Wheaton, Ill., June 28, 2007—Farm insurers can now provide equipment breakdown coverage for a dwelling insured under a farmowners policy.

Two new equipment breakdown endorsements are being filed countrywide under the Farmowners Program maintained by the American Association of Insurance Services (AAIS), a national advisory organization that develops policy forms and rating information used by more than 600 property/casualty insurers.

The endorsements, which carry a proposed effective date of Oct. 1, 2007, were developed in conjunction with The Hartford Steam Boiler Inspection and Insurance Co., a leading provider of equipment breakdown insurance. The endorsements can be used with any equipment breakdown reinsurer, however.

The new Farmowners equipment breakdown endorsements are similar to ones introduced earlier in 2007 under the AAIS Homeowners Program. They provide insurance for losses arising from accidents within certain types of household equipment, such as furnaces, hot water heaters, and heating/air conditioning systems. Such losses are typically excluded from coverage under residential property policies.

As with their Homeowners counterparts, the Farmowners endorsements generally exclude coverage for losses to home computers, appliances, and entertainment equipment, but one of the two options extends coverage to kitchen and laundry appliances that are permanently installed in a dwelling.

Both of the Farmowners options also provide coverage, however, for property that can service both the dwelling and a farm operation, such as well pumps and outdoor electrical wiring.

The new endorsements extend three types of coverage to equipment breakdown losses:

• Coverage for direct physical damage to covered equipment up to the applicable policy limit;

• Coverage up to built-in sublimits (per day and aggregate) for loss of use of a farm dwelling; and

• Coverage up to a built-in sublimit for loss to refrigerated property insured as farm personal property.

Carriers can establish a separate physical damage limit, or higher limits for loss of use and refrigerated property, by entries on schedules that accompany the endorsements.

In 2004, AAIS introduced an endorsement option that can be used to provide breakdown coverage for equipment used in a farming operation and insured as farm personal property.

Given that, the latest filing includes a revision of the existing AAIS Farmowners equipment breakdown manual supplement to address both the new endorsements covering household property as well as the existing endorsements covering farm property.