Final Agency Determination: FAD-038

Subject: Request dated November 1, 2004, requesting a Final Agency Determination for the 2003 and succeeding crop years regarding the interpretation of section 9(c) of the Sunflower Seed Crop Insurance Provisions, published at 7 C.F.R. 457.108, as it pertains to the payment of replant claims when one of the persons sharing in the crop purchased Catastrophic Risk Protection (CAT) coverage.

Section 9(c) of the Sunflower Seed Crop Insurance Provisions states, as here pertinent:

9. Replanting Payments

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(c) When more than one person insures the same crop on a share basis, a replanting payment based on the total shares insured by us may be made to the insured person who incurs the total cost of replanting. Payment will be made in this manner only if an agreement exists between the insured persons which:

(1) Requires one person to incur the entire cost of replanting; or

(2) Gives the right to all replanting payments to one person.

Section 8 of CAT Endorsement states:

"Notwithstanding any provision contained in any other crop insurance document, no replant payment will be paid whether or not the replanting of the crop is required under the policy."

The requestor interprets the term "agreement" in section 9(c) of the Sunflower Seed Crop Insurance Provisions to mean a written agreement between the parties. Accordingly, absent a written agreement between the persons who have a share in the insured crop, no person is entitled to payment reflecting the total cost of replanting.

Additionally, the requestor stated that assuming that there exists an "agreement" as required by section 9(c)(1) or (2) of the Sunflower Seed Crop Insurance Provisions entitling one shareholder, the tenant, to all replanting payments, if the tenant purchased buy-up coverage but the landlord, the other shareholder, only purchased CAT, then, under section 8 of the CAT Endorsement, the landlord is not eligible for a replant payment and the tenant may not recoup the total cost of replanting. In this case, the tenant is entitled to a replant payment commensurate with the share insured by the tenant.

The Federal Crop Insurance Corporation (FCIC) agrees with the interpretation that the term "agreement" in section 9(c) of the Sunflower Seed Crop Insurance Provisions means a written agreement between the parties. Without a written agreement, there is no way to document or verify that such an agreement exists. Since an agreement is a prerequisite to pay rent, evidence of such an agreement is necessary.

FCIC also agrees with the interpretation of section 9(c) of the Sunflower Seed Crop Insurance Provisions. If an agreement exists entitling one shareholder to all replanting payments who purchased coverage greater than CAT but the other shareholder only purchased CAT, the shareholder with coverage greater than CAT is only entitled to a replant payment commensurate with his/her insured share.

The provisions contained in section 9(c) of the Sunflower Seed Crop Insurance Provisions states that a replanting payment will be paid based on the total shares "insured" by the insurance provider. Since the provisions in section 8 of the CAT Endorsement prohibit replant payments for CAT policies, the shareholder with CAT policy's share is not eligible for a replanting payment. Therefore, the shareholder who purchased coverage greater than CAT can only be paid for his/her share of the replanting payment.

In accordance with 7 C.F.R. 400.765(c), this Final Agency Determination is binding on all participants in the Federal crop insurance program for the 2003 and succeeding crop years.

Date of Issue: February 11, 2005