1. Forms
2. FP
3. FP-10-39

What the form is

The FP 10 39, titled Earthquake Inception Extension, is an endorsement to a farm property insurance policy. Its primary purpose is to address a potential coverage gap related to earthquakes that begin shortly before a policy's inception. Standard policy language might exclude damage from an earthquake that started prior to the policy period, even if the damage itself occurs during the policy period. This endorsement extends coverage to include such damage, provided the initial earthquake shock began no more than 72 hours before the policy's effective date.

Classes of business it applies to

This endorsement is specifically designed for farm and agricultural businesses that have or are purchasing earthquake coverage (typically through Form FP 10 40, Causes of Loss – Earthquake Form). It applies to insureds who want to ensure there is no ambiguity or denial of coverage for an earthquake event that is ongoing or begins just before their new or renewing policy takes effect. For example, if an earthquake starts 48 hours before a farm's new policy period begins, and tremors continue causing damage after the policy inception, this endorsement would allow for that subsequent damage to be covered under the new policy, subject to its terms and limits.

Special considerations

Key considerations for this endorsement include:

• Timing is critical: The extension of coverage is strictly limited to earthquakes commencing within the 72-hour window prior to policy inception. Earthquakes starting outside this timeframe would not be covered for pre-inception damage.
• Requires underlying earthquake coverage: This endorsement is not a standalone earthquake coverage. It modifies an existing earthquake coverage provided by a form like FP 10 40. If the insured does not have the main Causes of Loss – Earthquake Form, this endorsement would not be applicable.
• Policy terms still apply: All other terms, conditions, limits, and deductibles of the underlying earthquake coverage and the main policy will still apply to any claims made under this extension.

For example, a farmer in an earthquake-prone region is renewing their farm policy. An earthquake begins the day before the new policy is set to start. Without FP 10 39, any damage occurring after the new policy starts but resulting from the pre-inception earthquake might be denied. With FP 10 39, the damage occurring during the new policy period from that specific, recent earthquake could be covered.

Key information for agents and underwriters

For Agents:

• It's crucial to explain this endorsement to clients in seismically active areas, especially when they are purchasing new policies or have recently switched carriers, as it closes a potential immediate gap in coverage.
• Ensure that the companion form, FP 10 40 (Causes of Loss – Earthquake Form), is also part of the policy if this endorsement is added.
• Document the discussion about this coverage and the 72-hour limitation.

For Underwriters:

• The primary risk associated with this endorsement is tied to the overall earthquake exposure of the insured property. Pricing considerations would typically be part of the premium for the main earthquake coverage (FP 10 40).
• While it extends the inception trigger, the likelihood of a significant earthquake perfectly straddling the policy inception within that 72-hour window is statistically specific, but the potential severity can be high.
• Verify that the correct edition date of the form is used and that it is compatible with the other policy forms.
• There are no unique state-specific applicability notes found for this form in the provided search results, suggesting it is a standard ISO form available broadly, though its adoption or modification could vary by insurer or state regulations not detailed in the search.