Final Agency Determination: FAD-92

FAD-92

Subject: Request dated August 4, 2008, requesting a Final Agency Determination for the 2007 crop year regarding the interpretation of section 14(a)(2) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. § 457.8. This request is pursuant to section 7 C.F.R. part 400, subpart X.

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

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

Your Duties-

(a) In case of damage to any insured crop you must:

***
(2) Give us notice within 72 hours of your initial discovery of damage (but not later than 15 days after the end of the insurance period), by unit, for each insured crop;

The requestor also cited the preamble to the Basic Provisions which addresses the inability to modify a policy. The preamble to Basic Provisions states, as here pertinent:

The provisions of the policy may not be waived or varied in any way by us, our insurance agent or any other contractor or employee of ours or any employee of USDA unless the policy specifically authorizes a waiver or modification by written agreement.

The requestor’s interpretation of the above quoted provisions is that if the required notice of loss is not given to the approved insurance provider (AIP) within 72 hours of the initial discovery of damage and is given more than 15 days after the end of the insurance period, and the insured crop has been destroyed before the notice of loss is given, then the claim for indemnity by the insured producer must be denied, despite the lack of culpability or wrongdoing by the insured producer in failing to give the required notice. Even though the insured producer may not have been at fault in failing to give the required notice, the timely notice of loss may not be waived by the approved insurance provider if the crop has been destroyed before the notice of loss is given.

The Federal Crop Insurance Corporation (FCIC) agrees in part with the requestor’s interpretation.

FCIC agrees if the notice of loss required by section 14(a)(2) (Your Duties) of the Basic Provisions is not given to the AIP, and the insured crop is destroyed by the producer before the notice of loss is given, the claim for indemnity must be denied when the AIP does not have the ability to accurately adjust the loss. Further, section 14(b)(1) (Your Duties) of the Basic Provisions specifies the producer must obtain consent from the AIP before destroying any of the insured crop that is not harvested.

FCIC also agrees that the preamble to the Basic Provisions specifies that no provision of the policy may be waived by the AIP or any other party. This would include the notice of loss provisions.

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 2007 crop year.

Date of Issue: October 14, 2008