Wheaton, Ill., Jan. 21, 2009—A national insurance advisory organization and a major equipment breakdown reinsurer have teamed up to develop a new endorsement for providing equipment breakdown coverage for farms.

Among other things, the endorsement includes a "green" upgrade feature that covers costs incurred to repair and replace damaged property with property certified by a "green authority" to conserve natural resources, reduce energy or water consumption, reduce emissions of pollutants, or otherwise minimize environmental impact.

The American Association of Insurance Services (AAIS) and Mutual Boiler Re, Malvern, Pa., have collaborated to develop the "Equipment Breakdown Enhancement Endorsement" that is available to property/casualty insurers that use the AAIS Farmowners Program. (The endorsement is available as a sample; companies must take filing action to use it.)

This equipment breakdown endorsement provides coverage for loss to household property and specified types of farm property caused by equipment breakdown, up to a declared limit. (Traditionally, losses caused by breakdowns within equipment have been excluded from coverage under standard property policies. In recent years, there has been a move to add such coverage by endorsement.)

Incidental coverages provided in the endorsement pay for costs of expediting expenses, pollutant clean-up and removal, refrigerant contamination, chlorofluorocarbon (CFC) refrigerants, and service interruption, as well as for loss to livestock and poultry.

The "Green Environmental and Efficiency Improvements" condition of the endorsement provides coverage beyond replacement cost for costs incurred to:

• Repair or replace damaged property with green alternatives;

• Hire an accredited green consultant to assist in green design and replacement;

• Attain certification or recertification by recognized green authorities; and

• Remove, recycle, and dispose of property in an environmentally sound manner.

In addition, the "Green Environmental and Efficiency Improvements" condition will extend coverage for additional living costs and loss of rent (if provided under the base policy) for any additional time required to repair or replace property to "green" standards.

For farm property, recovery under the "Green Environmental and Efficiency Improvements" condition is limited to 125% of what it would cost to repair and replace damaged property with property of like kind and quality, up to a built-in sublimit. For residential property, recovery is limited to $3,000 more than what it would cost to repair and replace damaged property with property of like kind and quality.

AAIS is a national insurance advisory organization that develops standardized policy forms and rating information used by more than 600 P/C insurers throughout the U.S. For information on affiliating with AAIS for use of its Farmowners Program, contact Rick Maka, director of marketing, at rickm@AAISonline.com or by calling 800-564-AAIS.

Mutual Boiler Re, a member of the FM Global Group, has been providing equipment breakdown insurance in North America for more than 130 years. For more information about Mutual Boiler Re and its "green" equipment breakdown coverage options, contact Sam Broomer, vice president, Mutual Boiler Re, at 800-814-4485, or by e-mail at samuel.broomer@MutualBoilerRe.com.

For more information on Mutual Boiler Re, go to www.mutualboilerre.com.