Form AG DS 02 - Supplemental Declarations: Agricultural Capital Assets (Output Policy)
1. What the form is
Form AG DS 02, titled Supplemental Declarations, is an insurance form used in conjunction with the AG DS 01–Agricultural Capital Assets (Output Policy) Declarations. Its primary purpose is to amend or supplement the limits of insurance provided by the main ISO Agricultural Capital Assets (Output Policy) Coverage Form (AG 00 01). Essentially, if an insured requires higher limits for specific coverages than those automatically included in the AG 00 01, the AG DS 02 form is used to document these changes. It is not a standalone policy document but rather an addition to the existing declarations page, providing a clear and organized way to specify these modified coverage amounts.
2. Classes of business it applies to
This form is specifically designed for the Agricultural Capital Assets (Output Policy) line of business, which caters to medium to large agricultural accounts. The types of businesses and operations that would typically utilize this policy and therefore potentially require the AG DS 02 for limit modifications include, but are not limited to:
- Large scale farms and ranches
- Agricultural processing operations (e.g., fruit/vegetable packing,
dairies)
- Grain storage facilities, including large grain elevators
- Wineries and vineyards
- Poultry and livestock operations, including hatcheries and slaughterhouses
- Businesses involved in the wholesale or retail of agricultural products
- Operations that manufacture goods from agricultural products
- Businesses providing services to agricultural or agribusiness customers
Real-world example: A large commercial winery might use the AG 00 01 policy for its overall property coverage. If they have a particularly valuable collection of aging wine or specialized processing equipment that exceeds the standard sub-limits in the AG 00 01, the AG DS 02 would be used to declare these higher specific limits of insurance.
3. Special considerations
There are several important points to consider when using Form AG DS 02:
- Not a mandatory form: The AG DS 02 is only used when necessary to modify limits. If the standard limits in the AG 00 01 and AG DS 01 are sufficient, this supplemental form is not needed.
- Used with AG DS 01: It is crucial to remember that this form supplements the main declarations page (AG DS 01) and the coverage form (AG 00 01); it does not replace them. All three documents should be reviewed together to understand the full scope of coverage.
- Specificity is key: The AG DS 02 must clearly identify which specific coverage limits are being amended. Ambiguity can lead to
disputes at the time of a claim.
- Underlying Coverage Breadth: The AG 00 01 policy typically provides broad, often "all-risk" or open perils coverage for various types of property, including buildings, business personal property, and potentially specialized agricultural assets. The limits declared on the AG DS 02 will apply to these broad coverages as specified.
Real-world example: A large grain storage operation might have a standard limit for debris removal in their AG 00 01 policy. However, due to the potential for a large-scale loss and the extensive cleanup that would be required, they might negotiate a higher debris removal limit. This increased limit would be documented on the AG DS 02.
4. Key information for agents and underwriters
For insurance agents and underwriters, Form AG DS 02 requires careful attention:
- Risk Assessment: When an AG DS 02 is requested, it signals that the insured has specific, higher-value exposures. Underwriters must thoroughly assess these exposures to ensure the requested limits are adequate and appropriate for the risk. This may involve detailed valuations of the specific property or coverage being increased.
- Pricing Implications: Amending limits upwards via the AG DS 02 will typically result in additional premium. The premium calculation should accurately reflect the increased exposure.
- Correlation with Base Policy: Agents and underwriters must understand how the limits on the AG DS 02 interact with the terms, conditions, and exclusions of the underlying AG 00 01 Coverage Form. For instance, if a limit for "Accounts Receivable" is increased, the definition and covered causes of loss for Accounts Receivable in the AG 00 01 still apply.
- Coverage Gaps: While the AG DS 02 increases limits, it does not broaden coverage or add new perils unless specifically stated and endorsed elsewhere in the policy. Agents should ensure clients understand that higher limits on the AG DS 02 do not negate underlying policy exclusions.
- Underwriting Guidelines: Insurers will have specific underwriting guidelines regarding the maximum limits they are willing to offer for various coverages under the Agricultural Capital Assets (Output Policy). The AG DS 02 allows for documentation of these insurer-approved higher limits. The broad nature of the AG 00 01 means underwriters need expertise in both commercial property and inland marine lines.
Real-world example: An agent is working with a large farming operation that has recently invested in highly specialized, expensive mobile agricultural equipment. The standard limit for such equipment in their AG 00 01 policy is insufficient. The agent would work with the underwriter to determine an appropriate increased limit, and this new limit would be documented on the AG DS 02. The underwriter, in turn, would assess the type, value, usage, and storage of this equipment to justify the higher limit and calculate the appropriate premium.