1. Forms
2. FP
3. FP-03-04

What the form is

The FP 03 04 Single Farm Property Per Occurrence Deductible endorsement is designed to prevent the application of multiple deductibles when a single event (occurrence) damages property covered under different farm property coverage forms within the same policy. It amends the deductible section in forms like the Mobile Agricultural Machinery and Equipment Coverage Form (FP 00 30), Livestock Coverage Form (FP 00 40), or the Other Farm Provisions Form (FP 00 90). Essentially, if a covered loss impacts items insured under more than one of these forms, the insured will only be responsible for the single highest deductible applicable to any of the involved coverages for that specific occurrence.

Classes of business it applies to

This endorsement is used in the agricultural sector for farms that have multiple types of property insured under different coverage forms within their farm policy. For example:

• A farm might have its mobile agricultural equipment insured under FP 00 30 and its livestock insured under FP 00 40. If a single tornado (one occurrence) damages both the equipment and some livestock, without this endorsement, the insured might have to pay separate deductibles for the equipment damage and the livestock loss. With the FP 03 04, only the higher of the two deductibles would apply.
• Similarly, if a farm policy includes coverage for farm dwellings (FP 00 12), other farm structures (FP 00 14), and mobile agricultural machinery (FP 00 30), and a fire damages all three, this endorsement would consolidate the deductibles.

Special considerations

The FP 03 04 endorsement is typically attached when a farm policy includes more than one of the specified property coverage forms, such as FP 00 12, FP 00 13, FP 00 14, FP 00 30, or FP 00 40. Its primary purpose is to provide financial relief to the insured by limiting their out-of-pocket deductible expenses in the event of a large loss affecting multiple categories of insured farm property. It simplifies the claims process in such scenarios by clarifying that only one deductible (the highest one) applies per occurrence. It's important to ensure the base policy correctly lists all applicable coverage forms for this endorsement to function as intended.

Key information for agents and underwriters

For Agents: When structuring a farm policy with multiple property coverage parts, agents should consider recommending the FP 03 04 to provide better financial protection and clarity for the insured in case of a widespread loss. Explain to the client how this endorsement can prevent multiple deductible payments for a single event, making the policy more favorable. Ensure all relevant farm property coverage forms are correctly identified for the endorsement to apply properly.

For Underwriters: The use of this endorsement means that in a single large loss affecting multiple coverages, the insurer will collect only one deductible (the highest applicable one) rather than potentially multiple smaller ones. This should be factored into the overall risk assessment and pricing for policies covering diverse farm assets. While it doesn't change the limits of liability, it does affect the net amount paid by the insurer for certain multi-coverage losses. The presence of this endorsement signifies a policy structure with broader farm property exposures, which should be reviewed for adequate overall coverage limits and accurate rating of the individual coverage parts. Ensure the premium reflects the slightly increased risk of a lower total deductible collection in specific loss scenarios.