Final Agency Determination: FAD-169

FAD-169

Final Agency Determination: FAD-169

Subject: Request dated July 12, 2012, requesting a Final Agency Determination for the 2009 and 2010 crop years regarding section 9(b) of the Nursery Crop Insurance Provisions, published at 7 C.F.R. 457.162. This request is pursuant to 7 C.F.R. part 400, subpart X.

Background:

Section 9(b) of the Nursery Crop Insurance Provisions states, in relevant part:

9. Insurance Period

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(b) The insurance ends at the earliest of:

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(2) Removal of bare root nursery plant material from the field;

(3) Removal of all other insured plant material from the nursery; or

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Interpretation Submitted

The requestor believes the provisions contained in sections 9(b)(2) and (3) end the coverage period for nursery crops when the insured removes the crops from the field or from the nursery. Further, if the insured removes the nursery material after a covered loss event but prior to the filing of a notice of loss, any such nursery material removed by the insured is not entitled to coverage or an indemnity. In this regard, if the insurance company cannot adjust and examine the damaged plants in the field, the insurance company cannot assess the amount of damage caused by the loss event. Similarly, the removal and transporting of the nursery plants may cause or exacerbate damage to the plants. Any damage that does not result from a natural occurrence is not covered under the policy.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees with the requestor. Insurance ends at the earliest of removal of bare root nursery plant material from the field, removal of all other insured plant material from the nursery, or other events as contained in section 9(b). FCIC also agrees that if the insured removes the nursery material from the nursery after damage has occurred; the nursery material removed may not be entitled to an indemnity.

Section 11 of the Nursery Crop Insurance Provisions states, in relevant part:

11. Duties in the Event of Damage or Loss

(a) In addition to your duties contained in section 14 of the Basic Provisions,

(1) You must obtain our written consent prior to:

(i) Destroying, selling or otherwise disposing of any plant inventory that is damaged;

or

(ii) Changing or discontinuing your normal growing practices with respect to care and maintenance of the insured plants.

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(b) Failure to obtain our written consent as required by section 11(a)(1) will result in denial of your claim.

Therefore, if the insured fails to obtain written consent from the insurance company before the insured destroys, sells, or otherwise disposes of any plant material that is damaged or before the insured changes or discontinues normal growing practices, any claim for damage to such plant material must be denied.

FCIC also agrees coverage is only provided for the unavoidable, naturally occurring events listed in section 10 of the Nursery Crop Insurance 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 crop years the above stated provisions are in effect.

Date of Issue: Oct 4, 2012