Individual Crop Insurance - Farmers' Legal Action Group ... · Individual Crop Insurance ... The...

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Materials Prepared for Federation of Southern Cooperatives Epes, Alabama September 11, 2009 Individual Crop Insurance by Karen R. Krub Farmers’ Legal Action Group, Inc. 360 North Robert Street, Suite 500 Saint Paul, Minnesota 551011589 Phone: 651.223.5400 Fax: 651.223.5335 Email: [email protected] Web site: www.flaginc.org Farmers’ Legal Action Group, Inc. is an equal opportunity employer.
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Transcript of Individual Crop Insurance - Farmers' Legal Action Group ... · Individual Crop Insurance ... The...

  • MaterialsPreparedfor

    FederationofSouthernCooperativesEpes,Alabama

    September11,2009

    Individual Crop Insurance

    byKarenR.Krub

    FarmersLegalActionGroup,Inc.360NorthRobertStreet,Suite500SaintPaul,Minnesota551011589

    Phone:651.223.5400Fax:651.223.5335Email:[email protected]:www.flaginc.org

    FarmersLegalActionGroup,Inc.isanequalopportunityemployer.

  • 2009FarmersLegalActionGroup,Inc.

    MaterialsPreparedfor

    FederationofSouthernCooperativesEpes,Alabama

    September11,2009

    Individual Crop Insurance

    I. ParticipantsinFederalCropInsurance

    Thefederalcropinsuranceprogramsareauniquemixtureofprivatecontractsandgovernmentregulations.

    A. FCICandRMA

    TheFederalCropInsuranceCorporation(FCIC)wascreatedin1938asadoallagencyforthethennewfederalcropinsuranceprogram.Overtimeitsrolechangedfromdirectinsuranceproductcreatorandinsuranceprovidertooversightofprivateinsurancecompaniesofferingapproved,reinsuredpoliciestoproducers.

    TheRiskManagementAgency(RMA)wascreatedin1996toadministerFCICprogramsanddootherriskmanagementoutreachandeducation.

    SimilartotherelationshipbetweentheCommodityCreditCorporationandtheFarmServiceAgency,itiseasiestandlargelyaccuratetothinkofRMAandFCICinterchangeably.Buttherecanbeoccasionswherethedistinctionissignificant.

    FCICpublisheslengthyregulationsthatcontrolthetermsofpoliciesthatproducerssign.Theregulationscanbeconfusingbecausesomearegeneralrulesthatapplytoallfederalcropinsurancepolicies.1Otherregulationsapplyonlyinparticularyears

    1 Someregulationsapplygenerallytofederalcropinsurance.See,forexample,7C.F.R.pt.400,subpt.G.Someprovidethebasicinsurancecontractsthatareusedformanycrops.See,forexample,theCatastrophicRiskProtectionEndorsement,7C.F.R.pt.402,andtheCommonCropInsurancePolicy,7C.F.R.457.1457.9.Otherregulationsapplyonlytocertaincropsandaddtothemoregeneralpolicyprovisions.See,forexample,HybridSeedCornCropInsuranceProvisions,7C.F.R.457.152,andPeachCropInsuranceProvisions,7C.F.R.457.153.Finally,someregulationsgoverntherelationshipbetweentheapprovedinsuranceprovidersandFCIC.

    CAUTION:Thesematerialsarefortrainingpurposesonly.Tolearnthedetailsaboutanycertainpoint,refertotheapplicablestatute,regulations,handbooks,andpolicynotices.

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    ortoparticularcrops.Despitethecomplexityofthestatutesandregulations,thepublicationoftherulesgiveseveryoneofficiallegalnoticeoftheircontents.ThismeansthateachpersonwhoisinsuredunderthefederalcropinsuranceprogramisboundbytherulessetforthintheFederalRegisterandtheCodeofFederalRegulations.

    RMA/FCICrole:

    1. Determinewhatcropsareinsurableandwhereandwhatpremiumratesapply.

    2. Approveinsurancecompaniestobeproviders.

    3. Approveandpublishthetypesofpoliciesthatmaybeoffered.

    4. Establishprogramregulationsandprocedures.

    5. Subsidizeproducerpremiums.

    6. Payprovidersadministrativeandoperatingexpenses.

    7. Reinsureproviders.(Essentially,thisisaguaranteetocoverlossclaimsexceedingacertainlevel.)

    B. PrivateInsuranceProvider

    Ingeneral,producersobtaincropinsurancecoveragefromprivateinsuranceproviders.Theseproviders,typicallyprivateinsurancecompanies,mustbeapprovedbyFCICtoofferthefederalinsuranceprograms.LocalUSDAofficesarerequiredtomakeavailabletoproducersthenamesofinsuranceagentsandcompaniesofferingtosellcropinsuranceinthatarea.

    Onceapolicyhasbeenapproved,aprivateinsuranceprovidermustofferittoalleligibleproducersintheprovidersservicearea.

    Insuranceproviderrole:

    1. Sellapprovedpoliciestoproducers.

    2. Servicepolicies.Thisincludes,amongotherthings,collectingpremiumsandfees,investigatinglossclaims,appraisinglosses,andcalculatingbenefitsdue.

    See,forexample,AgencySalesandServiceContractStandardsforApproval,7C.F.R.pt.400,subpt.M.

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    3. Maynotwaiveoralterpolicytermsunlessspecificallyallowedintheprogramregulations.

    4. MaydevelopnewproductsandsubmitthemtoFCICforapproval.

    C. Producer

    Producerrole:

    1. Applyforcoveragebysalesclosingdate.

    2. Paypremiumand/oradministrativefee.

    3. Reportacreageplanted.

    4. Usegoodfarmingpractices.

    5. Maintainallrequiredrecords.

    6. Complywithallpolicyrequirements.

    7. Reportlossesandcooperatewithlossinvestigation.

    Theburdenisonproducertoensurethatallreportsforexample,acreagereportsandlossclaimsarecompleteandaccurate.Theproducercannotrelyonaninsuranceagentsfillingoutoftheforms.Insomecases,producershavebeenabletofightadenialofcoverageduetoanagentserror,butthestrongtrendisforbothUSDAandthecourtstofindthattheultimateburdenistheproducers.

    Errorscanresultineitherreducedcoverageor,insomecases,nocoverage.

    II. TheCropInsuranceContract

    Theproducersrightsandresponsibilitiesarebasedprimarilyonhisorhercontractwiththeinsuranceprovider,andtheinsuranceproviderwillbethedecisionmakeronlossclaimsandotherissuesunderthecontract.

    Theproducershouldreadandunderstandallofthecropinsurancedocumentsbeforeenrolling.Ingeneral,noindemnitywillbepaidunlesstheproducercomplieswithalltermsandconditionsofthecontract.

    Afederalcropinsurancecontractpolicywillincludeanumberofdocumentsbroughttogether:

    A. Theproducerscompleteapplicationforcoverage.

    B. Basicprovisionsthemainumbrellapolicy.

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    C. Cropprovisionsspecificcoverageprovisionsapplicabletoagivencrop.

    D. Specialprovisionsspecificcoverageprovisionsthatvarybygeographicarea.

    E. Acatastrophicriskprotection(CAT)endorsement,iftheproducerselectsonlytheminimumlevelofcoverage.

    F. ActuarialdocumentspreparedbyFCICsettingout,foragivencrop,thecoveragelevelsavailable,particulartypesorvarietiescovered,premiumrates,coveredpractices,andrelatedinformation.

    G. TheregulationsatChapterIVofTitle7oftheCodeofFederalRegulations.

    III.CropInsuranceBasics

    A. LossesCovered

    Federalcropinsurancecoverslossesbycausedbydrought,flood,orothernaturaldisaster.FCICdefineswhatcountsasadrought,flood,orothernaturaldisasterforcropinsurancepurposes.Thecropprovisionsintheproducersspecificpolicyshouldlistinsurabletypesoflossesandexclusions,ifany.

    B. LossesNotCovered

    1. Cropinsurancepoliciesgenerallyexcludefromcoveragethoselossescausedbyneglect,mismanagement,orwrongdoing.2

    2. Lossesareexcludedfromcoverageiftheproducerfailedtoreseedthesamecropinareaswhereandundercircumstancesinwhichitwouldhavebeencustomarytoreseed.3

    3. Cropinsurancepoliciesgenerallyrequirethattheproducerfollowrecognizedgoodfarmingpractices.4Afailuretofollowgoodfarmingpracticeswillresultindenialoftheproducerslossclaim.

    2 See7C.F.R.457.8,CommonCropInsurancePolicy,12.CausesofLoss(a);CropRevenueCoverage(CRC)InsurancePolicy,13.CausesofLoss(a)(PolicyNo.05CRCBasic).3 7U.S.C.1508(a)(3)(B).4 7C.F.R.457.8,CommonCropInsurancePolicy,12.CausesofLoss(b);CropRevenueCoverage(CRC)InsurancePolicy,13.CausesofLoss(b)(PolicyNo.05CRCBasic).

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    Goodfarmingpracticesaredefinedas:

    productionmethodsutilizedtoproducetheinsuredcropandallowittomakenormalprogresstowardmaturityandproduceatleasttheyieldusedtodeterminetheproductionguaranteeoramountofinsurance,includinganyadjustmentsforlateplantedacreage,whichare:(1)forconventionalorsustainablefarmingpractices,thosegenerallyrecognizedbyagriculturalexpertsforthearea;or(2)fororganicfarmingpractices,thosegenerallyrecognizedbytheorganicagriculturalindustryfortheareaorcontainedintheorganicplan.5

    Animportantaspectofthisdefinitionistheideathatgoodfarmingpracticesarethosethataregenerallyrecognizedinthearea.Thetermgenerallyrecognizedisalsodefinedinthepolicies:

    [w]henagriculturalexpertsortheorganicagriculturalindustry,asapplicable,areawareoftheproductionmethodorpracticeandthereisnogenuinedisputeregardingwhethertheproductionmethodorpracticeallowsthecroptomakenormalprogresstowardmaturityandproduceatleasttheyieldusedtodeterminetheproductionguaranteeoramountofinsurance.6

    Theinsuranceprovidermakesthegoodfarmingpracticedetermination.TheinsuranceprovidermayonitsowninitiativeorattherequestoftheproducerrequestFCICtodeterminewhetheraparticularproductionmethodwillqualify.

