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3. AG-00-01

Form AG 00 01: Agricultural Capital Assets Program Coverage Form

The AG 00 01, Agricultural Capital Assets Program Coverage Form, is an Insurance Services Office (ISO) form designed to provide broad property coverage for medium to large agricultural accounts. It functions similarly to an "output policy," meaning it consolidates various coverages typically found in separate policies into a single, comprehensive form. This form aims to offer flexibility and address the diverse risks faced by modern agricultural operations. It covers direct physical loss or damage to covered property at covered locations, stemming from a covered cause of loss. The policy is generally written on an open perils basis, meaning it covers all risks of direct physical loss unless specifically excluded or limited.

Classes of Business

The AG 00 01 is tailored for a variety of agricultural and agribusiness operations. Real-world examples of businesses that would utilize this form include:

• Farms and Ranches: Covering dwellings, farm buildings (like barns and silos), machinery, equipment, and household personal property.
• Agricultural Processing Operations: Such as fruit/nut/vegetable packing, processing, and shipping facilities, or grain/rice/flour milling operations.
• Wholesale and Retail Agricultural Businesses: Including farm supply stores, feed manufacturers, and seed merchants.
• Specialized Agricultural Ventures: Wineries, breweries, distilleries, and aquaculture operations can also be covered.
• Other Agricultural-Related Businesses: The form is flexible enough to cover other businesses integral to the agricultural sector.

Special Considerations

There are several important aspects to consider when using the AG 00 01:

• Broad Coverage but with Exclusions: While providing extensive coverage, it's crucial to understand the form's exclusions and limitations. For instance, certain property like aircraft and watercraft (with limited exceptions for rowboats at the covered location), vehicles held for sale, and property in illegal transit are typically not covered. Harvested crops outside buildings may have specific limitations or require separate coverage.
• Built-in and Optional Coverages: The form includes several built-in additional coverages, such as debris removal, business income and extra expense, and limited coverage for fungi, wet or dry rot. Many optional endorsements are available to tailor the policy, for example, to add coverage for livestock, poultry, flood, or equipment breakdown.
• Declarations (AG DS 00): The AG DS 00, Agricultural Capital Assets (Output Policy) Declarations, is a related mandatory form that specifies limits for different types of property and chosen coverages. A supplemental declarations form (AG DS 02) can be used for higher limits on certain coverages.
• Output Policy Nature (OP 00 01): Its similarity to the OP 00 01, Capital Assets Program Coverage Form, means it's designed for larger, more complex risks requiring broader and more flexible coverage than standard property forms.
• No Coinsurance: A notable feature is that this form generally does not include a coinsurance clause, which can be an advantage for the insured.
• Valuation: Coverage is typically provided on a replacement cost basis.

Key Information for Agents and Underwriters

Agents and underwriters should be aware of the following when working with the AG 00 01:

• Underwriting Expertise: Due to the broad coverage, underwriting the AG 00 01 requires expertise in both commercial property and inland marine lines. Careful consideration of the high limits and extensive coverages is essential.
• Risk Assessment: The "perfect risk" rating approach is often used, where deficiency points are assigned based on how the actual risk compares to an ideal risk. This differs from standard property rating.
• Target Market: This form is best suited for medium to large agricultural enterprises that require comprehensive and flexible coverage beyond what standard farm policies offer.
• Coverage Gaps: While broad, agents should identify potential coverage gaps based on the specific insured's operations and recommend appropriate endorsements (e.g., AG 04 07 for Spoilage Coverage, AG 04 03 for Vehicle Physical Damage, or AG 10 04 for Flood Coverage).
• Understanding Exclusions: A thorough understanding of the property not covered and the specific exclusions is critical to avoid misunderstandings at the time of a claim. For example, loss or damage from utility service interruption originating away from the premises or due to utility equipment failure at the insured's location if it's utility property might be excluded. Intentional damage by employees may also be excluded.
• Agritainment Exposures: Modern farms often have "agritainment" exposures (e.g., corn mazes, petting zoos). Underwriters need to assess these unique liability and property risks, as specific exclusions or endorsements may apply.
• Related Forms: Familiarity with the declarations page (AG DS 00) and the general output policy (OP 00 01) is important for a complete understanding. The Common Policy Conditions (IL 00 17) also apply.