1. Forms
2. FP
3. FP-05-60

What the Form Is

The FP 05 60 Equipment Breakdown Protection Coverage is an endorsement to a farm insurance policy that provides coverage for loss or damage to covered farm property resulting from the sudden and accidental breakdown of that equipment. This endorsement specifically addresses mechanical failure, electrical failure, and the failure of pressure or vacuum equipment. It essentially adds a crucial layer of protection for the operational machinery and systems vital to a farm's functioning.

Classes of Business It Applies To

This endorsement is designed for a wide range of farming operations that rely on mechanical, electrical, or pressurized equipment. Examples include:

• Dairy farms using milking machines, milk coolers, and automated feeding systems.
• Farms with climate-controlled environments for livestock or storage of perishable goods (e.g., refrigerated storage for produce).
• Operations utilizing irrigation systems, pumps, and generators.
• Farms with specialized machinery for planting, harvesting, or processing, where a breakdown could halt operations.
• Farms employing computer and communication equipment integral to their operations.

Special Considerations

Key considerations for this endorsement include:

• Covered Equipment: The form typically defines what constitutes 'covered equipment,' which often includes equipment used for generating, transmitting, or utilizing energy, as well as certain computer and communication systems.
• Covered Cause of Loss: The primary trigger for coverage is a 'breakdown,' which usually means the sudden and accidental physical damage to covered equipment that requires its repair or replacement. It is not intended for general wear and tear or deterioration over time.
• Spoilage and Contamination: The endorsement may also provide coverage for spoilage of perishable goods or contamination of covered property if it results directly from a covered equipment breakdown, such as the escape of a refrigerant.
• Exclusions: Like all insurance forms, there will be exclusions. It's important to understand what types of equipment or causes of loss are not covered.

For example, if a farm's main well pump suffers an electrical failure, leading to an inability to irrigate crops during a critical growth period, this endorsement could cover the cost to repair or replace the pump and potentially any resulting crop damage if spoilage coverage is applicable and triggered.

Key Information for Agents and Underwriters

For Agents:

• Identify clients whose farm operations are heavily reliant on machinery and equipment where a breakdown would cause significant financial loss or operational disruption.
• Explain the difference between this coverage and standard property coverage, which may not cover internal derangement or breakdown of machinery.
• Discuss the potential for consequential losses, such as spoilage, and how this endorsement can mitigate those risks.

For Underwriters:

• Assess the type, age, condition, and maintenance schedules of the insured's critical equipment. Well-maintained equipment may present a lower risk.
• Consider the farm's dependency on specific equipment; a breakdown of critical machinery in a highly automated operation could have a more severe impact.
• Evaluate the potential for spoilage claims based on the nature of the farm products (e.g., dairy, fresh produce) and the availability of backup systems.
• Pricing should reflect the scope of equipment covered and the potential severity of a breakdown.