1. Forms
2. FL
3. FL-10-35

What the Form Is

The FL 10 35, titled "Fungi or Bacteria Exclusion - Liability," is an endorsement used to modify insurance policies, most commonly Farm Liability policies. Its primary purpose is to exclude coverage for bodily injury (BI) or property damage (PD) that arises out of, is caused by, or is in any way connected to fungi or bacteria. This includes substances like mold, mildew, and other microbial matter.

Classes of Business It Applies To

This endorsement is predominantly used for:

• Farm and Agricultural Risks: Given its common attachment to Farm Liability policies, it's highly relevant for farmers and agricultural businesses. For example, if a farm stores grain that develops mold, leading to illness in livestock or humans, or damage to third-party property, this endorsement would typically preclude coverage for such liability claims.
• Other Commercial Risks: While strongly associated with farm risks, similar exclusionary language for fungi and bacteria can be found in or added to other commercial liability policies where insurers want to limit exposure to mold-related claims.

Special Considerations

• Addressing Mold Exposure: The development of this type of exclusion was largely driven by increasing concerns and claims related to mold and other microbial substances in the early 2000s.
• Edition Date Specifics: The 10 06 edition of this form, as noted by Oregon Mutual Insurance, involved a revision to replace the term "consumption" with "bodily consumption." This was to clarify that the exclusion's exceptions (if any related to consumption) did not extend to goods or products not intended for bodily consumption (e.g., mold on building materials).
• Potential for Food Poisoning Exception: It's crucial to examine the specific wording of the endorsement used. Some fungi/bacteria exclusions may contain an exception, meaning they do not exclude liability specifically arising from food poisoning caused by fungi or bacteria.
• Significant Coverage Gap: This endorsement creates a substantial gap in coverage. Insureds need to be fully aware that they will likely have no liability protection under the policy for claims related to fungi or bacteria.

Key Information for Agents and Underwriters

• Pricing and Risk Assessment: The presence of this exclusion can impact policy pricing. For businesses with high exposure to mold or bacteria (e.g., operations in humid environments, older buildings, certain agricultural processes), this exclusion might be mandatory, or coverage for fungi/bacteria (if available at all) would come at a significantly higher premium.
• Underwriting Guidelines: Insurers will have specific underwriting guidelines dictating when the FL 10 35 or a similar exclusion must be applied. This can depend on the class of business, loss history, and property inspections. It is an ISO multi-state form, indicating its availability for wider use.
• Managing Coverage Gaps: Agents should proactively discuss the implications of this exclusion with their clients. If an insured has a significant exposure and requires coverage, agents may need to explore specialized pollution liability policies or other limited buy-back options, if available in the market.
• Clarity is Key: Given the potential for misunderstanding, agents must clearly explain what is and isn't covered, particularly regarding any exceptions like the potential for food poisoning carve-backs.