1. Forms
2. FP
3. FP-00-40

What the Form Is

The FP 00 40 Livestock Coverage Form is a named perils insurance contract designed to protect an insured's investment in livestock. Livestock is generally defined within the form to include animals such as cattle, sheep, swine, goats, horses, mules, and donkeys. This form can be structured to provide coverage on a blanket basis, which applies an overall limit to a class of animals with a sub-limit per animal, or on a scheduled basis, where individual animals or specific classes/types of animals are listed with a specific limit of insurance for each. The FP 00 40 can be issued as a standalone (monoline) policy or as part of a broader farm insurance package (multi-line policy). A key aspect of this form, particularly in its later editions (e.g., 04 16), is the distinction made for the peril of theft; for other covered causes of loss, "loss" typically means the death of the animal, whereas for theft, the death of the animal is not a prerequisite for coverage.

Classes of Business It Applies To

This form is primarily intended for individuals or businesses that own farm animals. While the principal prospects are farmers and ranchers, the form does not strictly require that the insured animals be owned exclusively in connection with farming operations. Real-world examples include:

• A dairy farmer insuring their herd of milk-producing cows.
• A rancher covering their beef cattle against various perils.
• An equine operation insuring their breeding horses.
• A hobby farmer with a small number of goats and sheep.

However, the Commercial Lines Manual often excludes eligibility for certain types of livestock operations, such as: range animals of the beef type and range sheep while on ranges; horses, mules, or donkeys used or bred exclusively for racing, show, or delivery; livestock while being transported by common or contract carrier to or from, or while at, stockyards or commercial feedlots; and insureds primarily conducting sales or auctions of livestock.

Special Considerations

Several important considerations apply when using the FP 00 40:

• Exclusivity: This form may not be used if livestock coverage is already provided under Form FP 00 13 (Farm Property - Farm Personal Property Coverage Form).
• Coinsurance: A coinsurance clause is typically included, requiring the insured to maintain coverage for at least 80% of the total value of the covered livestock at the time of loss. Failure to meet this requirement can result in a penalty, meaning the insurer may only pay a proportion of the loss. For example, if livestock valued at $100,000 is insured for only $60,000 (instead of the required $80,000), the insured would face a penalty at the time of a claim.
• Newly Acquired Livestock: If coverage is written on a scheduled basis, the form often provides coverage for newly acquired livestock for a limited period (e.g., 30 days). However, the insured must report these acquisitions to the insurance company within that timeframe and pay any additional premium due.
• Theft Coverage Revision: The 04 16 edition of the form significantly revised how theft losses are handled by separating theft as a distinct cause of loss. This change acknowledges that when an animal is stolen, its death cannot be immediately confirmed.
• Agritainment: The 04 16 farm program update introduced a definition of "agritainment" (tourism or entertainment on the insured location related to agriculture/aquaculture for compensation), which impacts all farm coverage forms, including how certain liability exposures related to livestock might be viewed.

Key Information for Agents and Underwriters

Agents and underwriters should focus on the following when dealing with the FP 00 40:

• Coverage Basis: Carefully assess with the insured whether blanket or scheduled coverage is more suitable for their specific livestock operation. Scheduled coverage offers more precise protection for high-value animals but requires more detailed record-keeping.
• Valuation and Coinsurance: Emphasize the importance of accurately valuing livestock and adhering to the 80% coinsurance provision to prevent underinsurance and potential claim penalties. Regular reviews of livestock values are recommended.
• Eligibility and Exclusions: Verify that the insured's operations fit within the eligibility guidelines and discuss any relevant exclusions, such as those for animals on open ranges or involved in racing.
• Reporting Requirements: For scheduled coverage, clearly explain the 30-day reporting requirement for newly acquired animals to ensure continuous coverage.
• Declarations Accuracy: The accuracy of the information on the Livestock Coverage Form Declarations (often FP DS 32) is critical, as the coverage form refers to it for limits, covered classes, and other specifics. Errors can adversely affect claim settlements.
• Available Endorsements: Consider relevant endorsements that can modify coverage, such as FP 04 56 (Collision Resulting in Death of Livestock), which can provide coverage for livestock killed in vehicle collisions on public roads or during transport. Another important endorsement to be aware of is FP 01 60 (Exclusion of Loss Due to Virus or Bacteria), which may be mandatory.