1. Forms
2. FP
3. FP-04-21

What the form is

The FP 04 21, Debris Removal Increased Limit of Insurance, is an endorsement to the Farm Property Coverage Form (e.g., FP 00 10). Its primary purpose is to provide additional coverage for the expenses incurred in removing debris of covered property damaged by a covered cause of loss. Standard farm property policies typically include a basic limit for debris removal (often 25% of the amount of the covered direct physical loss, plus an additional 5% of the limit of insurance if the direct loss and debris removal exceed the limit). This endorsement allows the insured to purchase a higher, specific dollar amount for that additional debris removal coverage if the built-in amount is anticipated to be insufficient.

Classes of business it applies to

This endorsement is specifically designed for commercial agricultural operations that are insured under a Farm Property Coverage Form. This can include various types of farms such as:

• Crop farms
• Livestock farms
• Dairy farms
• Orchards and vineyards

Real-world example: A large dairy farm has several old wooden barns. After a severe windstorm, one of the largest barns collapses. The cost to demolish the remaining structure, sort the materials, and haul away the debris is substantial due to the size and age of the barn. The standard debris removal coverage in their farm policy isn't enough to cover these high costs. If the farmer had the FP 04 21 endorsement with an adequate increased limit, the additional expenses for debris removal would be covered up to the selected endorsement limit.

Special considerations

• Assessment of Need: The necessity for this endorsement should be evaluated based on the type, size, and age of farm structures. Older buildings, larger structures, or those constructed with materials that are costly to remove (like concrete or potentially hazardous materials) may warrant higher debris removal limits.
• Policy Limits: It's important to understand that this endorsement increases a specific additional debris removal limit that applies after the initial debris removal coverage (which is part of the payment for the direct loss) is exhausted and often can apply even if the total of direct loss and debris removal exceeds the limit of insurance on the damaged property itself.
• Cost vs. Benefit: While there's an additional premium for this endorsement, the financial protection it offers can be significant in the event of a major loss, preventing substantial out-of-pocket expenses for cleanup.

Key information for agents and underwriters

• Agents: Agents should proactively discuss debris removal exposures with their farm clients. They should help clients estimate potential debris removal costs, considering factors like local disposal fees, accessibility of the site, and the nature of the farm structures. Recommending appropriate limits for the FP 04 21 is a key part of providing comprehensive coverage.
• Underwriters: When evaluating an application that includes this endorsement, underwriters should consider the overall risk profile of the farm. Factors such as the construction materials of the insured buildings, the farm's layout, and its susceptibility to perils that cause widespread debris (e.g., tornadoes, hurricanes, major fires) are important. The requested increased limit should be reasonable in relation to the potential exposure. Pricing should reflect the increased limit of liability being provided.
• Coverage Gaps: Without this endorsement, or with an inadequate limit, the insured could face a significant coverage gap if debris removal costs exceed the standard policy provisions. This is particularly true for catastrophic losses.