INFORMATIONAL MEMORANDUM:  R&D-95-008

TO:       All Reinsured Companies
          All Risk Management Field Offices
          CFSA Headquarters, State, and County Offices

FROM:     Tim B. Witt
          Acting Director
          Research and Development Division

SUBJECT:  Multiple Peril Crop Insurance Application Requirements for Farming 
          Operations Involving Spouses, Family Farms and Multiple Entities 
          Insured Under One Policy


ISSUE:

There has been confusion over the number of policies required to maintain 
eligibility for certain other Department of Agriculture (USDA) program 
benefits when spouses (or families living in the same household) are farming 
jointly or separately and when joint operations or other multiple entities are
involved.

BACKGROUND:

Recently, the Acting Deputy Administrator, Program Delivery and Field 
Operations of the Consolidated Farm Service Agency (CFSA) issued Catastrophic 
Risk Management Notice RM-5 to all CFSA State and County Offices.  This notice 
included the following:

     "A husband and wife can have one policy and a spouse can sign the policy 
     for the other insured.  However, if each receives farm program benefits 
     separately, they each will need an individual policy for linkage 
     purposes.  Generally speaking, every producer who receives an individual 
     farm program benefit must have an individual policy."

The Federal Crop Insurance Reform Act of 1994 (Act) states: 

    "To be eligible for any price support or production adjustment program, 
    the conservation reserve program, or any benefit described in section 371 
    of the Consolidated Farm and Rural Development Act, the producer must 
    obtain at least the catastrophic level of insurance for each crop of 
    economic significance grown on each farm in the county in which the 
    producer has an interest, if insurance is available in the county for the 
    crop."  


The Federal Crop Insurance Corporation (FCIC) 1995 Common Policy Basic 
Provisions (Section 10, Share Insured) allow an insured to obtain additional 
coverage for the landlord's or tenant's share of the crop.  The Act states 
that the producer must obtain insurance on each farm in which he has an 
interest; therefore, this policy provision provides the means by which the 
linkage requirement is met.

CFSA allows a husband and wife who farm together as a family farm, joint 
operations and partnership entities to receive separate farm program benefit 
checks.  For payment limitation purposes, benefits are combined to compute 
one amount towards the combined maximum limitation.

FCIC requires only one insurance contract when the insurable share is owned 
jointly or separately by the spouses.  Additionally, only one policy is 
written for joint operations, partnerships, etc.  
     
ACTION:

For multiple peril crop insurance purposes, existing procedure regarding 
insurable entities as provided in the Crop Insurance Policy, Catastrophic Risk 
Protection Handbook, Service Office Handbook for Catastrophic Risk Protection 
and other FCIC approved procedures will be followed.  This means that separate 
policies will only be required or allowed when the entities with insurable 
interests are separate as described in existing FCIC approved policies and 
procedures.  Eligibility for certain other USDA program benefits will not be 
affected as long as the crop share/interest of the appropriate legal entities 
are insured under at least the catastrophic level of coverage.