Final Agency Determination: FAD-033

FAD: 033

Subject: Request dated June 4, 2004, for Final Agency Determination for the Common Crop Insurance Policy (Basic Provisions), section 2(e)(8)

Section 2(e)(8) of the Basic Provisions states:

2. Life of Policy, Cancellation, and Termination.

(e) If any amount due, including administrative fees or premium, is not paid or an acceptable arrangement for payment is not made on or before the termination date for the crop on which the amount is due, you will be determined to be ineligible to participate in any crop insurance program authorized under the Act in accordance with 7 CFR part 400, Subpart U.

(8) After you again become eligible for crop insurance, if you want to obtain coverage for your crops, you must reapply on or before the sales closing date for the crop (Since applications for crop insurance cannot be accepted after the sales closing date, if you make any payment after the sales closing date, you cannot apply for insurance until the next crop year); and

The requestor interprets section 2(e)(8) to mean that if a producer is ineligible at the first sales closing date (SCD) for a particular crop because of a delinquent debt, the producer may subsequently become eligible by paying the debt and may then timely apply for coverage by a later SCD on the same crop for the remainder of the crop year.

The Federal Crop Insurance Corporation (FCIC) agrees with the submitted interpretation. If the sales period is still open when the insured pays the debt, section 2(e)(8) would permit the insured to submit a new application before the SCD. Insurance would be prospective only and attach after the application has been filed. This means that any loss incurred between the time the policy was terminated until insurance attached after the new application would not be covered.

The submitted interpretation included an example in which a nursery policy was terminated on September 30, 2003, for failure to pay the 2003 crop year premium. The producer then paid the premium on October 30, 2003. The insured could submit a new application for insurance on or before May 31, 2004, and receive coverage for the remainder of the 2004 crop year. However, the insured would not be covered for any losses that occurred after September 30, 2003, and the date insurance attached after the new application was submitted.

In accordance with 7 C.F.R. 400.765 (c), this Final Agency termination is binding on all participants in the Federal crop insurance program for the 2004 and subsequent crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: September 3, 2004