1. Forms
2. FP
3. FP-04-02

What the Form Is

The FP 04 02, Sump Overflow and Water Backup from Sewers or Drains (Coverages A, B, C and D only) endorsement is designed to add back a measure of coverage for losses resulting from water that backs up through sewers or drains, or overflows from a sump pump system. Standard property insurance policies, including farm policies, often exclude this type of water damage. This endorsement modifies that exclusion, providing a specific limit of coverage for such events. It applies to Coverages A (Dwellings), B (Other Private Structures Appurtenant to Dwellings), C (Household Personal Property), and D (Loss of Use) as defined in the FP 00 12 Farm Property–Farm Dwellings, Appurtenant Structures and Household Personal Property Coverage Form.

Classes of Business It Applies To

This endorsement is specifically used with the ISO Farm Program and applies to the personal lines aspect of a farm policy, rather than the commercial farming operations. It is relevant for:

• Farm owners who reside on their farm property.
• Insureds whose farm dwellings have basements with sump pumps.
• Properties located in areas with older sewer systems or those prone to sewer backups.

Real-world example: A farmer has a dwelling on their farm premises. During a heavy rainstorm, the municipal sewer system is overwhelmed, and water backs up into the basement of the farmhouse, damaging stored personal property and requiring cleanup. This endorsement, if attached to their policy, would provide coverage for this damage up to the specified limit.

Special Considerations

• Coverage Limit: The endorsement typically provides a relatively low limit of coverage, often around $5,000, for any one occurrence. This limit is the maximum amount the insurer will pay for the direct physical loss or damage.
• Specific Peril: It covers a very specific peril that is otherwise excluded. It does not cover damage from floods, surface water, or other sources of water damage unless specifically stated.
• Eligibility: This endorsement is only available for use with the FP 00 12–Farm Property–Farm Dwelling, Appurtenant Structures And Household Personal Property Coverage Form.
• Exclusion Modification: It's important to understand that this endorsement modifies an existing exclusion in the base policy's Causes of Loss form. The 04 16 edition of the form references a revised water exclusion in the base policy that now also includes tsunami and storm surge.

Real-world example: If an insured has this endorsement with a $5,000 limit and experiences a sewer backup causing $8,000 in damage to their basement and personal belongings, the policy would pay up to $5,000, less any applicable deductible.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters should consider the age and condition of the dwelling's plumbing, the presence and maintenance of a sump pump, the property's history of water backup incidents, and the general susceptibility of the local area's sewer infrastructure.
• Client Needs: Agents should discuss this coverage option with farm-owning clients who have dwellings on their property, particularly those with basements or below-grade areas. It addresses a common coverage gap.
• Limit Adequacy: While the standard limit is often $5,000, agents should discuss with clients whether this is adequate for their potential exposure, considering cleanup costs and the value of property typically stored in basements or lower levels. Some insurers may offer options to increase this limit.
• Clarify Coverage: Agents must clearly explain to the insured what is and isn't covered, emphasizing that this is not flood insurance and that the limit is specific to the peril of sewer backup and sump overflow.
• Pricing: The premium for this endorsement is generally modest, reflecting the limited scope and amount of coverage.