INFORMATIONAL MEMORANDUM: R&D-95-029 TO: All Reinsured Companies CFSA Headquarters, Program Delivery and Field Operations All Risk Management Field Offices FROM: Tim B. Witt Acting Director Research and Development Division SUBJECT: Policy Forms for Nursery for the 1996 Crop Year Attached are Nursery Crop Provisions for the 1996 crop year under the Common Crop Insurance Policy. Included is the Nursery Frost, Freeze, and Cold Damage Exclusion Option. The following are brief descriptions of significant changes made in these forms. Please refer to the policy forms for more complete information. Also attached is an updated Index of Policies in effect for the 1996 crop year. 1. Nursery Crop Provisions: (a) Provisions have been added in subsection 1.(a) to allow a maximum amount of insurance based on the highest reported monthly market value of inventory plus any additional inventory added during the year, or which is restocked, if approved by the insurer. (b) Provisions have been revised in subsection 1.(d) to change the annual loss deductible to crop year loss deductible and to replace the term "field market value" with the term "highest reported monthly market value." (c) Provisions have been added in subsection 1.(h) to clarify that the largest dimension is the distance measured at the top of the standard nursery container from one side directly across to the opposite side at the widest point. (d) Language has been added in subsection 1.(i) to clarify monthly loss deductible. (e) Language has been added in subsection 1.(j) to clarify monthly market value. (f) Language has been added in subsection 1.(n) to clarify that standard nursery containers are rigid containers not less than 3 inches across the largest dimension. (g) Language has been added in subsection 1.(q) to clarify that written agreements will not be approved for other than standard nursery containers. (h) Provisions have been added in section 2 to clarify that locations outside the 5-mile radius but within the same county may be designated as a separate basic unit. (i) Provisions have been added in subsection 6.(c) to clarify if the inventory changes within a specific month, the largest inventory expected for that month will be reported. (j) Provisions have been added in subsection 6.(f) to require the insured to give notice in writing before making a change in inventory value. (k) Provisions have been added in paragraphs 6.(f)(1) and 6.(f)(2) to specify that insurance will not attach on any proposed increase in inventory without being inspected and accepted if (1) the storage facilities have changed in any way since the previous inspection; or (2) the revisions include plants that have specific over-wintering storage requirements that were not previously reported on the nursery plant inventory summary. (l) Provisions have been added in subsection 6.(g) to clarify that a written agreement to add plants not listed on the Nursery Eligible Plant Listing must be requested by the sales closing date. (m) Provisions have been added in subsection 6.(h) to specify that any plants added to inventory that are not reported will not be insured. (n) Provisions have been added in subsection 7.(b) allowing the insured to pay annual premium in three (3) installments. (o) Language has been added in subsection 7.(c) to specify that additional premium for an increase in inventory is due and payable when the summary is approved. (p) Language has been added in subsection 7.(d) to clarify that premium will not be reduced due to a decrease in inventory unless such decrease results from the deletion of uninsurable inventory from the summary that was erroneously reported as insurable. (q) Provisions have been added in subsection 8.(a) to require that nursery plants be grown under an irrigated practice. (r) Language has been added in subsection 8.(c) to clarify that the nursery plant inventory will not include plants that produce edible berries, fruits, or nuts. (s) Language has been added in subsection 8.(d) to clarify that only nursery plants grown in standard nursery containers will be insurable. (t) Language has been added in subsection 8.(g) to allow plants not listed on the Nursery Eligible Plant Listing to be insured under written agreement. (u) Language has been added in subsection 8.(h) to clarify that stock plants will not be insured. (v) Provisions have been added to section 9 to specify that insurance attaches on the later of October 1 or the date the insurer accepts the inventory for insurance, provided 40 percent of the annual premium has been paid by such date. (w) Provisions have been added in subsection 9.(a) to clarify that insurance coverage ends when inventory is sold or otherwise removed unless the inventory is replaced and additional premium is paid. (x) Provisions have been added in subsection 9.(b) to clarify that one of the events that ends the insurance period is the date of final adjustment of a loss on the unit when the total indemnities paid for the unit equal the amount of insurance for the unit. (y) Provisions have been added to paragraph 10.(a)(9) to allow failure or breakdown of frost/freeze protection equipment or facilities as an insurable cause of loss. (z) Language has been added to paragraph 10.(b)(1) to clarify that brownout is not an insured cause of loss. (aa) Language has been added to paragraph 10.(b)(2) to clarify that failure of the power supply is not an insured cause of loss unless such failure is due to an insurable cause of loss. (bb) Language has been added to paragraph 10.(b)(5) to clarify that collapse or failure of buildings or structures are not an insured causes of loss. (cc) Provisions have been added in subsection 12.(a) to allow use of the highest reported monthly market value for the unit and the monthly loss deductible (not to exceed the remaining annual loss deductible) to calculate an indemnity. 2. Nursery Frost, Freeze and Cold Damage Exclusion Option: A Nursery Frost, Freeze, and Cold Damage Exclusion Option is available. This option excludes losses due to frost, freeze, and cold weather for plants that have specific over-wintering requirements when those over-wintering requirements will not be met. The Nursery Frost, Freeze, and Cold Damage Exclusion Option is not available for Catastrophic Risk Protection (CAT). Any questions or requests for a WordPerfect formatted diskette containing the Nursery Crop Provisions and Nursery Frost, Freeze, and Cold Damage Exclusion Option should be directed to the Product Development Branch at (816) 926-7730. 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