The Risk Management Agency (RMA) has issued Managers Bulletin MGR-19-008 addressing 2018 flood claims. RMA states that due to the flooding producers have lost production while in storage and that damage in storage is not covered under the Federal crop insurance program. However, RMA also states that it has procedures in place that allowed for an 180-day delay in the measurement in farm-stored production and allowed for additional time to harvest if granted by the approved insurance provider (AIP). The flooding could have caused damage to not only the stored production but also the unharvested production.
RMA has authorized emergency procedures in all counties in Iowa, Kansas, Missouri and Nebraska impacted by flooding. On a case-by-case basis, AIPs can use the emergency procedures for 2018 claims. AIPs are able to forego the storage structure measurements and use load records, farm management records, weighed production from farm scales or grain carts, and storage structure measurements done before the flooding.
For situations where additional time was given to harvest, RMA stated AIPs should follow procedures in subparagraphs 1108A and 1102H(3) of the Loss Adjustment Manual (LAM) on Flooded crops and Zero Market Value production. RMA states that the AIPs may finalize claims based on the insured’s signed certification that the production will be destroyed. The certification can be in the narrative of the claim for or on a separate certification form that is signed and dated and contains the certification statement provided in the bulletin.
ANALYSIS – With respect to farm-stored production, these procedures make sense and still require the use of contemporaneous and verifiable harvest records to calculate production to count. These procedures clearly do not consider losses that have occurred when in storage.
With respect to the delayed harvest, the procedures appear to presume a zero value, or at best a salvage value, and destruction of the crop. The bulletin seems to authorize the claim to be based on this zero value. The procedures do not address the fact that damage could have occurred after the insurance period. The bulletin only references subparagraphs 1102H(3) of the LAM, which deals with when the AIP determines the crop has zero value or a Federal or State agency requires destruction of the crop, and subparagraph 1108A of the LAM, which also deals with situations where the Federal or State agencies require destruction of the crop. The end of the insurance period is harvest of the crop or the date contained in the Crop Provisions or Special Provisions. For the coarse grains crops, which include corn, grain sorghum and soybeans, the latest end of the insurance period is December 10, 2018. The flooding did not occur until March 2019. It would appear that these flooding losses are uninsurable because they occurred after the end of the insurance period. The procedures would suggest that there should ne a proration of insurable to uninsurable losses. Therefore, it is unclear what authority is being used to allow a zero value.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.