    4. Numerousothercausesofalossmaybeexcludedbyacropinsurancepolicydependingonaparticularcrop.Forexample,apolicylikelywillnotcoverthefailureofanirrigationsystem.7Ortheremaybeparticular

    5 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Goodfarmingpractices(2008);CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Goodfarmingpractices(PolicyNo.05CRCBasic).6 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Generallyrecognized;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Generallyrecognized(PolicyNo.05CRCBasic).7 7C.F.R.457.8,CommonCropInsurancePolicy,12.CausesofLoss(d);CropRevenueCoverage(CRC)InsurancePolicy,13.CausesofLoss(d)(PolicyNo.05CRCBasic).

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    rotationrequirementsforthecrop.8Theparticularpolicysignedbytheproducerwilllikelylistseveralothercausesoflossthatwillnotbecovered.

    C. Linkage:WhenCropInsuranceIsRequired

    OneofthemostimportantaspectsofcropinsuranceformanyproducersiswhethertheproducermustpurchasesomeformoffederalcropinsuranceinordertobeeligibleforanotherUSDAprogram.Theserequirementsaresometimescalledlinkagerequirementsbecausetheylinkcropinsurancewithotherprograms.

    1. ConservationReserveProgramandFSALoansMustHaveInsuranceorWaiveFutureDisasterAssistance

    TobeeligibleforpaymentsunderConservationReserveProgram(CRP)contractsandforFarmServiceAgency(FSA)farmloanprograms,includingdirectandguaranteedFSAoperating(OL),farmownership(FO),andemergency(EM)loans,aproducermusteither:(a)getcropinsuranceforeachcropofeconomicsignificanceinwhichtheproducerhasaninterest(ifsuchinsuranceisavailable);or(b)signawaiverofeligibilityforemergencycroplossassistanceinconnectionwiththeuninsuredcrop.

    Producerswhodonoteithersignawaiverorgetcropinsurancearenoteligiblefortheprograms,andanylinkedprogrampaymentsalreadyreceivedforthatcropyearwilllikelyhavetoberefunded.

    a. OptionOne:CropInsuranceforAllCropsofEconomicSignificance

    Acropofeconomicsignificanceisdefinedasonethataccountsfor10%ormoreofthetotalexpectedvalueofallcropsgrownbytheproducer.9Ifacropmeetsthe10%testforeitherthepastyearsproductionorthecurrentyearsprojections,thecropwillbeconsideredeconomicallysignificant.10

    Ifthetotalexpectedliabilityundertheinsurancepolicyisequaltoorlessthantheadministrativefeerequiredtosignupforinsurance,thecropisnotconsideredtobeofeconomicsignificance.

    8 See,forexample,7C.F.R.457.109,SugarBeetCropProvisions,8.InsurableAcreage(a)(3),457.142,NorthernPotatoCropProvisions,7.InsurableAcreage(a).9 7C.F.R.400.651,Cropofeconomicsignificance.10 7C.F.R.400.653(a).

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    b. OptionTwo:WaiverofEmergencyCropLossBenefits

    AproducermayavoidpurchasingcropinsuranceandstillretaineligibilityforCRPandFSAloanprogramsbysigningawaiveroftherighttoclaimemergencycroplossassistance.11Anyproducersigningthewaiveragreesthatheorshewillnotbeeligibleforemergencycroplossassistanceforthecroptowhichthewaiverapplies.

    2. NewDisasterAssistanceProgramsCropInsuranceRequiredwithWaiverorEquitableReliefinSomeCircumstances

    Mostofthenewdisasterassistanceprogramscreatedbythe2008FarmBillincludeastrictlinkagerequirement.Ingeneral,aproducermusthaveobtainedcropinsuranceorNoninsuredCropDisasterAssistanceProgram(NAP)coverageonallcropsinordertobeeligibleforcroplosspaymentsundertheseprograms.12

    However,FSAwillwaivethisrequirementforproducerswhomeetthedefinitionofsociallydisadvantaged,limitedresource,orbeginningfarmersorranchers.13TheSecretaryofAgriculturemayalsoprovideequitablereliefonacasebycasebasistoproducerswhounintentionallyfailtosatisfythisrequirement.14

    D. ProducerEligibilityforCropInsurance

    1. InsurableInterestintheCrop

    Thepersonseekinginsurancemusthaveaninsurableinterestinacropasanowneroperator,landlord,tenant,orothercropshareowner.15

    2. InsurableAcreage

    Inaddition,theacreagemustbeinsurable.Forexample,landthathasnotbeenplantedandharvestedwithinoneofthelastthreecropyearsmaynotbeinsurable.16

    11 7U.S.C.1508(b)(7)(A)(ii).12 7C.F.R.760.104.13 7C.F.R.760.107.14 7C.F.R.760.106.15 7C.F.R.457.8(a);CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Share(PolicyNo.05CRCBasic);7C.F.R.407.8(a).

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    The2008FarmBillhasaddedanewrestrictionthatcropinsurancewillnotbeavailableduringthefirstfiveyearsofplantingonnativesodacreagethatwasfirsttilledforthepurposeofproducinganannualcropafterMay22,2008.17

    3. TimelyApplication

    AwrittenapplicationforcropinsurancemustbesubmittedonorbeforethesalesclosingdatesetbyFCICforthecropinthatcounty.18Thisapplicationwillgenerallybesubmittedtoanapprovedinsuranceprovider.

    4. TimelyPlanting

    Theproducermustmeetthedeadlineforeachcropsplantingperiodtobeeligibleforfullcoverageunderacropinsurancepolicy.19ThisdatewillbesetoutintheSpecialProvisionsfortheinsuredcrop.Itmaybepossibletoreceivecoverageatareducedlevelforcropsthatareplantedduringalateplantingperiod.

    5. AdministrativeFeeorPremium

    Theproducermustpayanadministrativefee,apremium,orboth,bythepaymentduedate.Thepremiumsandadministrativefeesvarywiththetypeofinsuranceandlevelofcoverageselected.

    6. HistoricalRecords

    TheproducermustproviderecordsacceptabletoFCICofhistoricalacreageandproductionreportsforthecroptobeinsured.20Iftheserecordsarenot

    16 See,forexample,7C.F.R.457.8,CommonCropInsurancePolicy,9.InsurableAcreage(a)(1);CropRevenueCoverage(CRC)InsurancePolicy,10.InsurableAcreage(a)(1)(PolicyNo.05CRCBasic).17 7U.S.C.1508(o).18 7U.S.C.1508(f)(2);7C.F.R.400.654(a),407.8(a),457.8(a);CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Salesclosingdate(PolicyNo.05CRCBasic).19 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Finalplantingdate;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Finalplantingdate(PolicyNo.05CRCBasic).20 See7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Productionreport,3.InsuranceGuarantees,CoverageLevels,andPricesforDeterminingIndemnities(e);CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Productionreport,4.CoverageLevel,andApprovedYieldforDeterminingFinalGuaranteeandIndemnity(d)(PolicyNo.05CRCBasic).

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    provided,theproducermustacceptayieldleveldeterminedbyFCICortheprovider.21Yieldcalculationsarediscussedinmoredetailbelow.

    7. TimelyAcreageReport

    Theproducermustfileanannualacreagereportonorbeforetheacreagereportingdatefortheinsuredcrop.22Specialrulesapplyiftheproducerwillbeinsuringmultiplecrops.Theacreagereportmustbesignedbytheproducerandmustdescribe:(a)allacreageofthecropinthecounty(insurableandnotinsurable)inwhichtheproducerhasashare;(b)theproducersshareatthetimecoveragebegins;(c)thecroppractice;(d)thecroptype;and(e)thedatetheinsuredcropwasplanted.

    Itisveryimportantthattheacreagereportbeaccurate.Ifthereportcontainsinformationlaterdeterminedtobeincorrectandtheerrorresultsinlowercoveragethantheproducercouldhavereceived,theproducerwillbeboundbytheerrorandwillonlyreceivetheloweramountofcoverage.Iftheerrorresultsinhighercoveragethantheproducershouldhavereceived,thecoveragewillbereducedtothecorrectamount.Moreseriously,iftheerrorresultsincoveragemorethan10%higherorlowerthanitshouldhavebeen,anybenefitfromthepolicyincludingindemnity,preventedplantingpayment,orreplantingpaymentwillbereducedinproportiontotheamounttheerrorexceeds10%.

    Inaddition,ifaproducerhasincorrectlyreportedacreageinanycropyear,theinsuranceprovidermayrequiretheproducertoprovidedocumentationtosubstantiateacreagereportssubmittedinlatercropyears.

    21 7U.S.C.1508(f)(3)(A);7C.F.R.457.8,CommonCropInsurancePolicy,3.InsuranceGuarantees,CoverageLevels,andPricesforDeterminingIndemnities(e)(1);CropRevenueCoverage(CRC)InsurancePolicy,4.CoverageLevel,andApprovedYieldforDeterminingFinalGuaranteeandIndemnity(d)(1)(PolicyNo.05CRCBasic).22 7U.S.C.1508(f)(3)(B);7C.F.R.400.654(d);7C.F.R.457.8,CommonCropInsurancePolicy,6.ReportofAcreage;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Acreagereport,7.ReportofAcreage(PolicyNo.05CRCBasic).

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    8. InformationAboutOtherCoverage

    Theproducermustprovideinformationregardingcropinsurancecoveragepreviouslyobtainedonanycrop.23

    9. NotDelinquentonDebtRelatedtoCropInsurance

    Aproducerwhoisdelinquentonadebtunderanycropinsurancepolicywillbeineligibleforcoverage.24Whentheineligibilitytakeseffectwilldependonwhetherthedelinquentdebtisanunpaidadministrativefeeorpremium,anoverpayment,ordefaultonapaymentagreement.Delinquencywillalsoresultinterminationofanypoliciesineffect,andtheproducermayberequiredtoreturnbenefitsalreadyreceived.

