1. Forms
2. FL
3. FL-04-30

What the form is

The Limited Farm Pollution Liability Extension Endorsement (FL 04 30) is an endorsement to the standard Farm Liability Coverage Form (FL 00 20). Its primary purpose is to modify the typically broad pollution exclusion found in farm liability policies, thereby granting back a limited amount of coverage for certain pollution incidents that occur on the insured's farm premises. This endorsement replaces the existing pollution exclusion in the FL 00 20 form. It's important to understand that this extension is limited and does not provide comprehensive pollution coverage.

Classes of business it applies to

This endorsement is designed for various types of farms and agricultural operations where there's a risk of on-premises pollution. Examples include:

• Farms that store and handle fertilizers, pesticides, or herbicides above ground, where accidental surface spills could occur.
• Operations where there's a potential for pollution release that doesn't originate from underground storage tanks or similar excluded sources.

For instance, if a farm experiences an accidental, sudden surface spill of agricultural chemicals (not from an underground tank) that causes bodily injury or property damage, this endorsement might provide coverage where the standard policy would not.

Special considerations

There are several important considerations when using the FL 04 30 endorsement:

• Exclusion for Underground/Underwater Sources: A significant limitation is that this endorsement typically still excludes pollution damage that arises from storage tanks, other containers, ducts, or piping that are, or were at any time, below or partially below the surface of the ground or water. This means leaks from underground fuel tanks or septic systems would likely remain excluded.
• Alternative to FL 01 63: The FL 04 30 is one of two endorsements that can modify the pollution exclusion in the FL 00 20. The other is the Amendatory Endorsement (FL 01 63). These two endorsements are generally not used together; the policy will typically include one or the other if pollution coverage is being modified.
• Aggregate Limit: The coverage provided by this endorsement is subject to a specific aggregate limit, which is the maximum amount the insurer will pay for all pollution incidents during the policy period, regardless of the number of claims. This limit will be shown on the endorsement itself or on the policy declarations page.
• On-Premises Focus: The coverage extension is primarily for pollution incidents on the insured location.

Key information for agents and underwriters

For Agents:

• It's crucial to discuss the specific pollution exposures of a farm client to determine if this limited endorsement offers meaningful protection. Explain its limitations clearly, especially the exclusion for underground sources.
• If a client has significant pollution exposures, particularly from underground tanks or large-scale chemical storage, a separate, more comprehensive pollution liability policy may be necessary.
• Ensure the client understands the aggregate limit applicable to this coverage.

For Underwriters:

• Carefully assess the farm's operations, including the types and quantities of potential pollutants stored and handled on-site, and their storage methods.
• The presence of underground storage tanks is a critical underwriting consideration, as this endorsement generally does not cover releases from them.
• Pricing should reflect the specific pollution exposures of the risk and the aggregate limit provided.
• Review the farm's loss history for any prior pollution incidents.
• Consider this endorsement as providing a measure of coverage for incidental, above-ground pollution events rather than a solution for significant environmental risks.