1. Forms
2. FP
3. FP-10-14

What the form is

The FP 10 14 Theft Exclusion endorsement is an optional form used with various Farm Property Coverage Forms. Its primary purpose is to allow the insured to remove or exclude coverage for the peril of theft for specifically scheduled property at designated locations. This means that if the described property is stolen from the specified location, the insurance policy will not cover the loss. However, an important provision is that if an excluded theft leads to another type of loss that is covered by the policy (an ensuing loss), that subsequent damage would still be covered. For example, if thieves break into a barn (an excluded theft of barn contents) and in doing so, damage the barn door (a covered peril like vandalism or damage by burglars), the damage to the door may be covered even if the stolen contents are not.

Classes of business it applies to

This endorsement is designed for agricultural businesses, specifically those insured under the ISO Farm Program. It can be applied to various types of farm property, allowing for customization of coverage. Examples include:

• A farmer who stores old, low-value equipment in an unlocked outbuilding and is willing to self-insure the theft risk for that specific equipment to save on premium.
• A livestock owner who wants to exclude theft coverage for animals in a remote pasture that is difficult to secure, understanding the increased risk.
• Operations with specific, high-risk items where theft coverage might be prohibitively expensive or where the insured has other risk mitigation strategies in place.

The endorsement can be attached to any Farm Property Coverage Form and can apply to all classes of property if desired.

Special considerations

There are several important points to consider when using the FP 10 14:

• Rate Credit: Electing to exclude theft coverage typically results in a premium credit for the insured.
• Insurer Requirement: In some cases, an insurer might require this endorsement if they deem certain property or locations to have an unacceptably high risk of theft.
• Scheduling is Key: The endorsement requires careful and precise scheduling of the property to be excluded and the specific locations where the exclusion applies. Ambiguity can lead to coverage disputes.
• Ensuing Loss: It's crucial to understand the concept of ensuing loss. While the direct loss by theft is excluded, consequential damage from a covered peril that happens because of the theft attempt might still be covered.
• Specific Exceptions (04 16 edition): The 04 16 edition of the form includes an exception for livestock, poultry, bees, fish, worms, or other animals designated in the schedule, meaning theft might still be covered for these if not specifically excluded. It also clarifies that damage done to a building by burglars and loss from looting during a riot are covered even if theft is excluded.

Key information for agents and underwriters

For Agents:

• Thoroughly discuss the implications of excluding theft coverage with the insured. Ensure they understand what is and isn't covered.
• Clearly identify and schedule the specific property and locations to which the exclusion will apply.
• Explain the potential premium savings versus the risk of uncovered theft losses.
• Document the conversation and the insured's decision to exclude theft coverage.

For Underwriters:

• Assess the overall risk profile of the farm when this endorsement is requested or mandated.
• Verify that the scheduled property and locations are clearly defined to avoid ambiguity.
• Consider the moral hazard if theft is excluded for highly valuable, easily portable items without adequate on-site security.
• Understand that while theft is excluded, other perils associated with a theft event (like damage by burglars) might still be covered.
• Note that the deductible applies separately to each building that sustains loss.