    E. ImportantFederalCropInsuranceDates

    Salesclosingdate:Lastdayfortheproducertocompleteandsignanapplicationforcoverageforagivencropyear.Thisisalsothelastdatefortheproducertomakechangestothepreviousyearspolicyifcoveragewillcontinue.

    Generally,thesalesclosingdatewillbe:

    February28orMarch15forspringplantedcrops.

    September30forfallplantedcrops.

    November20forperennialsandhorticulturalcrops.

    Cancellationdate:Lastdayfortheproducerorinsuranceprovidertocancelcoverage(otherwisepoliciescontinuefromyeartoyear).

    Finalplanting/Lateplantingdates:Lastdayfortheproducertoplantthecropandsecurethefullamountofrequestedcoverage.Dependingonthecrop,plantingafterthefinalplantingdatewilleitherresultinadecreasedlevelofcoverageornocoverage.

    23 7C.F.R.457.8,CommonCropInsurancePolicy,2.LifeofPolicy,Cancellation,andTermination(j);CropRevenueCoverage(CRC)InsurancePolicy,3.LifeofPolicy,Cancellation,andTermination(j)(PolicyNo.05CRCBasic).24 7C.F.R.457.8,CommonCropInsurancePolicy,2.LifeofPolicy,Cancellation,andTermination(f);CropRevenueCoverage(CRC)InsurancePolicy,3.LifeofPolicy,Cancellation,andTermination(f)(PolicyNo.05CRCBasic).

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    Acreagereportingdate:Lastdayfortheproducertoreport,foreachinsuredcrop:

    1. Thenumberofacresplantedorpreventedfrombeingplanted,

    2. Plantingdate,

    3. Theacreagelocation,

    4. Theproducersshareinthecrop,

    5. Thefarmingpracticesused,and

    6. Thecroptypesofvarietiesplanted.

    Theprovidermaydenycoverageiftheacreagereportisfiledaftertheacreagereportingdateforthecrop.

    F. EstablishingApprovedYields

    Formostcrops,theapprovedyieldusedtocalculatecoveragewillbedeterminedundertheActualProductionHistory(APH)CoverageProgram.TheAPHisbasedonanaverageofhistoricalyields,usingtheproducersindividualrecords.25Producersarerequiredtocertifytheaccuracyoftheproductionreportsusedtodeterminehistoricalyields,andverificationoftheproducersrecordsmayalsoberequired.26

    ForcropsnotcoveredbytheAPHprogram,theapprovedyieldwillbedeterminedaccordingtotheprovisionsoftheparticularcropinsurancepolicy.27

    1. SimpleAverageof410YearsofProducersActualProductionHistory

    TheAPHyieldisbasedonasimpleaverageoftheproducersmostrecent,continuousindividualproductionyieldsforthecrop.Aminimumoffouryearsofrecords,ifavailable,willbeusedintheaverage.Upto10yearsofrecordswillbeusedifavailable.Beyondthat,aseachnewyearsproductionisaddedtothecalculation,theoldestyielddropsout.

    25 7C.F.R.400.55.26 7C.F.R.400.53(a)(2),(b).27 7C.F.R.400.651,Approvedyield,402.4,CatastrophicRiskProtectionEndorsement,1.Definitions,Approvedyield.

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    2. AssignedYieldsIfVerifiableRecordsNotAvailable

    Producersunabletoprovidethenecessaryverifiablerecordsofpastproductionwillbeassignedayieldfortheyearsneededtodetermineanapprovedyield.28Ifnotenoughyearsofproductionhistoryareprovided,county10yearaverageyields,orTyields,maybesubstituted.29

    Casesinwhichayieldmustbeassignedforacropare:

    a. whentheproducerhasnotprovidedsatisfactoryevidenceoftheyieldofthecrop;

    b. whentheproducerhasnothadashareintheproductionofthecropformorethantwoyears;

    c. whentheproducerhasnotfarmedthelandbefore;

    d. whentheproducerrotatestoacropthathasnotpreviouslybeenproducedonthefarm.30

    IfmorethanoneTyieldisusedtofilloutaproducershistory,theywillbefactoreddown:1year,100%ofTyield;2years,90%ofTyield;3years,80%ofTyield;and4years,65%ofTyield.31

    Aproducerwhohasgrownthecropbeforebutdoesntsupplyanyrecordsofpastproductionwillbeassigned65%ofTyield.

    Iftheproducerisgrowingthecropforthefirsttime,coveragewillbeat100%ofTyield.

    3. AdjustmenttoAPHinSomeCircumstances

    a. SubstituteforDisasterYearYields

    If,inoneormoreofthecropyearsusedtoestablishtheproducersapprovedyieldforacrop,theproducersappraisedorrecordedyieldwaslessthan60%oftheTyieldduetoaninsurablecauseofloss,theproducer

    28 7U.S.C.1508(g)(2)(B);7C.F.R.400.52(f).29 7C.F.R.400.52(p).30 7U.S.C.1508(g)(2)(B).31 7C.F.R.400.52(c).

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    isallowedtoelecttoexcludethatyieldandreplaceeachexcludedyieldwithayieldequalto60%oftheapplicableTyield.32

    b. AdjustforExcessiveAPHYieldResult

    AproducersapprovedAPHyieldwillbereducedincaseswherethatyieldismorethan115%oftheaverageofapprovedyieldsfromallapplicableAPHdatabasesforthefarmingoperation.33Insuchcases,theyieldwillbereducedtoanamountconsistentwiththeaverageofapprovedyieldsfromotherAPHdatabasesfortheoperationwiththesamecrop,type,andpractice.TheapprovedAPHyieldwillalsobereducedwhentherearenoAPHdatabasesfromthefarmingoperationforcomparisonandtheproducersapprovedyieldismorethan115%ofthecountyTyield.Inthosecases,theyieldwillbeadjustedbyreducingittoanamountconsistentwiththecountyTyield.

    c. AdjustforSubstantialIncreaseinAcreage

    AproducersapprovedAPHyieldwillalsobereducedwhenthereisasubstantialincreaseinacreageplantedtothecrop.Thisadjustmentistriggeredintwosituations:(1)whenthecurrentyearsinsuredacreageincludingpreventedplantingacreageismorethan400%oftheaveragenumberofacresintheAPHdatabase;or(2)theacreageintwoormoreindividualyearsintheAPHdatabaseislessthan10%ofthecurrentyearsinsurableacreageintheunitincludingpreventedplantingacreage.34Insuchcases,theproducersyieldwillbereducedtoanamountconsistentwiththeaverageofapprovedyieldsfromotherAPHdatabasesfortheoperationwiththesamecrop,type,andpractice.

    32 7C.F.R.402.4,CatastrophicRiskProtectionEndorsement,1.Definitions,Approvedyield,457.8,CommonCropInsurancePolicy,36.SubstitutionofYields;CropRevenueCoverage(CRC)InsurancePolicy,35.SubstitutionofYields(PolicyNo.05CRCBasic).33 7C.F.R.457.8,CommonCropInsurancePolicy,3.InsuranceGuarantees,CoverageLevels,andPrices(g)(2)(i);CropRevenueCoverage(CRC)InsurancePolicy,4.CoverageLevel,andApprovedYieldForDeterminingFinalGuaranteeandIndemnity(f)(2)(i)(PolicyNo.05CRCBasic).34 7C.F.R.457.8,CommonCropInsurancePolicy,3.InsuranceGuarantees,CoverageLevels,andPrices(g)(2)(ii);CropRevenueCoverage(CRC)InsurancePolicy,4.CoverageLevel,andApprovedYieldForDeterminingFinalGuaranteeandIndemnity(f)(2)(ii)(PolicyNo.05CRCBasic).

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    d. AdjustforNewProductionMethodLikelytoReduceYield

    TheapprovedAPHyieldforacropwillalsobereducediftheproducerusesadifferentproductionmethodthanwasusedpreviously,andthenewproductionmethodislikelytoresultinayieldlowerthantheaverageoftheproducerspreviousactualyields.35Theyieldwillbereducedtoanamountconsistentwiththeproductionmethodsactuallyused,consideringtheproducersyieldsonotherunitswheresuchproductionmethodswereusedor,ifnosuchyieldsexist,thecountyTyieldfortheproductionmethods.

    Aproducermustnotifytheinsuranceproviderofachangeinproductionmethodsbytheacreagereportingdate.Afailuretodosowillresultnotonlyinthereductionofapprovedyield,asdiscussedhere,butwillalsobeconsideredamisreportofacreageandwillresultinreducedcoverage.

    4. ApprovedYieldCalculationExample

    Supposeaproducerappliesforcropinsurancefora2009soybeancrop.Theproducerhasgrownsoybeansinthefivepreviousyearsandhassubmittedproductionrecordsshowingtheseyields:

    2008=38bu./ac.2007=33bu./ac.2006=24bu./ac.2005=38bu./ac.2004=27bu./ac.

    Theproducersactualaverageyieldis32bu./ac.

    Nowsupposethattheproducerhasgrownsoybeansinthefivepreviousyearsbuthasnotsubmittedrecordsforeachyearofproduction.Nowthegraduatedcountyaverageyieldswillbesubstitutedforanymissingyear(s).

    35 7C.F.R.457.8,CommonCropInsurancePolicy,3.InsuranceGuarantees,CoverageLevels,andPrices(g)(3);CropRevenueCoverage(CRC)InsurancePolicy,4.CoverageLevel,andApprovedYieldForDeterminingFinalGuaranteeandIndemnity(f)(3)(PolicyNo.05CRCBasic).

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    Assumethefollowingcountyaverageyields:

    2008=35bu./ac.2007=28bu./ac.2006=24bu./ac.2005=30bu./ac.2004=25bu./ac.

    Iftheproducerdoesnothaveproductionrecordsforthe2005crop,theproducersAPHyieldwouldbecalculatedasfollows:

    2008=38bu./ac.2007=33bu./ac.2006=24bu./ac.2005=30bu./ac.(100%ofcountyaverageyield)2004=dropsoutbecausenolongercontinuous

    Theaverageis31.25bu./ac.,or.75bu./ac.lessthantheproducersactualaverage.

