Crop Insurance CLAIMS: Where the Rubber Meets the Road

Crop Insurance CLAIMS: Where the Rubber Meets the Road

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The sole purpose of purchasing any type of insurance is to be paid for a loss. The sole purpose of Federal crop insurance is to be a safety net for crop losses due to weather-related events. What we really are insuring is our loss of revenue or income to the farm due to the loss of production of our crops. The sole purpose of this concept of a safety net is to provide enough income to get us into the next year. To help us cover our fixed costs so that we do not go into bankruptcy. It is not meant to provide us with enough money to buy a new truck or tractor or pay for our vacation.

When we understand that the highest coverage option for many Federal crop insurance programs is either 75% or 85%, leaving a 35% or 25% loss or what Federal crop insurance refers to as your deductible, can be and is still a significant loss.

Paying claims is where the rubber meets the road. The claim process procedures, like other aspects of Federal crop insurance, are full of regulations and rules. Some of these regulations and rules can make the time of payment from the time of loss seem like an eternity. Knowing the regulations and your duties and responsibilities will speed up the claim process ensuring a fair and full claim payment.

First, let us look at what is a covered claim. What is an insured cause of loss? Insured causes of loss (and any limitations) are stated in each crop’s policy provisions.

  1. Adverse weather conditions.
  2. Fire, due to natural causes.
  3. Earthquake.
  4. Insects, but not damaged due to insufficient or improper pest control measures.
  5. Plant disease, but not damaged due to insufficient disease control measures.
  6. Volcanic eruption.
  7. Wildlife, unless control measures have not been taken.
  8. Failure of irrigation water supply, if caused by an insured peril that occurs during the insurance.
  9. Other insured causes of loss due to natural disasters may be determined by the secretary of agriculture.

In the common crop insurance policy, you will find a section titled, “duties in the event of damage, loss, abandonment, destruction, or alternative use of crop or acreage”. Here you will find your duties and responsibilities to filing a crop insurance claim. Let us look at some of our duties and responsibilities and the problems that are caused by your failure to adhere to these policy procedures.

  1. A) In the case of damage or loss of production or remedy to any insured crop, you must protect the crop from further damage by providing sufficient care.

This is true in all insurance policies. If you suffer a fire in your home, you have the responsibility of protecting the undamaged portion of the house and your personal items. We may be required to board up broken doors or windows. We may be required to move unharmed items to a safe place. We cannot just abandon the home and walk away. Similarly, you must continue to care for the crop after a loss by maintaining acceptable farming practices such as fertilization, weed control, insect disease control. There could be a situation where the damage to your crop was so severe, like extreme drought, where it is not economical to further care for the crop. You cannot abandon care for the crop without permission from the insurance carrier. Continual and constant communication with your adjuster is key.

  1. B) When there is damage or loss of production you must give the insurance carrier notice within 72 hours of your initial discovery of the damage or loss of production. This is very important. We cannot wait until the crop season is over, fully harvest the crop, and then at some future date figure out that the actual production was lower than your insurance guarantee and then file a claim. An insurance provider may accept a late claim notice. They will have you sign a waiver stating they have the right to deny the claim due to late notice of loss.

It does state that you have 72 hours from your initial discovery. Let us say that we are insuring fruit such as apples or peaches and have a freeze in February, March, April, or even May.  You realize there is a potential for damaged production of your fruit due to the low temperatures. However, you may not actually see any damage until the fruit blossom or the fruit set. You do not necessarily have to file a notice of loss within 72 hours of the day of the freeze. We will not see the actual damage until the fruit blossom or the fruit set. So, filing a notice of loss after the fruit blossom or fruit set versus right after the low temperatures will not cause a claim notice to be considered late and therefore denied.

  1. C) Representative samples are portions of the insured crop that must remain in the field for examination and review by the insurance provider’s adjuster when making a crop appraisal, as specified in the crop provisions. In certain instances, the insurance provider may allow you to harvest the crop and require only that a sample of the crop be left in the field. The samples must be left intact until the insurance provider inspects them or until 15 days after completion of the harvest, whichever is earlier. The samples must be 10 feet wide and run the entire length of the field. A real big no-no is to leave samples in the headlands. The time to retain representative samples may be extended if it is necessary to accurately determine the loss.
  2. D) You must obtain consent from the insurance provider before you put the insured crop to alternate use. Boy, this is a big one! The most common situation where this rule raises its ugly head is with the corn crop. Simply, someone signs up for grain corn insurance coverage and plants his corn, and reports it as grain corn. Due to adverse weather, either it is way too dry or way too wet, the corn never matures correctly. The grower decides he’s going to chop his corn for silage. That is an example of the crop being put to alternate use. You must file a notice of loss. The insurance provider will then do an appraisal before you harvest the silage, determine what products to count is on a grain basis and compare that to your acreage guarantee. When production to count is less than your guarantee you will receive a loss payment. However, if notice of loss is reported after harvesting the corn as silage then the rule states that you automatically met your acre guarantee and no loss payment will be made, no matter what actual production you end up with.

Also, you must receive consent from the insurance provider when you put the reported acreage to another use. An example is when a grower plants wheat in the fall. The grower reports his wheat acreage by November 15 of that year. Some of the planted wheat emerges thin. This grower decides to destroy the weak wheat plantings and re-plants the ground to a different crop. You must file a notice of loss and get permission to destroy the reported crop acreage before you actually destroy the acreage.

Let’s look at an example, a grower plants 800 acres of wheat by the correct plant date, reports the acreage correctly by the acreage report date. The next spring 100 acres emerges weakly. He decides to destroy it but does not file a notice of loss or receive consent to destroy it. What is the outcome?

  • The grower’s premium bill will be based on the actually reported acres. In this example 800 acres. Not the harvested acreage of 700.
  • When he finally harvests the wheat the production of the 700 acres will be divided by the reported acres of 800 resulting in a reduction of APH for the next year.

 

49,000 bu. actually harvested divided by 700 acres that were left = 70 bu./acre.

49,000 bu. actually harvested divided by 800 acres reported = 61 bu./acre.

This is the amount that would be used for APH purposes.

 

  1. E) Submit a timely claim or notice of loss.

We’ve already looked at the 72-hour rule. There are other dates and time limits to be aware of. You must submit a claim no later than 60 days after the date the insurance period ends. The end of the insurance period is different for each crop in the state and is found in the special provisions for each crop.

Corn for grain       December 10       

Corn for silage     October 20

Soybeans             December 10

Fall Wheat            August 31

Apples                  November 5

Peaches               September 30     

Grapes                  November 20

Cabbage               November 25

 

For more information on crop insurance claims, call the office at 585 589-6236, for a copy of my book.