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

Form AG DS 03 - Flood Coverage Schedule

1. What the form is

The AG DS 03 Flood Coverage Schedule is a crucial document in agricultural insurance. Its primary purpose is to detail the specific locations and corresponding coverage limits when flood insurance is provided for an agricultural capital assets policy. This schedule works in tandem with a flood coverage endorsement, such as the AG 10 04–Flood Coverage, to define the scope of protection against flood-related losses. It essentially itemizes the properties and the maximum amount the insurer will pay for flood damage at each listed location.

2. Classes of business it applies to

This form is specifically designed for the Agricultural Capital Assets (Output Policy) line of business. This means it applies to a wide range of agricultural operations, including, but not limited to:

• Farms and Ranches: Covering structures like barns, silos, grain bins, machinery sheds, and even farm dwellings if specified.
• Agribusinesses: This can include retail or wholesale operations related to agriculture, service providers in the agricultural sector, and other businesses with significant capital assets exposed to flood risk.
• Specific Agricultural Properties: The schedule can list various types of farm buildings, grain stores, and potentially even warehouses used for agricultural outputs.

Real-world example: A large commercial grain farm with multiple storage bins and equipment sheds across different parcels of land would use the AG DS 03 to list each structure and the specific flood coverage limit applicable to each, in conjunction with the AG 10 04 endorsement.

3. Special considerations

There are several important factors to consider when utilizing the AG DS 03:

• Mandatory for Flood Coverage Endorsement: This schedule is essential when the AG 10 04–Flood Coverage endorsement is attached to the main policy. Without this schedule, the flood coverage endorsement lacks the specific details of what is covered and for how much.
• Waiting Period: A critical point is the inception date of the Flood Coverage Endorsement listed on the schedule. Coverage typically does not apply to any flood that begins within 72 hours following this entered date, though there might be exceptions for renewals. This is similar to the 30-day waiting period often found in National Flood Insurance Program (NFIP) policies.
• Property in the Open: Coverage for business personal property in the open (e.g., harvested crops in piles, movable irrigation equipment not stored inside) is only provided if specifically described on this schedule.
• NFIP Interaction: If there is an existing National Flood Insurance Program (NFIP) policy, its details (insurer and policy number) must be listed. NFIP coverage is generally primary. If no underlying NFIP coverage exists, an "Underlying Insurance Waiver" box needs to be checked.
• Coinsurance: If the main policy is subject to coinsurance, the flood coverage will also be, unless waived by checking the specific box on the schedule.
• Excluded Property: Certain properties may be ineligible for flood coverage, such as those in Coastal Barrier Resources Act zones, or structures built on or over water like boathouses. Land itself is also typically excluded.
• Lender Requirements: For properties in high-risk flood zones with federally-backed mortgages, flood insurance is often mandatory.

Real-world example: A farmer purchasing a new agricultural property in a designated flood zone and obtaining a federally-backed loan will likely be required to secure flood insurance. The AG DS 03 would be used to specify coverage for their new barn and equipment shed, and they would need to be mindful of the 72-hour waiting period from the flood coverage inception date.

4. Key information for agents and underwriters

• Risk Assessment: Accurately identifying and listing all structures to be covered is paramount. Underwriters will scrutinize the locations listed, their flood zone designations (e.g., A, V, B, C, X), and the requested limits. The challenge for insurers often lies in accurately assessing flood risk on large properties where the risk can vary significantly across different areas of the land.
• Pricing: Premiums will be influenced by the flood risk associated with each scheduled location, the limits of liability, the chosen deductible, and any applicable surcharges. The move towards property-specific risk factors, like FEMA's Risk Rating 2.0 for NFIP, highlights the increasing granularity in flood risk assessment.
• Coverage Gaps: Agents should ensure clients understand what is not covered. Growing crops, livestock (unless specifically endorsed), and certain detached structures might be excluded or require separate coverage (e.g., federal crop insurance for growing crops). It's important to note that while harvested crops stored inside an insured building are typically covered as contents, growing crops in the field are not.
• Underwriting Guidelines: Underwriters will verify that the property is eligible for the coverage (e.g., not in a Coastal Barrier Resources Act area where flood insurance may be unavailable). They will also check for the presence of any other flood insurance and ensure the AG DS 03 is completed accurately, including the correct inception date and any waivers. Some insurers may have specific guidelines regarding property size or location that affect their willingness to offer flood cover.
• Aggregate Limits: Be aware that the flood coverage often has an aggregate limit, meaning the total payout for all flood losses in a policy period will not exceed this amount. Additionally, even if other policy coverages provide sublimits, these generally do not increase the overall flood limit specified.
• Importance of Accuracy: The description of scheduled locations and business personal property in the open must be precise to avoid claim disputes.