Final Agency Determination: FAD-006

FAD-006

Subject: The Raisin Crop Insurance Provisions, 7 C.F.R. § 457.124, subparts 9 and 10.

On February 8, 2001, the Risk Management Agency was asked for a final agency determination concerning the Raisin Crop Insurance Provisions for the 2000 crop year. Readers may access subparts 9 and 10 of §457.124 on RMA's web site to review policy language for which interpretation was requested.

Approved insurance providers must indemnify insureds for all losses of production under 7 C.F.R. § 457.124, when an insured is unable to pick up a raisin crop due to wet conditions caused by rain during the insurance period and the crop is subsequently damaged by rains occurring after the insurance period, irrespective of whether FCIC's Product Development Division and Insurance Services has authorized additional time for harvest under FCIC-25010-2 §79(A) because FCIC-25010-2 §79(A) was NOT published in the Federal Register and because FCIC-25010-2 §79(A) can not be used by RMA to limit payments to policyholders.

It is the final agency determination that under the terms of the raisin policy published at 7 C.F.R. § 457.124, damage to the raisins that results from the insured cause of loss ( rain), that occurred after the insurance period may be insurable provided that there is evidence that:

(1) Rains damaged the raisins during the insurance period;

(2) As a result of the rain that occurred during the insurance period, it was not possible to box and remove the raisins before the end of the insurance period;

(3) Rains occurred after the insurance period that caused further damage to the raisins; and

(4) As a result of the rain that occurred during or after the insurance period, it was not possible to box and remove the raisins at any time between the end of the insurance period and the subsequent rains that caused the additional damage.

If the above stated conditions are met, the loss to the raisins that occurs after the end of the insurance period is indemnifiable, provided that all other conditions of the policy are met.

It is the final agency determination that the policy provides additional time for harvest of the crop and no other authorization is needed. However, under sections V.G.2.g and V.H of the Standard Reinsurance Agreement, reinsured companies are required to comply with FCIC's loss adjustment procedures. Loss adjustment procedures are not required to be published in the Federal Register. Such procedures are only intended to be interpretative of the policy and to provide guidance on how loss adjustment should be done to ensure that all claims are adjusted the same, regardless of which reinsured company is doing the adjustment.

While reinsured companies must comply with FCIC's loss adjustment procedures, there is an apparent conflict between the terms of the policy and the loss adjustment procedures. It is the final agency determination that when such conflicts occur, the terms of the policy control.

In accordance with 7 C.F.R. § 400.765(c), this constitutes the final agency determination and is binding on all participants in the Federal crop insurance program.

Date of Issue: May 9, 2001