What the form is
The FP 01 60, titled "Exclusion of Loss Due to Virus or Bacteria," is a mandatory endorsement used with Insurance Services Office (ISO) farm insurance policies. Its primary function is to explicitly exclude coverage for any loss or damage directly or indirectly caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness, or disease. This form acts as an absolute exclusion for these types of perils.
Classes of business it applies to
This endorsement applies to various types of farming operations that have coverage under the ISO Farm Program. Specifically, it is attached to policies that include any of the following coverage forms:
- FP 10 60 – Causes of Loss Form – Farm Property: This form outlines the covered perils for general farm property.
- FP 00 30 – Mobile Agricultural Machinery and Equipment Coverage Form: This covers items like tractors, combines, and other mobile farm equipment.
- FP 00 40 – Livestock Coverage Form: This provides coverage for farm animals.
For example, a dairy farm with coverage for its buildings, milking equipment (under mobile machinery if applicable), and cattle would likely have this endorsement attached if using the standard ISO farm policy structure.
Special considerations
The FP 01 60 is a mandatory attachment under the specified farm coverage forms unless alternative endorsements FP 05 30 (Exclusion of Loss Due to Virus or Bacteria; Limited Coverage for Fungi, Wet Rot, Dry Rot and Bacteria–Property) or FP 05 31 (Exclusion of Loss Due to Virus or Bacteria; Limited Coverage for Fungi, Wet Rot, Dry Rot and Bacteria – Farm Dwellings, Appurtenant Structures and Household Personal Property) are used instead. These alternative endorsements also exclude virus and bacteria but may provide a very limited amount of coverage for fungi, wet rot, and dry rot. It is crucial to note that if FP 01 60 is attached, the exclusion is absolute for virus and bacteria.
Key information for agents and underwriters
For Agents: It is essential to explain the impact of this absolute exclusion to the insured. Clients need to understand that losses stemming from events like an avian flu outbreak causing culling of poultry, or bacterial contamination rendering produce unsellable, would not be covered if the proximate cause is the virus or bacteria itself. If some level of coverage for fungi or bacteria is desired and available, the agent must ensure the correct alternative endorsements (FP 05 30 or FP 05 31) are used in place of FP 01 60.
For Underwriters: This endorsement significantly mitigates the insurer's exposure to systemic agricultural losses caused by widespread animal or plant diseases. When FP 01 60 is part of the policy, the risk assessment for perils like viral or bacterial infections is straightforward – they are excluded. If the alternative endorsements FP 05 30 or FP 05 31 are considered, underwriters must carefully evaluate the limited buy-back provisions for fungi, wet rot, and dry rot, and price accordingly, while still recognizing the overarching exclusion for viruses and bacteria. The presence of this endorsement clarifies that the policy is not intended to cover these types of biological hazards.