Final Agency Determination: FAD-71

FAD-71

Subject: Request dated December 22, 2006, requesting a Final Agency Determination for the 2006 crop year regarding the scope of the sections 6 and 8 of the Nursery Crop Insurance Provisions, published at 7 C.F.R. 457.162, along with the accompanying Nursery Loss Adjustment Handbook. This request is pursuant to section 506(r) of the Federal Crop Insurance Act, 7 U.S.C. 1501(s) and 7 C.F.R. part 400, subpart X.

PIVR is defined in section 1 of the Nursery Crop Provisions as:

The plant inventory value report, your report that declares the value of insurable plants in accordance with section 6.

Section 6 of the Nursery Crop Insurance Provisions states, in part:

6. PIVR.
…

(b) You must submit a PIVR for each insured practice, as applicable, and two copies of your most recent wholesale catalogs or price lists in accordance with subsection (k) to us with your application and on or before the sales closing date for each crop year following the year of application.

(c) The PIVR must include, by basic unit, all growing locations, basic unit value, coverage level selected, as applicable, and your share.

(d) Your PIVR, including any revised report, and your Peak Inventory Value Report will be used to determine your premium and amount of insurance.

(e) Your PIVR must reflect your insurable nursery plant inventory value by basic unit.

Section 8 of the Nursery Crop Insurance Provisions states, in part:

8. Insured Crop and Plants.
In lieu of the provisions of sections 8 and 9 of the Basic Provisions, the crop insured will be all nursery plants and plant types in each practice, contained on the Eligible Price List, in which you have a share, that you elect to insure,…

Section 3A(4) of the Nursery Loss Adjustment Handbook states, in part:

The PIVR may be revised no more than twice during the crop year. Insurance will not attach until 30 days after the AIP receives an acceptable revised PIVR. The revision can only be done to increase inventory values. If the insured selected basic units by plant type and submits a revised PIVR to add a new plant type basic unit that was not reported on the initial PIVR, the revised PIVR is not considered one of the two allowable revisions.

The requestor interprets the above-quoted provisions to mean that plant types not listed or identified on the insured’s PIVR are not insurable or eligible for an indemnity payment. For example, assume the PIVR submitted by the insured identified the insured plant types as deciduous shrubs, broad-leaf evergreen shrubs, and coniferous shrubs. The PIVR is not revised. During loss adjustment, the adjuster discovers the nursery also has plant types properly categorized as ground cover and vines, annuals, and liners. These plant types (ground cover and vines, annuals, and liners) would not be insurable under the insured’s nursery policy and would not be eligible for an indemnity payment.

The Federal Crop Insurance Corporation (FCIC) agrees with the interpretation submitted. Section 8 of the Nursery Crop Provisions state that crop insured are all the nursery plants and plant types the producer elects to insure. In accordance with section 6 of the Nursery Crop Provisions, such election is made on the PIVR or a revision to the PIVR. If a producer produces a particular plant type that is contained on the Eligible Plant List but does not include such plant type on the PIVR, it is an election not to insure that plant type. Therefore, the plant types omitted from the insured’s PIVR or revised PIVR are not insurable and would not be eligible for an indemnity.

In accordance with the 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 for the 2006 crop year.

Date of Issue: March 6, 2007