation Guard
 Cause of Loss
◦ Basic
◦ Broad
◦ Special

5. Blanket coverage will lump property values together
so you have the total amount for any one loss.
Some companies will blanket by each individual
insured location and others will blanket all insured
locations together.

6. No Blanket
Blanket By Location Blanket All Locations
Coverage
You would have the
Since there are two All buildings at all
total of $600,000 that
barns at this location locations would be
you had the barn
the company would added together and you
insured for.
lump those values would have a total of all
together so you would the buildings.
have a total of $2,400,000
$1,2000,000.

7. Most building and business personal property
policies have a coinsurance clause which requires
the insured to carry insurance equal to at least a
specified percentage of the replacement cost value
of the property. If a loss occurs, and it is
determined that the amount of insurance carried is
less then the amount required a penalty could be
placed on the insured.

8. The replacement cost of a barn The replacement cost of a barn
is $500,000. If the policy has an is $1,000,000. The policy is
80 % Co Insurance Clause, the written on 100% Coinsurance,
building needs to be insured for but the building is only insured
at least $400,000 to avoid a for $900,000. In this situation
coinsurance penalty. the insured would be hit with a
coinsurance penalty for the
$100,000 that they are
$500,000 X .80 = $400K
underinsured.
Example 1 Example 2

9. Basic property insurance policies are written to
cover the perils of:
Fire, Lightning, Windstorm, Hail, Explosion,
Vandalism, Smoke, Sprinkler Leakage,
Aircraft or Vehicle Damage,
Riot or Civil Commotion,
Sinkhole Collapse, &
Volcanic Action

10. Broad Cause of Loss will also include the following
perils on top of the Basic perils:
Collapse due to the weight of ice, snow, or
sleet
Breakage of Glass, Water Damage, &
Falling Objects

11. The Broadest coverage is the special form, which
is best known as the all risk form. All risk covers all
causes of loss, except those specifically excluded
from coverage.
A couple of examples of excluded perils would be
flood & earthquake.
It is possible for a commercial property policy to
have more than one cause of loss form.

12. Property can be valued in several different ways. Insurance
companies commonly use two approaches to determine
value, which also determines how a loss will be paid; the
replacement cost method and the actual cash value method.
Insures consider Replacement Cost of a property item to
be the cost to replace it with new property of like kind.
Actual Cash Value is the replacement cost minus the
accumulated depreciation for age and condition .

13. Replacement Cost Example Actual Cash Value Example
The company would replace
your roof with like kind. Minus Since half of the life expectancy
your deductible. is used up the company would
deprecate your roof by 50%.
Minus your deductible.
$100,000 - $5,000(Ded)=
$95,000 $100,000 X 50% = $50,000 -
$5,000(Ded) = $45,000

14. An insured can insure a building for its full value at
the beginning of the policy year, but, by the end of
that year, it might not be covered for it’s full value.
This problem can be corrected by adding inflation
guard coverage. With inflation guard, the policy
limit increases at the end of the term by 3%.

15.  Occurrence Form vs.  Medical Payments
Claims Made Form
 Pollution Liability
 General Aggregate / Endorsement
Occurrence Limit
 CCC Endorsement
 Products / Completed
Operations  Umbrella

16. A policy is usually written on two main forms,
Occurrence & Claims Made.
For a claim to be covered under an Occurrence form
that claim needed to take place during the policy period.
For a claim to be covered under a Claims Made form
the claim needed to have taken place and turned in
during the policy period.

17. Occurrence Claims Made
In this particular example the Even though the claim happened
claim would be covered under an during the policy period there is
occurrence policy since it no coverage, since the claim
happened during the policy wasn’t turned in during that
period. The claim does not need policy period.
to be turned in during that policy
period.

18. General Aggregate Occurrence Limit
Limit is the total amount Is the total amount the
the company will pay out company will pay out for
during the policy period any one claim
General Aggregate Limit Occurrence Limit

19. Products Coverage - is provided for damages
arising out of products manufactured, sold, handled
or distributed by the insured.
Completed Operations - covers damages
occurring after operations have been completed or
abandoned, or after an item is installed or built and
released for it’s intended purpose.

20. Medical Payments Coverage pays medical
expenses resulting from bodily injury caused by an
accident on premises owned or rented by the
insured, or locations next to such property, or when
caused by the insured’s operations. These
payments are made without regard to the liability of
the insured.

21. This endorsement redefines that animal waste is
not considered a pollutant under the GL.

22. This endorsement removes the Care, Custody &
Control Exclusion under your liability policy. It
provides defense coverage in the event of a lawsuit
claiming negligence which result in the death or
destruction of livestock in your Care, Custody, or
Control . This coverage is written on a named peril
basis, with a policy limit of $1,000,000.

23. Provides additional liability coverage over the
underlining liability, auto, & employers liability.
Usually written in million dollar increments up to 5
Million in coverage.
* We will not write in excess of our pollution liability
endorsement.

24.  Farm Employers  Business Income / Extra
Liability vs. Workers Expense
Compensation
 Livestock Transit
 Builders Risk
 BI Utility Service
 Earthquake Interruption
 Flood
 Appearance Damage
Wavier
 Terrorism  M&E Breakdown

25.  Farm Employers  Workers Comp – is
Liability – provides more broad than FEL.
minimal coverage for It will provide cash
benefits and medical
injured employees.
care if an employee
becomes disabled
because of an injury or
illness related to the job.

26. Provides coverage for the structures while they are
under construction. This endorsement will also give
you coverage for theft of building materials.

27. Extends your cause of loss to include damage that
results directly from an earthquake. Coverage is
provided for replacement of buildings only. All
earthquake shocks that occur within a 160 hour
period (one week) are considered to be a single
occurrence. A separate deductible applies and is
determined by the value of the insured property.

28. Flood Insurance is covered under a separate policy
underwritten by the federal government.

29. Provides coverage for a Certified Act of
Terrorism
Certified Act of Terrorism – an act of terrorism
that must cause losses in excess of 5 million
dollars. It must have been committed by an
individual or individuals acting on behalf of any
foreign persons or foreign interest to coerce the
government or populations of the United States.

30.  Business Income pays the actual loss of business
income sustained by the insured because of a
necessary suspension of the insured’s operation
during the period of restoration following a loss.

31. This endorsement adds the peril of Transit onto the
policy.

32. Provides business income and extra expense
coverage due to utility service interruption.

33. Changes policy wording to state that coverage does not
apply to appearance or cosmetic loss or damage to the
metal roofing material caused by or resulting from
windstorm or hail.
* A 10% credit is applied to the property section.

34. Adds the following perils to the policy:
Mechanical Breakdown
Electrical Arcing &
Steam Explosion

35. Informational statements regarding insurance coverage are for
general description purposes only. These statements do not amend,
modify or supplement any insurance policy. Consult the actual policy
or your agent for details regarding terms, conditions, coverage,
exclusions, products, services and programs which may be available
to you. Your eligibility for particular products and services is subject to
the final determination of underwriting qualifications and acceptance
by the insurance underwriting company providing such products or
services.