Final Agency Determination: FAD-176

FAD-176

Subject: Request dated November 19, 2012, requesting a Final Agency Determination for the 2011 crop year regarding the interpretation of section 14(b) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8. This request is pursuant to 7 C.F.R. part 400, subpart X.

Section 14(b) of the Basic Provisions states, in relevant part:

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

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(b) Notice provisions:

(1) For a planted crop, when there is damage or loss of production, you must give us notice, by unit, within 72 hours of your initial discovery of damage or loss of production (but not later than 15 days after the end of the insurance period, even if you have not harvested the crop).

(2) For crops for which revenue protection is elected, if there is no damage or loss of production, you must give us notice not later than 45 days after the latest date the harvest price is released for any crop in the unit where there is a revenue loss.

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(4) All notices required in this section that must be received by us within 72 hours may be made by telephone or in person to your crop insurance agent but must be confirmed in writing within 15 days.

(5) If you fail to comply with these notice requirements, any loss or prevented planting claim will be considered solely due to an uninsured cause of loss for the acreage for which such failure occurred, unless we determine that we have the ability to accurately adjust the loss. If we determine that we do not have the ability to accurately adjust the loss:

(i) For any prevented planting claim, no prevented planting coverage will be provided and no premium will be owed or prevented planting payment will be paid; or

(ii) For any claim for indemnity, no indemnity will be paid but you will still be required to pay all premiums owed.

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The requestor interprets section 14(b) to mean that if there is damage or loss of production, a policyholder must give notice of the loss to the Approved Insurance Provider (AIP), by unit, within seventy-two hours of the policyholder’s initial discovery of the damage or loss of production. If a loss of production has occurred, the policyholder must notify the AIP not later than fifteen days after the end of the insurance period. If a revenue loss has occurred, the policyholder must give notice of the loss to the AIP within forty-five days after the harvest price is issued by RMA. A policyholder may make an initial notice of loss by telephone or in person to the policyholder’s agent; however, such notice of loss must be confirmed in writing within fifteen days of the policyholder’s initial discovery of the damage or loss. An AIP may accept a late Notice of Damage or Loss if the AIP has the ability to accurately adjust the loss. Otherwise, the loss will be considered solely due to an uninsured cause of loss and no prevented planting coverage will be provided and no indemnity will be due. The policyholder will still owe the premium and fees.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees in part with the requestor’s interpretation of section 14(b) of the Basic Provisions. FCIC agrees that with respect to production losses, the notice of loss must be provided not later than 15 days after the end of the insurance period, which would be the date the harvest on the unit was completed or the date stated in the Special Provisions if the crop is not harvested. FCIC agrees that with respect to revenue losses, the notice of loss must be provided not later than 45 days after the latest date the harvest price is released for the crop. If the notice of loss is not timely filed, the loss will be considered due to uninsured causes for the acreage for which the notice of loss was untimely filed unless the AIP determines it can accurately adjust the loss.

The requestor indicates when a notice of loss is not given timely and the AIP does not have the ability to accurately adjust the loss, the policyholder will still owe premium and administrative fees. This is not correct with respect to a prevented planting claim. In accordance with section 14(b)(5)(i) of the Basic Provisions, if the policyholder fails to give notice of damage or loss and the AIP is unable to accurately adjust the loss for any prevented planting claim, no premium will be owed.

In accordance with 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: Dec 10, 2012