    Iftheproducerdoesnothaveproductionrecordsforthe2005and2006crops,theproducersAPHyieldwouldbecalculatedasfollows:

    2008=38bu./ac.2007=33bu./ac.2006=21.6bu./ac.(90%ofcountyaverageyield)2005=27bu./ac.(90%ofcountyaverageyield)2004=dropsoutbecausenolongercontinuous

    Theroundedaverageis30bu./ac.,or2bu./ac.lessthantheproducersactualaverage.

    Iftheproducerdoesnothaveproductionrecordsforthe2005,2006,and2007crops,theproducersAPHyieldwouldbecalculatedasfollows:

    2008=38bu./ac.2007=22.4bu./ac.(80%ofcountyaverageyield)2006=19.2bu./ac.(80%ofcountyaverageyield)2005=24bu./ac.(80%ofcountyaverageyield)2004=dropsoutbecausenolongercontinuous

    Theroundedaverageis26bu./ac.,or6bu./ac.lessthantheproducersactualaverage.

    Iftheproducerdoesnothaveproductionrecordsforanyofthefourmostrecentcropsgrown,theproducersAPHyieldwouldbecalculatedasfollows:

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    2008=22.75bu./ac.(65%ofcountyaverageyield)2007=18.2bu./ac.(65%ofcountyaverageyield)2006=15.6bu./ac.(65%ofcountyaverageyield)2005=19.5bu./ac.(65%ofcountyaverageyield)2004=dropsoutbecausenolongercontinuous

    Theroundedaverageis19bu./ac.,or13bu./ac.lessthantheproducersactualaverage.

    IV.TypesofCropInsurance

    TheFederalCropInsuranceActandtheregulationsthatimplementitallowforhundredsofpossiblecropinsuranceplans.Federalcropinsuranceiscurrentlyavailableinpermanentpoliciesorpilotprogramsformorethan100differentcrops.

    YieldInsurancevs.RevenueInsurance

    IndividualRiskvs.GroupRisk

    SingleCropCoveragevs.WholeFarmCoverage

    Inmostcases,insurancecoveragemustbeelectedonacropbycropbasis.Thismeansthatifcoverageisobtainedatall,thesametypeofpolicyandlevelofcoveragemustbeobtainedforalloftheproducersacreageofthatcropinthecountyforthatyear.36Thereareexceptionstothisgeneralruleforfieldsindifferentsections,differentcroptypesorvarieties,anddifferentproductionpractices(forexample,organicvs.conventionalorirrigatedvs.nonirrigated).37

    A.MultiPerilCoverageforYieldLosses

    ThemostfamiliarformofcropinsuranceistraditionalmultiperilcoverageoftencalledMPCIwhichprovidesinsuranceagainstyieldlosses.Ingeneral,theproducerbuysmultiperilcoverageforeachcropindividually,andindemnitypaymentsaretriggeredbylowyields,poorquality,lateplanting,preventedplanting,orforcedreplanting.

    36 7C.F.R.457.8,CommonCropInsurancePolicy,3.InsuranceGuarantees,CoverageLevels,andPricesforDeterminingIndemnities(b);CropRevenueCoverage(CRC)InsurancePolicy,4.CoverageLevel,andApprovedYieldForDeterminingFinalGuaranteeandIndemnity(b)(PolicyNo.05CRCBasic).37 7C.F.R.457.8,CommonCropInsurancePolicy,34.UnitDivision;CropRevenueCoverage(CRC)InsurancePolicy,2.UnitStructure(PolicyNo.05CRCBasic).

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    Underamultiperilyieldinsurancepolicy,theproducersinsuranceguaranteeistheproducershistoricalyieldmultipliedbyacoveragelevelselectedbytheproducer(from5085%ofhistoricalyield).Theproduceralsoselectsanindemnitypricelevel(from55100%ofexpectedmarketprice,whereRMAsetstheexpectedprice).Iftheproducersactualyieldislessthantheyieldguarantee,anindemnitywillbedue.

    Thedecisionofwhatcoverageandpricelevelstochooseisbasedontwofactors:riskacceptanceandcost.Highercoveragelevelspayoutmore,andmoreoften,thanlowercoveragelevels.Buthighercoveragelevelsarealsomoreexpensive,withthefederalpremiumsubsidydroppingoffsignificantlyathighercoveragelevels.

    Coveragelevel 50/55 50/100 55 60 65 70 75 80 85

    FCICsubsidyshare 100 67 64 64 59 59 55 48 38

    Producersshareofpremium 0 33 36 36 41 41 45 52 62

    1. CatastrophicRiskProtection(CAT)

    Catastrophicriskprotection(CAT)istheminimumlevelofyieldinsuranceavailable.ThepurposeofCATcoverageistoprotectagainstamajorcroploss.CATpoliciesreceivea100%premiumsubsidyfromFCIC.Theproducerpaysonlyanadministrativefeeforthecoverage.

    a. Covers50PercentofApprovedYield

    CATpoliciesguarantee50%oftheproducersapprovedyield.38The50%approvedyieldcalculationdeterminesbotheligibilityforbenefitsandthelevelofbenefits.Thismeansthattheproducerwillonlygetcoverageifthelossisover50%oftheapprovedyield.Inaddition,paymentswillonlybemadeontheportionofthelossthatexceeds50%oftheapprovedyield.

    Forexample,aproducerinsuredunderaCATpolicywhosuffersalossof40%ofhisorherapprovedyieldwillnotreceiveanyindemnitypaymentsatall.Aproducerwhosuffersa60%lossofhisorherapprovedyieldwillreceiveindemnitypaymentsbasedon10%oftheapprovedyieldthatis,theextentofthelossthatexceeds50%.

    38 7U.S.C.1508(b)(2)(A);7C.F.R.402.4,CatastrophicRiskProtectionEndorsement,4.InsuranceGuarantees,CoverageLevels,andPricesforDeterminingIndemnities;7C.F.R.400.651,Catastrophicriskprotection.

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    b. Covers55PercentofExpectedMarketPrice

    CATcoveragepaymentsarecalculatedusing55%oftheexpectedmarketpriceforthecropinquestion.39TheexpectedmarketpriceissetbyFCICbeforethesalesclosingdateforthecrop.40Theexpectedpricemaybelessthantheactualpricepaidbybuyersiftheactualpricetypicallyincludescompensationtotheproducerforsignificantamountsofpostproductionexpensessuchasconditioning,culling,sorting,orpacking.

    2. AdditionalCoverage

    AnyleveloffederalcropinsurancethatexceedstheCATlevelofcoverageisconsideredadditionalcoverage.41ThesepoliciesprovideaddedcoveragebyinsuringlessseverecroplossesthanCATdoesandprovidingabetterpaymentrate.Forexample,aproducerwhoobtainsadditionalinsuranceatthe75%coveragelevelwillreceivealosspaymentforanycroplossthatisgreaterthan25%.

    a. Covers50to85PercentofApprovedYield

    Underanadditionalcoveragepolicy,aproducermayelecttoinsure5085%oftheproducersapprovedyield.

    b. CoversUpto100PercentofExpectedMarketPrice

    Additionalcoverageinsurancepaysupto100%oftheexpectedmarketpriceforthecrop.42

    3. YieldCoverageExample

    Supposethataproducerhasanapprovedhistoricalyieldof50bushelsperacreforsoybeansandtheproducerpurchasescropyieldinsurancecoverageat75%ofyield.

    Theproducersyieldguaranteeis:

    Approvedyieldxcoveragelevel=Yieldguarantee50bu./ac.x.75=37.5bu./ac.

    39 7U.S.C.1508(b)(2)(A)(i);7C.F.R.400.651,Catastrophicriskprotection.40 7C.F.R.400.651,Expectedmarketprice.41 7U.S.C.1502(b)(1).42 7U.S.C.1508(c)(9).

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    Theproducermustexperiencealossof25%,or12.5bu./ac.,beforeanindemnitywouldbetriggered.Oncecoveragehasbeentriggered,theproducerwillreceivepaymentforthedifferencebetweentheyieldguaranteeandtheactualyield.

    Iftheproducersactualyieldwas30bu./ac.,theindemnitywouldbebasedonacoveredlossof7.5bu./ac.:

    Yieldguaranteeactualyield=Coveredloss37.5bu./ac.30bu./ac.=7.5bu./ac.

    Thiscoveredlossismultipliedbythepricelevelselectedbytheproducerandthenumberofacresunderthepolicy.Iftheproducerselected100%ofthesoybeanpriceof$7/bu.andhadplanted200acres,thetotalindemnitywouldbe:

    Coveredlossxexpectedmarketpricexselectedpricelevel=Indemnity7.5bu./ac.x$7/bu.x200ac.=$10,500

    Iftheproducerhadelectedtoinsure60%ofhisyieldratherthan75%,theresultwouldbe:

    Yieldguarantee=50bu./ac.x.60=30bu./ac.Coveredloss=30bu./ac.30bu./ac.=0bu./ac.

    Thatis,therewouldbenocoveredlossbecausetheproducersactualyieldequaledtheyieldguarantee.

    Similarly,foranycoverageelectionbelow60%,therewouldbenocoveredlossbecausetheactualyieldwouldhaveexceededtheyieldguarantee.

    Iftheproducerhadelectedtoinsure85%ofhisyieldat60%oftheprice,theresultwouldbe:

    YieldGuarantee=50bu./ac.x..85=42.5bu./ac.CoveredLoss=42.5bu./ac.30bu./ac.=12.5bu./ac.

    CoveredPrice=$7/ac.x.60=$4.20/bu.Indemnity=12.5bu./ac.x$4.20/bu.x200ac.=$10,500

    B. RevenueInsurance

    Since1995,FCIChasexperimentedwithfederalcropinsurancecoveragethatseekstoprotectproducersagainstdeclinesincroppricesaswellascropyields.Severaldifferenttypesofthiscoveragehavebecomeavailableindifferentpartsofthecountryforavarietyofcrops.Therevenuecoverageplansareinmostwaysvery

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    similartotraditionalmultiperilyieldinsurance.Theimportantdifference,however,isthatintherevenuebasedprograms,inonewayoranotherpaymentindemnitiesaswellaspremiumstakeintoaccountcroppricechanges.

    Thedifferentrevenueinsuranceproductsaredistinguishedbythecroppriceusedtodeterminetherevenueguarantee,thelevelsofcoverageavailable,andtheunitsthatcanbeinsured.

