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Final Agency Determination: FAD-177

FAD-177

Final Agency Determination: FAD-177

Subject: Request dated November 16, 2012, requesting a Final Agency Determination for the 2011 crop year regarding the interpretation of section 14(e) 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.

Background:

Section 14(e) 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

(e) Claims:

(1) Except as otherwise provided in your policy, you must submit a claim declaring the amount of your loss by the dates shown in section 14(e)(3), unless you:

(i) Request an extension in writing by such date and we agree to such request (Extensions will only be granted if the amount of the loss cannot be determined within such time period because the information needed to determine the amount of the loss is not available); or

(ii) Have harvested farm-stored grain production and elect, in writing, to delay measurement of your farm-stored production and settlement of any potential associated claim for indemnity (Extensions will be granted for this purpose up to 180 days after the end of the insurance period).

(A) For policies that require APH, if such extension continues beyond the date you are required to submit your production report, you will be assigned the previous year’s approved yield as a temporary yield in accordance with applicable procedures.

(B) Any extension does not extend any date specified in the policy by which premiums, administrative fees, or other debts owed must be paid.

(C) Damage that occurs after the end of the insurance period (for example, while the harvested crop production is in storage) is not covered; and

(2) Failure to timely submit a claim or provide the required information necessary to determine the amount of the claim will result in no indemnity, prevented planting payment or replant payment:

(i) Even though no indemnity or replant payment is due, you will still be required to pay the premium due under the policy for the unit; or

(ii) Failure to timely submit a prevented planting claim will result in no prevented planting coverage and no premium will be due.

(3) You must submit a claim not later than:

(i) For policies other than revenue protection, 60 days after the date the insurance period ends for all acreage in the unit (When there is acreage in the unit where the insurance period ended on different dates, it is the last date the insurance period ends on the unit. For example, if a unit has corn acreage that was put to another use on July 15 and corn acreage where harvest was completed on September 30, the claim must be submitted not later than 60 days after September 30); or

(ii) For revenue protection, the later of:

(A) 60 days after the last date the harvest price is released for any crop in the unit; or

(B) The date determined in accordance with section 14(e)(3)(i).

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Interpretation Submitted:

The requestor interprets Section 14(e) of the Basic Provisions to mean that for revenue protection; the policyholder must submit a claim for indemnity within sixty days after the end of the insurance period or not later than sixty days after the harvest price is issued by the Risk Management Agency (RMA) if a loss of production was not incurred. Alternatively, the policyholder can request an extension prior to the sixtieth day after the end of the insurance period or the release of the harvest price, whichever is later. If the claim is untimely it will result in no indemnity, prevented planting payment, or replant payment. Even though no indemnity is due, the policyholder is still required to pay the premium.

Final Agency Determination

The Federal Crop Insurance Corporation disagrees in part with the requestor’s interpretation of section 14(e) of the Basic Provisions.

The requestor interprets section 14(e) of the Basic Provisions to mean that for revenue protection, the policyholder must submit a claim for indemnity within sixty days after the end of the insurance period or not later than sixty days after the issuance of the harvest price. The requestor failed to recognize that for revenue protection, the policyholder must submit a claim not later than the later of sixty days after the end of the insurance period or sixty days after the last date the harvest price is released for any crop in the unit.

This means that if the date harvest is completed is prior to the date the harvest price is released, the sixty days starts to run on the date the harvest price is released. Conversely, if the date the harvest is completed is after the date the harvest price is released, the sixty days starts to run on the date harvest was completed. This would be more than sixty days after the date the harvest price was released.

FCIC agrees that if the claim was submitted more than sixty days from the later of the end of the insurance period or the date the harvest price is released and no extension is requested, no indemnity, prevented planting, or replant payment will be owed. Further, FCIC agrees that even though no indemnity is due, premium will still be owed. However, this also applies for replant payments. Even though no replant payment will be due, premium will still be owed. It is only with respect to prevented planted claims where the prevented planting payment is not due and no premiums are 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 the crop years the above stated provisions are in effect.

Date of Issue: Dec 18, 2012