1. Forms
2. AG
3. AG-04-03

What the form is

The AG 04 03 Vehicle Physical Damage Coverage endorsement is designed to be attached to the AG 00 01 Agricultural Capital Assets (Output Policy) Coverage Form. Its primary purpose is to add physical damage coverage for vehicles owned by the insured that are specifically listed and described in the endorsement's schedule. This endorsement essentially carves back in coverage for vehicles that would otherwise be excluded or limited under the standard AG 00 01 form, providing a way to insure them for direct physical loss or damage subject to specified limits and deductibles.

Classes of business it applies to

This endorsement is specifically used for agricultural businesses that are insured under an Agricultural Capital Assets (Output Policy). Examples include:

• Farms that own trucks, tractors, or other vehicles used in their agricultural operations.
• Agribusinesses that require physical damage coverage for their fleet of owned vehicles and prefer to have it integrated with their agricultural output policy.

It serves as an alternative to securing a separate commercial automobile policy for physical damage, though the coverage provided by a dedicated auto policy is often broader.

Special considerations

• Scheduled Vehicles Only: Coverage applies exclusively to vehicles that are listed and described in the endorsement schedule. There is no automatic coverage for newly acquired or replacement vehicles; these must be added to the schedule.
• Comparison to Commercial Auto Policy: The physical damage coverage provided by AG 04 03 may not be as comprehensive as that found in a standard commercial auto policy. It's crucial for the insured to understand these differences.
• Deductibles: The endorsement will specify the deductible that applies to each vehicle. In the event of a single loss involving multiple covered vehicles, typically the highest applicable deductible for any one of those vehicles will apply.
• Valuation: The basis of valuation (e.g., Actual Cash Value) will apply, and establishing the value of older, well-maintained agricultural vehicles can sometimes be challenging.

Key information for agents and underwriters

• Agent's Role: Agents should carefully explain the scope of coverage and its limitations, particularly the requirement to schedule all vehicles and the potential differences compared to a standalone commercial auto policy. Ensuring accurate descriptions, vehicle identification numbers (VINs), limits, and deductibles on the schedule is critical.
• Underwriting Considerations: Underwriters need to assess the specific vehicles being scheduled, their intended use, age, condition, and the requested limits. The definition of "vehicle" within the endorsement should be clearly understood. The lack of automatic coverage for new vehicles means regular policy reviews and updates are essential to avoid coverage gaps.
• Risk Assessment: The types of vehicles (e.g., private passenger autos, trucks, specialized farm vehicles) and their operational exposures will influence the risk profile and pricing.
• Potential Gaps: Without careful management and scheduling, significant coverage gaps can arise, especially when new vehicles are acquired or existing ones are replaced.