    1. CropRevenueCoverage(CRC)

    ThemostcommonoftherevenuebasedfederalcropinsurancepoliciesisCropRevenueCoverage(CRC).CRCisnowauthorizedonapermanentbasisbyFCICandiswidelyavailable.Ithascometorivaltraditionalmultiperilyieldbasedinsuranceforthedominanttypeofcropinsurance.Sincethe2000cropyear,CRCcoveragehasbeenavailableforcorn,grainsorghum,soybeans,cotton,rice,and/orwheatinallstateswheremultiperilcoverageisavailable.

    Forthemostpart,theproductionhistoryrequirements,applicationandpaymentdeadlines,acreageandproductionreportingrequirements,preventedplantingandreplantingcoverage,andpremiumsubsidiesforCRCaresimilartothosefortraditionalmultiperilcropinsurance.

    CRCcombinesprotectionforbothpriceandyieldrisk.TheyieldcoveragecomponentofrevenueinsuranceisbasedentirelyonAPHandpermitstheproducertoselectthelevelofyieldcoverage,withinagivenrange.UnderaCRCpolicy,aproducerisguaranteedanincomeforthecropbasedontheexpectedharvestpriceandtheproducersexpectedyields.

    Theproducersrevenueguaranteeisbasedonhistoricalyield,thecoveragelevelelectedbytheproducer,andthehigheroftheearlyseasonbasepriceortheharvesttimeprice.43Asaresult,revenuecoverageunderaCRCpolicyincreasesduringtheseasonifcroppricesrise(uptoa200%priceincrease).Thecroppricesusedtodeterminerevenueareestablishedmarketprices,nottheactualpricereceivedbytheproducer.

    ActualrevenueforCRCiscalculatedastheactualyieldmultipliedbytheharvesttimeprice.Ifactualrevenueislessthantherevenueguarantee,anindemnitywillbedue.

    43 SeeCropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,BasePrice,Finalguarantee,HarvestPrice(PolicyNo.05CRCBasic).

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    2. RevenueCoverageExample

    Supposeaproducerhasanapprovedyieldof50bushelsperacreforsoybeans.Thebasepriceforsoybeansis$8.00/bushel.

    Approvedyieldxbaseprice=Expectedrevenue50bu./ac.x$8/bu.=$400/ac.

    Iftheproducerobtainscroprevenueinsurancecoverageat75%ofexpectedrevenue,theproducersrevenueguaranteeis:

    Expectedrevenuexcoveragelevel=Revenueguarantee$400/ac.x.75=$300/ac.

    Theproducermustexperiencealossof25%,or$100/ac.,beforeanindemnitywouldbetriggered.

    Oncecoveragehasbeentriggered,theproducerwillreceivepaymentforthedifferencebetweentherevenueguaranteeandtheactualrevenue.

    Iftheproducersactualyieldwas40bu./ac.andtheharvesttimepricewas$6.00,theproducersactualrevenuewouldbe:

    Actualyieldxharvesttimeprice=Actualrevenue40bu./ac.x$6.00/bu.=$240/ac.

    Theindemnitywouldbebasedonacoveredlossof$60/ac.:

    Revenueguaranteeactualrevenue=Coveredloss$300/ac.guarantee$240/ac.actual=$60/ac.

    Thiscoveredlossismultipliedbythenumberofacresunderthepolicy.

    Iftheproducerhadplanted200acres,thetotalindemnitywouldbe:

    Indemnity=$60/ac.x200ac.=$12,000

    Iftheproducerhadelectedtoinsure60%ofhisrevenue,theresultwouldbe:

    Revenueguarantee=50bu./ac.x$8.00/bu.x.60=$240/ac.Coveredloss=$240/ac.guarantee$240/ac.actual=$0/ac.

    Thatis,therewouldbenocoveredlossbecausetheproducersactualrevenueequaledtherevenueguarantee.

    Similarly,foranycoverageelectionbelow60%,therewouldbenocoveredlossbecausetheactualrevenuewouldhaveexceededtherevenueguarantee.

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    Ifproducerhadelectedtheoriginal75%revenueguarantee,buttheharvesttimepricewas$7.50,theproducersactualrevenuewouldbe:

    Actualrevenue=40bu./ac.x$7.50/bu.=$300/ac.Coveredloss=$300/ac.guarantee$300/ac.actual=$0/ac.

    Againtherewouldbenocoveredlossbecausetheproducersactualrevenueequaledtherevenueguarantee.Theincreasedpriceatharvesttimeoffsetthereducedyield.Similarly,foranyactualharvestpriceabove$7.50,therewouldbenocoveredlossbecausetheactualrevenuewouldhaveexceededtherevenueguarantee.

    Iftheproducerhadelectedtoinsure85%ofhisrevenueandthefinalharvestpricewas$8.25,theresultwouldbe:

    Revenueguarantee=50bu./ac.x.$8.00/bu.x.85=$340/ac.Actualrevenue40bu./ac.x$8.25/bu.=$330/ac.Coveredloss=$340/ac.$330/ac.=$10/ac.Indemnity=$10/ac.coveredlossx200ac.

    V. CostofCropInsurance

    Thecostoffederalcropinsuranceinvolvestwofactors:anadministrativefeeandapremium.

    A. AdministrativeFee

    Alltypesoffederalcropinsuranceincludeanadministrativefeetobepaidbytheproducer.

    1. FeeAmount

    a. CATcoverage:$300percroppercounty.

    b. MultiperilyieldcoverageexceedingCATlevels:$30percroppercounty.

    c. CRC:$30percroppercounty.

    2. WaiverifZeroAcreageReportTimelyFiled

    Theadministrativefeewillbewaivediftheproducerfilesazeroacreagereportbytheacreagereportingdate.

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    3. WaiverforLimitedResourceFarmersPurchasingCATCoverage

    LimitedresourcefarmerscanreceiveawaiveroftheadministrativefeeforCATcoverage.44Thewaiverisnotautomatic.Itmustberequestedbytheproducer.

    Aproducerwillqualifyasalimitedresourcefarmerwho:

    (1)hasdirectorindirectgrossfarmsalesof$155,200orlessineachoftheprevioustwoyears;45and

    (2)ineachoftheprevioustwoyearshadatotalhouseholdincomeatorbelowthenationalpovertylevelforafamilyoffourorlessthan50%ofthecountymedianhouseholdincome.

    4. FeeDueDate

    Theadministrativefeeforcropinsurancecoveragemustbepaidwhenthepremiumisdueor,forCATcoverage,within30daysaftertheproducerhasbeenbilledbytheinsuranceprovider.46ThebillingdatewillbestatedintheSpecialProvisionsofthepolicy.

    B. Premium(ExceptforCATPolicies)

    Asmentionedabove,FCICpays100%ofthepremiumforCATcoverage,sonopremiumisrequiredfromtheproducer.47Producerspurchasingadditional

    44 7U.S.C.1508(b)(5)(E);7C.F.R.402.4,CatastrophicRiskProtectionEndorsement,6.AnnualPremiumandAdministrativeFees(c).45 7C.F.R.402.4,CatastrophicRiskProtectionEndorsement,1.Definitions,Limitedresourcefarmer.Theamountintheregulation$100,000isadjustedforinflationeachyearusingthePricesPaidbyFarmerIndexascompiledbytheNationalAgriculturalStatisticalService.AnnualadjustmentscanbefoundthroughUSDAsLimitedResourceFarmer/Rancherselfdeterminationtoolatwww.lrftool.sc.egov.usda.gov/tool.asp.46 7C.F.R.402.4,CatastrophicRiskProtectionEndorsement,6.AnnualPremiumandAdministrativeFees(b);7C.F.R.457.8,CommonCropInsurancePolicy,7.AnnualPremiumandAdministrativeFees(e)(2);CropRevenueCoverage(CRC)InsurancePolicy,8.AnnualPremiumandAdministrativeFees(e)(2)(PolicyNo.05CRCBasic).47 7U.S.C.1508(b)(5),(e)(1)(A);7C.F.R.402.4,CatastrophicRiskProtectionEndorsement,6.AnnualPremiumandAdministrativeFees(a).

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    coverageunderyieldinsuranceoranytypeofrevenueinsurancewillbechargedboththeadministrativefeeandapremium.48

    Theannualpremiumforcropinsurancepoliciesiscalculatedbasedontheamountofinsuredacreage,theproducersshareatthetimecoveragebegins,thepremiumrateforthecrop,anypremiumadjustmentsthatmayapply,andthelevelofcoverageselectedbytheproducer.Formostpolicies,informationaboutpremiumratesandavailableadjustmentswillbeincludedinthecropactuarialdocuments.

    VI.CoverageforSpecialPlantingCircumstances

    A. LatePlantingCoverage

    Insomecases,producersmaybeabletoinsureacropplantedafterthefinalplantingdateiftheinabilitytotimelyplantthecropwasduetoaneligiblecauseoflossthatoccurredduringtheinsuranceperiod.Insomecases,itmayevenbepossibletoinsureacropthatisplantedafterthelateplantingperiod.Asisthecasewithmanyothercropinsuranceprovisions,thiscanvarysignificantlyfromcroptocrop,soproducersshouldchecktheirindividualpolicies.

    Thereisnoincreasedpremiumforlateplantingcoverage.49Thepremiumforlateplantingcoverageisincludedinthebasecropinsurancepolicyprice.

    Ingeneral,thelateplantingcoverageprovisioncanapplyinfourdifferentcircumstances.50

    1. CropsPlantedDuringtheLatePlantingPeriod

    Manycropshaveadesignatedlateplantingperiod.Lateplantingperiodsgenerallybeginonthedayafterthefinalplantingdateandusuallylastfor25daysafterthefinalplantingdate.51

    48 7U.S.C.1508(c)(10),(d).7C.F.R.457.8,CommonCropInsurancePolicy,7.AnnualPremiumandAdministrativeFees;CropRevenueCoverage(CRC)InsurancePolicy,8.AnnualPremiumandAdministrativeFees(PolicyNo.05CRCBasic).49 7C.F.R.457.8,CommonCropInsurancePolicy,16.LatePlanting(c);CropRevenueCoverage(CRC)InsurancePolicy,17.LatePlanting(c)(PolicyNo.05CRCBasic).Ifitturnsoutthattheamountofpremiumthattheproduceristopayforthelateplantedacreageisgreaterthanthebenefitsdue,coverageforthoseacreswillnotbeavailable.Nopremiumwillbedueandnoindemnitywillbepaid.50 7C.F.R.457.8,CommonCropInsurancePolicy,16.LatePlanting;CropRevenueCoverage(CRC)InsurancePolicy,17.LatePlanting(PolicyNo.05CRCBasic).

