Final Agency Determination: FAD-187

Subject: Request dated April 30, 2013, requesting a Final Agency Determination for the 2011 and 2012 crop years regarding the interpretation of section 10(c)(1)(v) of the Peach Crop Insurance Provisions, published at 7 C.F.R. § 457.153. This request is pursuant to 7 C.F.R. part 400, subpart X.

Background:

Section 10(c)(1)(v) of the Peach Crop Insurance Provisions states in relevant part:

10. Settlement of Claim.

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(c) The total production to count (in bushels) from all insurable acreage on the unit will include:

(1) All appraised production to count will be determined as follows:

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(v) Any appraised production on insured acreage will be considered production to count unless such production is exceeded by the actual harvested production.

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Section 15(b)(1) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions (7 C.F.R. § 457.8)) states in relevant part:

15. Production Included in Determining an Indemnity and Payment Reductions.

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(b) Appraised production will be used to calculate your claim if you are not going to harvest your acreage. Such appraisals may be conducted after the end of the insurance period. If you harvest the crop after the crop has been appraised:

(1) You must provide us with the amount of harvested production (If you fail to provide verifiable records of harvested production, no indemnity will be paid and you will be required to return any previously paid indemnity for the unit that was based on the appraised amount of production); and

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Interpretation Submitted

The requester interprets the foregoing policy provisions as such that for insurable acreage that is harvested, the appraised production is used for the production to count only if the appraised production exceeds the actual harvested production. To make the determination to use the appraised production, the approved insurance provider (AIP) must first determine the amount of actual harvested production. The AIP must verify the actual harvested production records in accordance with RMA procedures in order to determine if the harvested production is, in fact, less than the appraised production. The policyholder is required to provide actual harvested production records for the AIP to make their determination.

The requestor believes this is consistent with section 15(b)(1) of the Basic Provisions. Section 15(b)(1) states if the policyholder fails to provide verifiable records of harvested production, no indemnity will be paid and the policyholder will be required to return any previously paid indemnity for the unit that was based on an appraised amount of production. The policyholder is required to support the harvested production with verifiable records for an indemnity to be paid.

Final Agency Determination

The Federal Crop Insurance Corporation (FCIC) agrees with the requestor’s interpretation. Consistent with the Peach Crop Insurance Provisions and FAD-135 published on RMA’s website February 22, 2011, when an appraisal is called for, the production to count is based on the higher of the appraised production or the actual harvested production. FCIC agrees that it is necessary to determine the actual harvested production in order to make this comparison. Additionally, in accordance with section 15(b)(1) of the Basic Provisions, the policyholder is required to provide verifiable records of harvested production or no indemnity will be paid and the policyholder will be required to return any previously paid indemnity for any unit that was based on the appraised amount of production.

In accordance with 7 C.F.R. § 400.765(c), this Final Agency Determination is binding on all participants in the Federal crop insurance program for the 2011 crop year and all crop years the policy provisions are in effect. Any appeal of this decision must be in accordance with 7 C.F.R. § 400.768(g).

Date of Issue: July 11, 2013