- The policy between the producer and an insurance company isn’t just a standard insurance policy -- it’s federal law.
- Every provision has to be satisfied by the producer.
The producer occupies only one rung on the long crop insurance ladder. Above him is the USDA, the Risk Management Agency (RMA) and the Federal Crop Insurance Corporation. The relationship between the private insurance company offering crop policies and the RMA is governed by the Standard Reinsurance Agreement.
The policy between the producer and an insurance company isn’t just a standard insurance policy -- it’s federal law. As such, it must be strictly complied with. Every provision has to be satisfied by the producer.
“I represent farmers,” says Grant Ballard, an attorney with Banks Law Firm in Little Rock and a research consultant for the National Agricultural Law Center (NALC) at the University of Arkansas. “I’m basically the guy who gets the call when a crop insurance claim has been denied. The farmer will say, ‘This isn’t right. We want to hire you and get our money.’
“This places a huge burden on (producers). The policies are long and have small print, are complicated and aren’t fun to read. It’s impossible to know everything about federal crop insurance.”
But you do need to take the time to be aware of what the policy requires, says Ballard, who spoke at the Jan. 30NALC-sponsored Farm Bill, Crop Insurance, and Related Legal Issues for Row Crop Producers in Morrilton, Ark. “In the end, that isn’t your agent’s responsibility. Crop insurance agents do a lot of great work and shoulder a lot of the burden for producers. But it isn’t their responsibility in the end. Federal law places the responsibility on the producer.”
Ballard continues to receive phone calls and questions on certain insurance-related issues.
- Acreage reporting.
“A lot of times the insurance agent shoulders the burden of acreage reporting. That isn’t their responsibility. If they mess up, you can’t sue the crop insurance agency as recourse.
“It’s important you submit accurate and complete acreage reports. A simple over- or underestimation leads to a lower indemnity payment. In a tough year, that can be significant.”
Another thing that’s interesting: the RMA can get access to a producer’s Farm Service Agency documents.
“They’re both agencies under USDA and they can work back and forth. So, your FSA reports need to match your crop insurance documents as best as they can. If there’s a difference, you need to be able to document to the insurance company why that’s the case.”
- Timely reporting.
Ballard says a producer with a yield loss should report it in a timely manner and document it in writing.
“Once a loss is discovered, under most policies you can contact the agent verbally and render your first notice. I recommend you always follow that up in writing.
“You don’t want to be six months down the line needing money while the agent says ‘I misplaced the claim’ or ‘I didn’t get your call.’ Always document in writing.”
- Representative samples.
Be familiar with a crop’s specific insurance provisions. They require a producer to leave representative samples for a lot of crops in the field for the adjustment process. Make sure to leave the required representative samples.
“I saw a claim denied on this basis. The farmer had left what I’d consider a representative sample in the field but it wasn’t what was required under the specific crop provisions of the policy.
Another thing to be cognizant of is that sometimes a company will send multiple adjusters.
“They’ll come for a visit and then come back again. You need to make sure they’re done before destroying representative samples. The best way to do that is to get a written document from the insurance company saying, ‘We’re done adjusting this claim.’”
Again, Ballard reminds, the policy provisions are federal regulations. No one can waive those.
“If your insurance agent says, ‘This is what it says, but this is how we do it,’ don’t accept it. The agent or adjuster doesn’t have the authority to waive federal regulations. And if you get into a crop insurance dispute, the policy is what the arbitrator will follow.”
- Early planting dates.
For certain insured crops a policy will have an early and late planting date. Unfortunately, these don’t always jibe with a farm’s readiness.
“With current weather patterns a lot of producers in extreme southeast Arkansas are planting prior to the early planting date in policies. They’re planting corn in Chicot County in February.
“At first, you could think, ‘Well, the only thing I’m risking by planting before the early planting date is the insurance company won’t provide a replanting payment if I’m flooded out later.’ That’s true by the regulations.”
However, Ballard says by taking that position the producer runs a “significant risk” of having a claim denied on a “good farming practices” determination. “Many of the people who make the regulations don’t farm, they don’t travel around farm country much. I’d say insurance claims managers, in general, don’t travel much either.
“When they see you planted earlier than the planting dates in the policy, they can say, ‘That’s a violation of good farming practices and you never should have planted. We’re denying the whole claim.’
“That’s a risk you run. If you take that chance, go ahead and document that this was a reasonable time to plant and here’s why: soil temperature, moisture levels, etc.”
Crop insurance policies also require producers to maintain solid harvesting, production and marketing records for insured crops.
“As soon as you believe you have a claim, you need to begin gathering documentation. The provisions of a policy say you are required to have records at hand. Those include planting and replanting records, input records, production records, harvesting and disposition records on each unit.”
Policies also require producers to cooperate in the investigation of claims.
“That means if you’re sent a letter saying ‘we want these documents within 10 or 15 days’ you need to do your best to provide them. I’ve had good producers call and say, ‘I called the claims manager and he said I’d have 30 days.’ Then, a claim is denied due to no cooperation.
“As an attorney, my client says he called the company and tried to work with the company but didn’t get the information as soon as they wanted. But I have no documentation to show that happened. Again, make a record of everything you do in the adjustment process.”