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    Iftheproducerinsuresacropthatisplantedduringalateplantingperiod,theproductionguaranteeoramountofinsuranceforeachacreplantedwillgenerallybereducedby1%perdayforeachdayafterthefinalplantingdatethatthecropisplanted.52ForCRCpolicies,thefinalcoverageguaranteeisreducedby1%perday.53

    2. CropsPlantedAftertheLatePlantingPeriod

    Itcanalsobepossibletoinsureacropthatwasplantedafteralateplantingperiod.54Thelateplantingcoveragelevelinthissituationisdeterminedbymultiplyingtheproductionguaranteeoramountofinsurancethatwouldhavebeenprovidediftheacreagehadbeenplantedontimebytheproducerspreventedplantingcoveragelevel.ForCRC,thefinalcoverageguaranteeismultipliedbythepreventedplantingcoveragelevel.

    3. CropsPlantedLateWhenThereIsNoLatePlantingPeriod

    Producersmaybeabletoplantandinsureacropafterthefinalplantingdateevenifnolateplantingperiodexistsforthecrop.Aswithplantingsafteralateplantingperiod,inthissituationthecoverageavailableisdeterminedbymultiplyingtheproductionguaranteeoramountofinsurancethatwouldhavebeenprovidediftheacreagehadbeenplantedontimebytheproducerspreventedplantingcoveragelevel.ForCRC,thefinalcoverageguaranteeisreducedbythepreventedplantingcoveragelevel.

    4. PlantingStartedButCompletionPrevented

    Insomecases,aninsurablecausemaybeamaterialfactorinpreventingaproducerfromcompletingplantingafterplantinghasbegun.Foracreagetobecompletelyplanted,accordingtoFCICregulations,thefollowingmustoccur:theseeds,plants,ortreesmusthavebeenplacedatthecorrectdepthandintoa

    51 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Lateplantingperiod;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Lateplantingperiod(PolicyNo.05CRCBasic).52 7C.F.R.457.8,CommonCropInsurancePolicy,16.LatePlanting(a).53 CropRevenueCoverage(CRC)InsurancePolicy,17.LatePlanting(a)(PolicyNo.05CRCBasic).54 7C.F.R.457.8,CommonCropInsurancePolicy,16.LatePlanting(b);CropRevenueCoverage(CRC)InsurancePolicy,17.LatePlanting(b)(PolicyNo.05CRCBasic).

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    seedbedthathasbeenproperlyprepared.55Theseactionsmustmeettheappropriaterequirementsofthecropandtheproducerschosenplantingmethod.Forexample,ifseedisbroadcastonthesoilsurfacebutcannotbeincorporatedasintendedbecauseofaninsurablecause,itmeetstherequirementsofthisprovision.56

    Ifacreagecannotbecompletelyplantedduetoaninsurablecause,forthepurposesofcropinsurancethecropistreatedasifitwereplantedafterthefinalplantingdate.Thecoverageforthecropwillbedeterminedbymultiplyingtheproductionguaranteeoramountofinsurancethatwouldhavebeenprovidediftheacreagehadbeenplantedontimebytheproducerspreventedplantingcoveragelevel.57ForCRC,thefinalcoverageguaranteeismultipliedbythepreventedplantingcoveragelevel.58

    B. ReplantingCoverage

    Ifallowedundertheproducersspecificinsurancepolicy,aproducerwhoisrequiredtoreplantacropmaybeeligibleforcompensationforthoseexpenses.59ReplantingcompensationisnotavailableunderCATpolicies,evenwherereplantingisrequiredbyacontract.60

    Replanting,forthesepurposes,isdefinedasperformingtheculturalpracticesnecessarytopreparethelandtoreplacetheseedorplantsofthedamagedordestroyedinsuredcropandthenreplacingtheseedorplantsofthesamecropinthe

    55 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Plantedacreage;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Plantedacreage(PolicyNo.05CRCBasic).56 7C.F.R.457.8,CommonCropInsurancePolicy,16.LatePlanting(d);CropRevenueCoverage(CRC)InsurancePolicy,17.LatePlanting(d)(PolicyNo.05CRCBasic).57 7C.F.R.457.8,CommonCropInsurancePolicy,16.LatePlanting(b)(1),(d).58 CropRevenueCoverage(CRC)InsurancePolicy,17.LatePlanting(b)(1),(d)(PolicyNo.05CRCBasic).59 7C.F.R.457.8,CommonCropInsurancePolicy,13.ReplantingPayment;CropRevenueCoverage(CRC)InsurancePolicy,14.ReplantingPayment(PolicyNo.05CRCBasic).60 7C.F.R.402.4,CatastrophicRiskProtectionEndorsement,8.ReplantingPayment.

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    insuredacreage.61Theexpectationistoproduceatleastthecropyieldusedtocalculatethecropinsuranceproductionguarantee.

    1. RequirementsforReplantingCoverage

    a. InsuranceProviderApprovesReplanting

    Beforeaproducerreceivesareplantingpayment,theinsuranceprovidermustapprovethereplanting.

    b. MustReplant20Acresor20PercentoftheUnit

    Theacreagereplantedmustbeatleast20acresor20%oftheinsuredacreagefortheunit.Thiscalculationismadeasofthefinalplantingdateforthecrop,orwithinthelateplantingperiodifalateplantingperiodisavailable.

    c. MustBePracticaltoReplant

    Ingeneral,practicaltoreplantmeansthattheinsuranceproviderdetermines,afterlossordamagetotheinsuredcrop,thatreplantingtheinsuredcropwillallowthecroptoattainmaturitybythecalendardatefortheendoftheinsuranceperiod.62Whenmakingthisdetermination,theprovideristoconsider(1)moistureavailability,(2)marketingwindows,(3)theconditionofthefield,and(4)thetimetocropmaturity,amongotherrelevantfactors.Thepracticaltoreplantdeterminationdoesnottakeintoaccounttheproducersinputcostsortheavailabilityofseedorplants.

    Ifthelateplantingperiodorthefinalplantingdate,ifnolateplantingperiodisapplicablehaspassed,itwillonlybeconsideredpracticaltoreplantifreplantingisgenerallyoccurringinthearea.

    61 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Replanting;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Replanting(PolicyNo.05CRCBasic).62 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Practicaltoreplant;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Practicaltoreplant(PolicyNo.05CRCBasic).

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    2. RestrictionsonReplantingPayments

    Replantingpaymentsarenotavailableinthreeparticularcircumstances.

    a. Iftheinsuranceprovidersappraisalconcludesthatproductionwithoutreplantingwillbegreaterthanthereplantingcoveragelevelsetintheproducerspolicy.63

    b. Iftheinitialcropwasplantedbeforetheearliestplantingdatesetoutintheproducerspolicy.

    c. Ifonereplantingpaymenthasalreadybeenmadeontheacreageforthatcropyear.

    3. AmountofReplantingPayments

    Replantingpaymentswillbetheproducersperacrecostofreplanting,uptothereplantingcoverageamountsetoutintheproducersinsurancepolicy.64

    C. PreventedPlantingCoverage

    Preventedplantingcoverageistriggeredwhenaproducerispreventedfromplantingacropduetoaninsuredevent,suchasadverseweatherconditions.65Preventedplantingisoneofthemostimportantandconfusingaspectsoffederalcropinsurance.Thereisasignificantvariationinparticularpoliciesregardingpreventedplanting.

    Thereisnoincreasedpremiumforpreventedplantingcoverage.66Thepremiumisincludedinthebasecropinsurancepremiumoradministrativefee.Iftheamountoftheproducerspremiumforacreagethatispreventedfrombeingplantedisgreater

    63 7C.F.R.457.8,CommonCropInsurancePolicy,13.ReplantingPayment(b)(1);CropRevenueCoverage(CRC)InsurancePolicy,14.ReplantingPayment(b)(1)(PolicyNo.05CRCBasic).64 7C.F.R.457.8,CommonCropInsurancePolicy,13.ReplantingPayment(c);CropRevenueCoverage(CRC)InsurancePolicy,14.ReplantingPayment(c)(PolicyNo.05CRCBasic).65 See7U.S.C.1508(h)(6);7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting;CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(PolicyNo.05CRCBasic).66 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(c);CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(c)(PolicyNo.05CRCBasic).

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    thantheinsurersliabilityfortheacreage,coveragefortheseacreswillnotbeavailable.Nopremiumwillbedueandnoindemnitywillbepaid.67

    1. PreventedPlantingCoverageLevels

    Preventedplantingcoverageissetatapercentageoftheregularinsuredcropguarantee.Thelevelofcoverageavailableforpreventedplantinglossesdependsonthecropbeinginsuredandwhethertheproducerhaspurchasedadditionalcoverage.

    a. ProtectionLevelsVarybyCrop

    Theprotectionlevelforpreventedplantingcanvaryagreatdealfromcroptocrop.Forexample,preventedplantingcoverageforsmallgrainsistypically60%oftheguaranteeforplantedacreage,whilethepreventedplantingcoverageforonionsis45%oftheplantedacreageguarantee,andthepreventedplantingcoveragefornorthernpotatoesis25%oftheguaranteeforplantedacreage.68Inallcases,producersneedtochecktheirspecificcropinsurancedocumentstomakesureoftheircoverage.

    b. AdditionalLevelsofCoverageSometimesAvailable

    Sometimesitispossibleforproducerstopurchaseadditionalpreventedplantingcoverage.69Forexample,forsmallgrainscropinsurance,preventedplantingcoverageistypicallysetat60%oftheproductionguaranteeforacreagethatisplantedinatimelyway.Iftheproducerpaysanadditionalpremium,heorshemayincreasethislevelofcoverageforpreventedplanting.70

    67 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(c).68 7C.F.R.457.101,SmallGrainsCropProvisions,13.PreventedPlanting(b),457.135,OnionCropProvisions,14.PreventedPlanting,457.142,NorthernPotatoCropProvisions,12.PreventedPlanting.69 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(b);CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(b)(PolicyNo.05CRCBasic).See,forexample,7C.F.R.457.101,SmallGrainsCropProvisions,13.PreventedPlanting(b),457.108,SunflowerSeedCropProvisions,12.PreventedPlanting,457.142,NorthernPotatoCropProvisions,12.PreventedPlanting.70 7C.F.R.457.101,SmallGrainsCropProvisions,13.PreventedPlanting(b).

