Form AG DS 00: Agricultural Capital Assets Program Declarations
The AG DS 00, Agricultural Capital Assets Program Declarations, is a crucial document that personalizes and activates the AG 00 01 Agricultural Capital Assets Program Coverage Form. It serves as a summary or "roadmap" of the entire agricultural output policy, outlining the specific terms, coverages, limits, and other key details agreed upon by the insurer and the insured. This form is not the policy itself, but rather a foundational component that specifies how the broader coverage form (AG 00 01) applies to a particular insured.
Classes of Business It Applies To
The AG DS 00 is utilized for medium to large agricultural accounts and related agribusinesses. This includes a wide array of operations, such as:
- Farms and ranches
- Agricultural retail, wholesale, and service businesses
- Agricultural processing operations (e.g., dehydrating facilities, slaughterhouses, wineries)
- Grain storage facilities and mill operations
- Poultry operations and hatcheries
- Businesses involved in buying, selling, or storing agricultural products
- Manufacturers of goods from agricultural products
- Businesses selling goods or services to agricultural customers
- Operations like loggers, beekeepers, and aquaculture
Essentially, any agricultural-related business could potentially utilize this program, and the AG DS 00 would be the declarations page for their policy. It is designed for operations that require broad and flexible coverage for their capital assets.
Special Considerations
There are several important points to consider when using the AG DS 00:
- Relationship to AG 00 01: The AG DS 00 is intrinsically linked to the AG 00 01 Agricultural Capital Assets Program Coverage Form. The AG 00 01 provides the actual terms and conditions of coverage, while the AG DS 00 specifies the choices made by the insured, such as limits of insurance, covered property, and applicable deductibles. The AG 00 01 pays for direct physical loss or damage to covered property at covered locations from a covered cause of loss.
- Eligibility: While the program is broad, underwriters must first confirm if a specific risk meets the program's eligibility requirements. Writing an ineligible risk on this form can lead to issues with claims and distorted loss ratios. Individual insurance companies will have their own underwriting guidelines and appetite for certain types of agricultural risks.
- Output Policy Nature: This is an "output policy," meaning it's designed to provide broad coverage for the capital assets of an agricultural operation. It often combines features of various property coverage forms.
- Flexibility: The Agricultural Capital Assets Program is known for its flexibility in both coverage and rating. The declarations page (AG DS 00) will reflect these customized choices.
- Mandatory Form: The AG DS 00 (or a company-specific equivalent like AG DS 01) is a mandatory part of the policy.
- Accuracy is Key: The information on the declarations page, including the named insured, addresses, policy term, limits, and scheduled property, must be accurate. Errors can lead to claim disputes or inadequate coverage.
- Endorsements: The declarations page will list any endorsements that modify the standard AG 00 01 coverage. There are numerous optional endorsements available for the Agricultural Capital Assets Program to tailor coverage. For example, flood coverage can be added via endorsement AG 10 04, and the specifics would be detailed on a schedule like AG DS 03.
Real-world example: A large commercial winery owns buildings, processing equipment, inventory of bottled wine, and even a small guest house on the property used for business purposes. The AG DS 00 would list the specific coverage limits for the winery buildings, the business personal property (equipment and inventory), and potentially the dwelling if covered under the policy. It would also specify the chosen deductible and list any endorsements, such as one providing spoilage coverage (e.g., AG 04 07) for their temperature-sensitive wine inventory.
Key Information for Agents and Underwriters
- Risk Assessment: Underwriters need to carefully evaluate the specific risks associated with the agricultural operation. This includes the type of operation, construction of buildings, loss history, and financial stability. The AG DS 00 will reflect the outcome of this assessment through the specified coverages and limits.
- Pricing: The Agricultural Capital Assets Program often utilizes a unique and flexible rating plan, potentially using a deficiency point system that starts with a "perfect risk" and adjusts based on the specific characteristics of the insured operation. The final premium will be shown on the AG DS 00.
- Coverage Gaps: While the AG 00 01 provides broad coverage, it's crucial for agents to identify any potential coverage gaps based on the client's specific operations and ensure these are addressed, either through endorsements listed on the AG DS 00 or separate policies. The policy is an open perils policy, meaning it covers risks of direct physical loss unless specifically excluded or limited.
- Property Valuation: Accurate valuation of buildings, business personal property, and other capital assets is critical. The limits of insurance shown on the AG DS 00 should reflect the correct values to avoid underinsurance. Coverage is typically provided on a replacement cost basis.
- Deductibles: The AG DS 00 will specify the deductible amounts. The policy may have different deductibles for different types of losses or properties. The deductible applies once per occurrence.
- Built-in Coverages: The AG 00 01, as reflected on the declarations, includes several built-in coverages, such as for accounts receivable, property in transit, crime exposures, business income, debris removal, and an annual automatic increase in coverage for buildings and business personal property. The limits for these coverages will be detailed on the AG DS 00 or supplemental declarations (like AG DS 02 for higher limits on certain coverages).
- Monoline or Package: This coverage can be written as a monoline policy or packaged with other coverages like Commercial General Liability or Commercial Auto. The AG DS 00 will indicate if it's part of a package.
Real-world example for underwriters: When underwriting a large grain storage facility, an underwriter would pay close attention to the construction of the silos, fire suppression systems, and housekeeping practices. The AG DS 00 for this risk would reflect high limits for buildings and business personal property (the grain). The underwriter might also require a higher deductible due to the potential for large-scale loss. They would also verify that endorsements appropriate for a grain facility, perhaps related to spoilage or specific perils, are considered and listed on the declarations if elected.