What are key coverage differences between
a Homeowner and Farmowner policy?
There are several key differences in coverage between a Homeowners policy and a Farmowners policy. Both policies cover your personal property and liability exposures but the scope of coverage can differ greatly. Here are some of the most significant differences.
Care, Custody & Control
Homeowner policies contain an exclusion for non-owned property in the care, custody & control of the insured. This exclusion applies to any non-owned horse on your property, even if there for a short period of time.
A Farm/Ranch Package policy can be endorsed to include livestock care, custody & control coverage with limits starting at $5,000 per horse and $25,000 per occurrence Higher limits are available upon request.
Business Pursuits Exclusion
Home-based business owners may mistakenly believe their homeowners policy will cover their business activities. All standard homeowners policy contains a “business pursuit” exclusion or “professionals services” exclusion. These exclusions specifically state that the policy does not cover business activities at home.
If a homeowner boards a horse or gives a few lessons in exchange for money, feed or anything of value he is engaging in a business pursuit and these activities are excluded from the liability coverage of a homeowners policy.
A Farm Package policy uses the ISO or AAIS Commercial General Liability forms to extend proper commercial and business liability coverage. This form does not contain a Business Pursuit limitation as it is intended to cover loss arising from bodily injury or property damage which results from equine business activities as described in the declarations of the policy.
Homeowners Property Limitations
A homeowner policy significantly limits coverage for Business Property and Appurtenant Structures .
Appurtenant or Other Structures – Coverage for appurtenant structures (covered as “other structures” under Coverage B on the policy) is excluded for any structure which can be used in whole or in part for business purposes on a homeowners policy. This includes any farm buildings such as barns, hay storage and tack rooms whether or not they are used for a commercial venture. That means that if you are boarding, training, breeding or even if you only have personal horses, your homeowners policy may not insure those buildings for any losses.
Additionally, “Coverage B” is usually limited to ten percent of the limit of the dwelling. In most cases, this amount is not adequate to replace your equine structures.
Business Personal Property
Coverage for business personal property (such as tack, hay fed to boarded horses, and other equipment used for the care of horses) is typically limited to $2,500 on the premises, $250 off the premises. This limit is rarely adequate to replace this type of equine property, especially when off the insured location.
A Farm Ranch Package policy lists farm buildings and structures individually (Coverage G) and farm personal property specifically (Coverage E or F) for their true replacement values so that there is no mistaking the intent of the property to be covered, and no business limitation on the use of the property. In addition, miscellaneous tack and equipment you own is covered for at least 25% of that limit off premises (limit off premises varies from policy to policy).