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    2. BasicsofPreventedPlantingCoverageEligibility

    a. InabilitytoPlantbyFinalPlantingDate

    Preventedplantingcoveragedependsontheinabilityoftheproducertoplantthecropbyacertaindate.71

    (1) FinalPlantingDate

    Iftheproducerispreventedfromplantingthecropbythefinalplantingdate,theproducermaybeeligibleforpreventedplantingcoverage.Thefinalplantingdate,whichwillvaryconsiderablybycropandcounty,isincludedintheproducerspolicy.72

    (2) LatePlantingPeriod

    Insomecases,theproducerwillalsohavethechancetoplantacropduringalateplantingperiod.73Producersarenotrequiredtotrytoplantduringthelateplantingperiodtobeeligibleforpreventedplantingcoverage.

    Iftheproducertriestoplantthecropduringorafterthelateplantingperiodbutispreventedfromdoingso,preventedplantingcoverageisstillavailable.Iftheproducerwasabletoplanttheinsuredcropduringorafterthelateplantingperiod,thecropwillbecoveredunderthelateplantingprovisions,discussedabove.

    b. PlantingPreventedDuetoInsuredCauseofLoss

    Inorderforpreventedplantingpaymentstobeavailable,thereasontheproducerisnotabletoplantmustbeincludedintheinsuredcausesofloss

    71 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Preventedplanting;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Preventedplanting(PolicyNo.05CRCBasic).72 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Finalplantingdate;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Finalplantingdate(PolicyNo.05CRCBasic).73 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(a)(3);CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(a)(3)(PolicyNo.05CRCBasic).

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    listedintheproducersinsurancepolicy.74Othercauseoflossrequirementsforpreventedplantingcoveragearethefollowing.

    (1) MustHaveAffectedOtherProducersWithSimilarAcreage

    Inorderforpreventedplantingcoveragetobeavailable,theproducermusthavebeenpreventedfromplantingtheinsuredcropduetoaninsuredcauseoflossthatisgeneraltothesurroundingarea.Thiscausemustalsopreventotherproducersfromplantingacreagewithsimilarcharacteristics.

    (2) ProperEquipmentWasUsed

    Theproducermusthavebeenunabletoplanttheinsuredcropdespiteusingproperequipment.

    (3) InputsandLandMustHaveBeenAvailableforPlantingandProducingtheCrop

    Theproducermustbeabletoprovethatheorshehadtheinputsavailabletoplantandproducethecropwithanexpectationofatleastproducingtheyieldusedtodeterminetheproductionguaranteeoramountofinsurance.75

    c. TriggeringCoverage:20Acresor20PercentofUnit

    Fortheproducertobeeligibleforpreventedplantingpayments,theaffectedacreagemustbeatleast20acresor20%oftheproducersinsurablecropacreageintheunit,whicheverisless.76

    d. OnceTriggerReachedDetermineTotalAcresCovered

    Onceatriggerforpreventedplantingcoverageismet,thenextstepistodeterminethetotalacresthatarecoveredforpreventedplanting.Thisis

    74 7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Preventedplanting;CropRevenueCoverage(CRC)InsurancePolicy,1.Definitions,Preventedplanting(PolicyNo.05CRCBasic).75 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(f)(9);CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(f)(10)(PolicyNo.05CRCBasic).76 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(f)(1);CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(f)(1)(PolicyNo.05CRCBasic).

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    donebysettingthemaximumeligiblepreventedplantingacreageandthenreducingthemaximumbythenumberofacresthattheproducerwasactuallyabletoplant.77Thisisarathercomplicatedcalculationthatconsiderswhetherthecropisrequiredtobecontractedwithaprocessortobeeligibleforcropinsurancecoverageandwhethertheproducerhas,inthelastfourcropyears,producedanycropforwhichpreventedplantingcoveragewasavailable.

    3. DroughtandPreventedPlanting

    Droughtwillbeconsideredaninsurablecauseoflossforpreventedplantinginsomecircumstances.78

    a. DroughtCoverageforNonIrrigatedAcreage

    Fornonirrigatedacreagetoqualifyfordroughtrelatedpreventedplantingcoverage,thecircumstancesdescribedbelowmustbetrueasofthefinalplantingdateforthecroporwithinthelateplantingperiodiftheproducertriedtoplantduringthelateplantingperiod.

    1. Thepreventedplantingareamusthaveinsufficientsoilmoistureforgerminationoftheseedandprogresstowardcropmaturity.

    2. Theinsufficientsoilmoisturemustbeduetoaprolongedperiodofdryweather.

    3. Theprolongeddeficienciesinprecipitationmustbeverifiablethroughinformationcollectedbysourceswhosebusinessitistorecordandstudytheweather.

    b. DroughtCoverageforIrrigatedAcreage

    Forirrigatedacreagetoqualifyfordroughtrelatedpreventedplantingcoverage,theremustbenoreasonableexpectationofhavingadequatewatertoproducetheyieldguaranteeorrevenueguaranteeasofthefinalplantingdateforthecroporwithinthelateplantingperiodiftheproducertriedtoplantduringthelateplantingperiod.

    77 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(e);CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(e)(PolicyNo.05CRCBasic).78 7C.F.R.457.8,CommonCropInsurancePolicy,17.PreventedPlanting(d);CropRevenueCoverage(CRC)InsurancePolicy,18.PreventedPlanting(d)(PolicyNo.05CRCBasic).

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    4. PreventedPlantingBenefitsBasedonaReducedGuarantee

    Ingeneral,indemnitypaymentsforacreagepreventedfrombeingplantedarebasedonareducedguarantee.Individualpoliciesshouldexplainhowthisprovisionworksforaparticularcrop.

    D. PlantingandInsuringaSubstituteCrop

    Onceacropfailsorispreventedfrombeingplanted,itisoftenpossiblefortheproducertoplantanalternativeorsubstitutecrop.Sometimesitispossibleforaproducertoinsurethatsubstitutecrop.Ifaproducerisnotabletoplantacropforwhichinsurancehasbeenobtained,FCICmayallowtheproducertoinsureasubstitutecropunderaCATpolicyafterthesalesclosingdatebutbeforetheacreagereportingdate.79

    Thecoveragerulesforasecondcroponthesameacreageinagivencropyeararequitecomplicated,withmanydecisionsandresponsibilitiesforproducers,includingreportingobligations.80Producersshouldconsultwiththeirinsuranceprovidersaboutcoverageforsecondcrops.

    1. WhereFirstCropSuffersTotalorPartialInsurableLoss

    Producerswhosefirstcropsufferedatotalorpartialinsurablelossmaychooseoneoftwocoverageoptions.First,theproducercanchoosenottoplantasecondcropandinsteadcollectaninsurancepaymentequalto100%oftheinsurablelossforthefirstcrop.81Second,theproducercanchoosetoplantasecondcropandcollectanupfrontpaymentof35%oftheinsurablelossforthefirstcrop.82Iftheproducerthendoesnotsufferaninsurablelosstothesecondcrop,theproducerwillbepaidtheremainderofthefullindemnitypaymentfor

    79 7C.F.R.400.654(c).80 See7C.F.R.457.v8,CommonCropInsurancePolicy,9.InsurableAcreage(a)(8).81 7U.S.C.1508a(b)(1)(A);7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(e)(1).82 7U.S.C.1508a(b)(1)(B);7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(e)(2)(i).

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    thefirstcroploss.83Thepremiumpaidforthefirstcropwillbeadjustedtoreflecteitherthepartialorfullindemnitypaymentforthefirstcrop.84

    2. WhereFirstCropIsPreventedFromBeingPlanted

    Ifafirstinsuredcropispreventedfrombeingplanted,theproducermaysimilarlychooseoneoftwooptions.First,theproducermayelectnottoplantasecondcropandcollectanindemnitypaymentequalto100%ofthepreventedplantingguaranteefortheacreageforthefirstcrop.85Thisoption,however,isavailableonlyinthosesituationsinwhichotherproducers,intheareawhereafirstcropispreventedfrombeingplantedislocated,arealsogenerallyaffectedbytheconditionsthatpreventedthefirstcropfrombeingplanted.86

    Underthesecondoption,theproducermayplantasecondcropandcollectanupfrontpaymentofupto35%ofthepreventedplantingguaranteeforthefirstcrop.87Thisoptionisalsoonlyavailableifotherproducersintheareaaregenerallyaffectedbytheconditionsthatpreventedthefirstcropsplanting.88AfurtherrequirementisthatthesecondcropcannotbeplantedbeforethelatestplantingdateestablishedbyFCICforthefirstcrop.89Thepremiumpaidforthefirstcropwillbeadjustedtoreflecteitherthepartialorfullindemnitypayment.90

    83 7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(e)(2)(iii)(A).84 7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(e)(2)(ii),(iii)(B).85 7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(f)(1).86 7U.S.C.1508a(c)(4).See7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Preventedplanting.87 7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(f)(2)(i).88 See7C.F.R.457.8,CommonCropInsurancePolicy,1.Definitions,Preventedplanting.89 7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(f)(2)(i).90 7C.F.R.457.8,CommonCropInsurancePolicy,15.ProductionIncludedinDetermininganIndemnityandPaymentReductions(f)(2)(ii).

