What the form is
The FL 04 32, titled "Additional Insured – Executors, Administrators, Trustees or Beneficiaries," is an endorsement to the Farm Liability Coverage Form (FL 00 20). Its primary purpose is to extend liability coverage to individuals who, due to the death of the named insured, take on roles such as executor, administrator, trustee, or become a beneficiary of the insured's estate. This ensures that these parties are protected against liability claims arising from the insured farm operations during the period of estate settlement or transition.
Classes of business it applies to
This endorsement is specifically designed for agricultural businesses, such as farms and ranches, that are insured under an ISO Farm Program. It is particularly relevant for:
- Individually owned farms
- Family farm operations
- Farms where estate planning involves trusts or designated beneficiaries who will manage or inherit the farm.
For example, if a sole proprietor farmer passes away, their appointed executor would be responsible for managing the farm's ongoing operations and liabilities until the estate is settled. This endorsement would provide that executor with liability coverage under the farm's policy for incidents arising from those duties. Similarly, if a farm is placed in a trust, the trustee managing the farm for the beneficiaries would be covered.
Special considerations
There are important conditions attached to this endorsement:
- As permitted by law: The coverage granted to the additional insureds applies only to the extent allowed by applicable law.
- Contractual limitations: If coverage is required by a contract or agreement (such as a will or trust document), the endorsement specifies that the coverage provided will not be broader or provide higher limits than what is stipulated in that contract or agreement.
- No increase in limits: The endorsement does not increase the overall limits of liability stated in the policy declarations.
- Timeliness: It's crucial to consider adding this endorsement proactively during estate planning or promptly upon the death of a named insured to avoid potential coverage gaps for those managing the estate's farm-related affairs.
For instance, if a trust document requires the trustee to maintain liability insurance with specific limits for the farm, this endorsement would provide coverage to the trustee, but not exceeding those contractually required limits if they are less than the policy's overall limits.
Key information for agents and underwriters
Agents: Should recommend this endorsement to farm clients, especially when discussing estate planning or when there are multiple family members involved in the farm who might take over responsibilities. It provides peace of mind that the individuals responsible for the farm after the named insured's death will have liability protection. Explain that it doesn't typically involve a significant premium increase, if any.
Underwriters: When this endorsement is added, it's important to understand that coverage is being extended to individuals who may or may not have the same level of farming experience as the original named insured. While the policy limits don't change, the scope of insured persons does. The key underwriting consideration is the continuity of competent farm management during an estate settlement. The risk profile of the farm itself doesn't inherently change due to this endorsement, but the individuals managing that risk might. Documentation of who these parties are (if known) can be beneficial, though the endorsement typically covers the roles (executor, trustee, etc.) rather than specifically named individuals.