Final Agency Determination: FAD-057

FAD-057

Subject: Request dated January 18, 2006, requesting a Final Agency Determination for the 2005 and subsequent crop years regarding the interpretation of section 11 of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8, concerning the determination of the date on which the insurance period ends. This request is pursuant to 7 C.F.R. part 400, subpart X.

Section 11(b) of the Basic Provisions states:

Section 11. Insurance Period

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(b) Coverage ends at the earliest of:

(1) Total destruction of the insured crop on the unit; (2) Harvest of the unit; (3) Final adjustment of a loss on a unit; (4) The calendar date contained in the Crop Provisions for the end of the insurance period; (5) Abandonment of the crop on the unit; or (6) As otherwise specified in the Crop Provisions.

Because of the use of the term “or” in section 11(b), the requestor interprets the conditions set forth is subsections (1) through (6) as being disjunctive, meaning the enumerated events are alternatives to one another. Accordingly, the first event to occur triggers the end of the insurance period regardless of the calendar date contained in the Crop Provisions or any of the other conditions listed in section 11(b).

The requestor provided an example to illustrate their interpretation of section 11(b) in the context of the requirement contained in section 14(c) of the Basic Provisions to submit a claim for indemnity not later than 60 days after “the end of the insurance period.”

Section 14(c) of the Basic Provisions states, as here pertinent:

Section 14. Duties in the Event of Damage, Loss, Abandonment, Destruction, or Alternative Use of Crop or Acreage.

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(c) In addition to complying with the notice requirements, you must submit a claim for indemnity declaring the amount of your loss not later than 60 days after the end of the insurance period unless you request an extension in writing and we agree to such extension…

In the context of section 14(c) and the requirement that an insured submit “a claim for indemnity…not later than 60 days after the end of the insurance period,” the beginning of the 60-day submission period coincides with the date on which the insurance period ends as per section 11(b). For example, if the harvest concludes on October 5th, an insured must submit a claim for indemnity not later than December 5th, which is 60 days after October 5th. Concomitantly, the failure to submit a claim by December 5th would trigger the applicable delayed claim procedures. In addition, the fact that the calendar date set forth in the Crop Provisions is after October 5th is irrelevant for calculating the end of the insurance period and the calculation of the 60-day submission period.

The Federal Crop Insurance Corporation (FCIC) agrees in part with the interpretation. FCIC agrees the term “or” in section 11(b) means the enumerated events are alternatives to one another. Therefore, the first date any one of the events specified in sections 11(b)(1) through (6) occurs triggers the end of the insurance period. This means that in the example, if harvest concluded on October 5th, the insurance period ends on October 5th. The submitter is correct that once harvest is complete and the insurance period ends, the dates that any of the other events listed in sections 11(b)(1) through (6) subsequently occur, including the calendar date for the end of the insurance period, are irrelevant for calculating the 60-day deadline for submitting a claim in accordance with section 14(c). However, in the example provided, if harvest on the unit was completed on October 5th, the insured must submit a claim for indemnity not later than December 4th, which is 60 days after October 5th, rather than December 5th as stated in the interpretation submitted.

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 2005 and succeeding crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: February 22, 2006