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    Ifthisoptioniselected,theproducerwillreceiveanassignedyieldforthefirstcropforfutureactualproductionhistorycalculationsequalto60%oftheproducerscurrentactualproductionhistoryyieldforthecrop.91

    VII.ClaimingFederalCropInsuranceBenefits

    Theproducerisresponsiblefortakingcertainactionswhenheorshediscoversacroploss.Whethertheproduceractsappropriatelyandpromptlymaydeterminewhethertheinsuranceproviderwillmakeanindemnitypaymentontheloss.

    A. CropInsuranceContractDefinesObligations

    Theactionsthattheproducermusttakeafteralossarewrittenintheinsurancecontract.Formanycontracts,theycanbefoundinthesectioncalledDutiesintheEventofDamage,Loss,Abandonment,Destruction,orAlternativeUseofCroporAcreage.Thedutiesspecifiedinthecontractsignedbytheproducerdetermineexactlywhatactionsarerequired.

    B. CommonProducerObligations

    Thefollowingguidelinesprovidealistofthemostcommonrequirementsforproducerswhohavesufferedaloss.92Failuretosatisfytheserequirementswillusuallyresultindenialofcoverage.

    1. ProtecttheCrop

    Theproducershouldprotectthecropfromfurtherdamagebyprovidingsufficientcareforthecrop.

    91 7C.F.R.457.8,CommonCropInsurancePolicy,3.InsuranceGuarantees,CoverageLevels,andPricesforDeterminingIndemnities(h).Ifpartoftheunitisplantedandpartispreventedfrombeingplanted,theyieldwillbedeterminedby(1)multiplyingthenumberofinsuredpreventedplantingacresby60%oftheproducersapprovedyieldforthefirstinsuredcrop;(2)andaddingthatamounttotheappraisedorharvestedproductionforalloftheinsuredplantedacreage;and(3)dividingthatamountbythetotalnumberofacresintheunit.92 Thislistisderivedfrom7C.F.R.457.8,CommonCropInsurancePolicy,14.DutiesintheEventofDamage,Loss,Abandonment,Destruction,orAlternativeUseofCroporAcreage,YourDuties;CropRevenueCoverage(CRC)InsurancePolicy,15.DutiesintheEventofDamage,Loss,Abandonment,Destruction,orAlternativeUseofCroporAcreage,YourDuties(PolicyNo.05CRCBasic).

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    2. GiveNoticetoProviderasSoonasPossibleOftenWithin72Hours

    Theproducershouldgivenoticetotheinsuranceproviderassoonaspossibleafterthelossisdiscovered.Manypoliciesrequirethattheproducergivenoticewithin72hoursofthefirstdiscoveryofcropdamage(andnolaterthan15daysaftertheendoftheinsuranceperiod).Forpreventedplanting,theproducermustgivenoticewithin72hoursafterthefinalplantingdate,theendofthelateplantingperiod,orthedatetheproducerdeterminesitwouldnotbepossibletoplanttheinsuredcropwithinanylateplantingperiod,asapplicable.Mostpoliciesallowtheinitialnoticetobemadebyphoneorinpersonbutrequireawrittenconfirmationwithin15days.

    3. LeaveRepresentativeSamples

    Theproducershouldleaverepresentativesamplesofthecropintactforeachinsuredfield.

    4. AllowProvidertoExamineCrop

    Thecropinsuranceproviderwillretaintherighttoexaminetheinsuredcropasoftenasitreasonablyrequires.Failuretoprovideaccesswillresultinadeterminationthatnopaymentisdueunderthepolicyforthatcropyear.93

    5. CooperateWithInvestigationandSettlement

    Theproducermustcooperatewiththeprivateinsuranceproviderinthesettlementoftheclaim.Thismeansthat,aslongastherequestsarereasonable,theproducermustshowtheproviderthedamagedcrop,allowtheprovidertoremovesamplesofthecrop,providerecordsanddocumentsthattheproviderrequests,andallowtheprovidertomakecopiesoftherecords.

    6. GetConsentBeforeSomeActions

    Theproducershouldgetwrittenconsentfromtheinsuranceproviderbeforetakingsomeactions.Theseinclude:

    Destroyinganyoftheinsuredcropthatisnotharvested.

    Puttingtheinsuredcroptoanalternativeuse.

    93 7C.F.R.457.8,CommonCropInsurancePolicy,21.AccesstoInsuredCropandRecordRetention(e);CropRevenueCoverage(CRC)InsurancePolicy,21.AccesstoInsuredCropandRecordRetention(e)(PolicyNo.05CRCBasic).

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    Puttingtheacreagetoanotheruse.

    Abandoninganyportionoftheinsuredcrop.

    Theinsuranceprovidermustalsobeinformed,inwriting,afteranyoftheseactionsaretaken.

    Inmostcases,theinsuranceproviderwillnotgiveaproducerpermissiontotakeanyoftheseactionsifitispracticaltoreplantthecrop.Also,theproducerwillgenerallynotbepermittedtotakeanyoftheseactionsuntiltheproviderhasmadeanappraisalofthepotentialproductionofthecrop.

    7. SubmitaWrittenClaim

    Inadditiontocomplyingwithallothernoticerequirements,theproducermustsubmitawrittenclaimforindemnitydeclaringtheamountofcroploss.Thisclaimusuallymustbefilednolaterthan60daysaftertheendoftheinsuranceperiod.Anextensionmaybepossibleiftheamountoflosscannotbedeterminedwithinthetimelimit.Thewrittenclaimmustincludealltheinformationrequiredunderthecontractforsettlingtheclaim.

    8. ProvideRequestedAdditionalInformation

    Upontherequestoftheinsuranceprovider,theproducermustalsocooperateinprovidingcertainadditionalinformation.

    a. HarvestingandMarketingRecords

    Theproducermustprovideacompleteharvestingandmarketingrecordofeachinsuredcrop,byunit.Thisincludesseparaterecordsshowingthesametypesofinformationforproductionfromanyacreagethatwasnotinsured.Producerswhotakeadvantageoftheopportunitytoplantasecondcropafterafirstinsuredcrophasbeendamagedorpreventedfrombeingplantedwillhaveadditionalreportingrequirements.

    b. ExaminationUnderOath

    Ifrequested,theproducermustusuallysubmittoanexaminationunderoath.

    9. EstablishProof

    Theproducerwillusuallyneedtoprove:

    a. thetotalproductionorvaluereceivedfortheinsuredcrop;

    b. thatanycroplossoccurredduringtheinsuranceperiod;and

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    c. thatanycroplosswasdirectlycausedbyoneormoreoftheinsuredcauses.

    10. RetainRecords

    Producersarerequiredtomaintainanumberofdifferentrecordsasproofoftheireligibilityforcropinsurancecoverageand/orpayment.FCICortheinsuranceprovidermayextendtheperiodthattherecordsmustbekeptbynotifyingtheproduceroftheextensioninwriting.94

    a. HarvestandSaleRecordsforThreeYears

    Forthreeyearsaftertheendofthecoveredcropyear,theproducermustretainacompleterecordoftheplanting,replanting,inputs,production,harvesting,anddispositionofallcrops,includingacreagenotinsured.95

    b. ProductionRecordsforThreeYears

    Therecordsusedbytheproducertoestablishthebasisforproductionreportsmustalsoberetainedforthreeyearsafterthecoverageyearandmustbeprovidedtotheinsuranceprovideruponrequest.

    c. PenaltiesforFailingtoRetainRecords

    Failuretoretainrecordscanresult,attheoptionoftheprovider,inthecancellationofthepolicy,productionlevelsbeingassignedtounitsbytheprovider,and/orthedenialofanindemnitypayment.

    C. CommonInsuranceProviderObligations

    Cropinsuranceregulationsalsosetoutalimitednumberofobligationsthatmustbemetbytheprivateinsuranceprovider.96Theseincludethefollowing.

    94 7C.F.R.457.8,CommonCropInsurancePolicy,21.AccesstoInsuredCropandRecords,andRecordRetention(c);CropRevenueCoverage(CRC)InsurancePolicy,21.AccesstoInsuredCropandRecords,andRecordRetention(c)(PolicyNo.05CRCBasic).95 7C.F.R.457.8,CommonCropInsurancePolicy,21.AccesstoInsuredCropandRecords,andRecordRetention(b)(1);CropRevenueCoverage(CRC)InsurancePolicy,21.AccesstoInsuredCropandRecords,andRecordRetention(b)(1)(PolicyNo.05CRCBasic).96 Thislistisderivedfrom7C.F.R.457.8,CommonCropInsurancePolicy,14.DutiesintheEventofDamage,Loss,Abandonment,Destruction,orAlternativeUseofCroporAcreage,OurDuties;CropRevenueCoverage(CRC)InsurancePolicy,15.DutiesintheEventofDamage,

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    1. PayWithin30DaysofClaimResolution

    Iftheproducermeetsallofthecropinsurancepolicyrequirements,theinsuranceprovidermustgenerallypaytheproducerwithin30daysaftertheproviderandproducerreachanagreementregardingthesettlement.

    Iftheproducerandprovidercannotreachanagreement,theprovidermustpaytheowedclaimwithin30daysafterthecompletionofanarbitration,reconsiderationofadeterminationofgoodfarmingpractices,orotherappeal,orwithin30daysafteracourtentersfinaljudgmentinthedispute.

    Paymentmustalsobemadewithin30daysofthecompletionofanyinvestigationbyUSDAofacurrentorpastclaimforindemnity,unlessevidenceofwrongdoingisfound.Ifevidenceofwrongdoingisfound,theinsuranceprovidermayoffsettheindemnitydueagainstanyoverpayment.

    2. GiveNoticeIfUnabletoPayinTime

    Iftheinsuranceproviderisunabletopaythelosswithinthe30dayperiod,theprovidermustgivetheproducernoticeofitsintentionswithinthe30dayperiod.

    3. UseFCICLossProcedures

    TheprivateinsuranceprovidermustapplythelossadjustmentproceduresestablishedorapprovedbyFCIC.Buttheprovidermaydeferadjustmentofthecroplossuntiltheamountofthelosscanbeaccuratelydetermined.Theproviderisnotobligatedtopayforadditionaldamageresultingfromtheproducersfailuretoprovidesufficientcareforthecropduringthisdeferralperiod.

    Loss,Abandonment,Destruction,orAlternativeUseofCroporAcreage,OurDuties(PolicyNo.05CRCBasic).