2012 Drought Questions and Answers- Insurance Companies' Ability to Make Indemnity (Claims) Payments

Yes, all AIPs who sell and service Federal crop insurance policies must have surplus adequate to cover their written premium, after all reinsurance considerations, equal to meeting the obligations for two catastrophic loss years. The AIP must meet certain regulatory and financial standards, which are monitored and reviewed by RMA to ensure financial soundness. In addition, because the policies are reinsured by the Federal Crop Insurance Corporation (FCIC), if an AIP is unable to pay any indemnities owed, any losses you have will be paid by the FCIC based on your insurance policy.

 

Contact your AIP (agent) before putting spring-planted crop acres to another use such as harvesting for silage, diverting irrigation water, destroying the crop, or abandoning the acres. Notice of damage must be given within 72 hours of the initial discovery of damage or loss of production, but not later than 15 days after the end of the insurance period, even if the crop has not been harvested. It is very important to work closely with your AIP before making any changes to the care of the insured crop. The AIP must have a chance to appraise and release the acres before the crop is put to another use, destroyed, or abandoned. If an accurate appraisal cannot be made, or you disagree with the appraisal at the time acreage is to be destroyed or no longer cared for, you and the AIP can select representative sample areas of the crop to be left intact for future appraisal purposes. In this case, the representative sample areas must continue to be cared for, with the exception of irrigation, until the final appraisal can be made.

 

Crops that have been damaged and will be taken to harvest must be cared for and maintained using generally recognized good farming practices. Agricultural experts in the area can advise on farming practices required to maintain the production in the field and to help protect the crop from further damage. With the AIP's agreement, you may destroy or abandon the crop and leave representative sample areas in accordance with paragraph 88 of the Loss Adjustment Manual (LAM). The representative sample areas must be maintained as if the entire crop was left intact until the AIP conducts a final inspection an release the representative sample areas. Failure to properly maintain the crop following damage could result in a determination that the cause of loss was not covered and, therefore, no claim payment is due.                   

 

Yes, but you must contact your AIP before cutting any corn insured as grain for silage. If any portion of the crop will not be harvested or will be put to another use (i.e, harvested as silage in a county where corn is insured only on a grain basis), the insured crop must be appraised as soon as possible, but before the corn is cut for silage. If an accurate appraisal cannot be made, the AIP may defer the appraisal until such time an accurate appraisal can be made (i.e, using the maturity line appraisal method versus stand reduction appraisal method). If you disagree with the initial appraisal, request to defer the appraisal, and if the AIP agrees, representative sample areas of the unharvested crop may be left for future appraisal in accordance with paragraph 88 of the LAM. In this case, the representative sample areas must be cared for and maintained, with the exception of irrigation, until the final appraisal can be made. 

           

You must notify your AIP before harvesting or placing harvested grain in storage if you suspect your grain contains aflatoxin. Because aflatoxin can worsen in storage, aflatoxin losses are only insurable if the grain is tested at an approved testing facility before being moved into commercial or on-farm storage. You may arrange with your AIP to leave representative sample areas of the unharvested crop from which the adjuster can obtain samples for aflatoxin testing. Losses resulting from an increase in the aflatoxin level while in on-farm storage, or failure to get proper aflatoxin testing, are not covered under the crop insurance policy.

              

Yes, if the automated planter monitor and combine monitor are integrated with Global Positioning System technology and yield mapping software. Contact your AIP (agent) for more information about the requirements and use of precision farming technology and your crop insurance policy.

 

Yes, you should maintain alternate production records by insurance unit, type and practice, from third party sources (such as grain buyer settlement sheets, commercial storage records, etc.) and provide your AIP access to any farm-stored grain to assist in validating the accuracy of your precision farming technology system records.

Yes, you must provide written documentation that you have calibrated the system for each crop year and for each crop according to the owner's manual specifications, and the results of any sensor calibration adjustments you made to your automated monitoring systems. The results of the calibration must not exceed 3 percent when compared to the actual weighed production harvested from the acreage used to calibrate the sensors.

 

Yes, you may weigh and store production on your farm to keep records of separate production for optional units, basic units, and separate production from insured and uninsured acreage. Your weighed production will be used for crop insurance provided it is within 3 percent of the adjuster-measured and calculated production. You must use acceptable scale types and meet acceptable weight tickets/records. Acceptable scale types are: non-portable farm scales, commercial elevator scales, or grain carts if the grain cart can produce printed tickets showing the weight, or has an integrated display panel to show the weight of the production in the cart (if the cart is available so the cart's capacity can be determined). If you have acceptable harvested production from a precision farming technology system, this procedure will not apply.

 

The maximum price limit for corn and soybeans is the base price multiplied by two. For example, in most of the country the corn base price is $5.68x2=$11.36 maximum price limit." 

 

The above information is provided by USDA Risk Management Agency.