The Risk Management Agency (RMA) issued Final Agency Determination FAD-288 regarding the interpretation of section 14 of the Common Crop Insurance Policy Basic Provisions (Basic Provisions). The requestor’s interpretation is that the producer’s claim must be paid even if it is not timely filed as long as the approved insurance provider (AIP) can accurately adjust the loss based on section 14(b)(5). The requestor claims that section 14(b)(5) and 14(e) must be read together to allow payment of the claim where the notice of loss is provided within a period that the loss can accurately be adjusted. The requestor refers to FAD-018, which states that if failure to comply with a provision is determined not to affect the amount of existence of a loss, or when the policy provides a remedy for the failure to comply, an indemnity may still be paid. The requestor states that FAD-92, FAD-97, and FAD-176 emphasize that a breach does not require denial of a claim if the AIP can accurately adjust the loss.
RMA agreed with the requestor’s interpretation that a claim may be paid if the AIP can accurately adjust the loss, provided all other policy provisions have been met even though the claim was not timely filed. RMA refers to FAD-176, which states that for production losses, notice of loss must be filed not later than 15 days after the end of the insurance period, which is the date harvest was completed on the unit or the date in the Special Provisions. If the notice of loss is not timely filed, the loss is considered due to insured causes for the acreage for which the notice of loss was untimely filed unless the AIP determines it can accurately adjust the loss. RMA states that if the AIP determines the loss cannot be accurately adjusted, and timely notice has not been filed, the loss is considered due to uninsured causes.
ANALYSIS – The requestor and RMA are correct that the policy states that claims can be paid even if notices of loss are not timely filed as long as the AIP can accurately adjust the loss. This provision was added to protect producers from their own failure to comply with the notice provision and claims were denied. The problem is that it puts AIPs in an untenable position of having to try to adjust losses without the contemporaneousness allowed by timely notices. In some cases notice is provided after the insurance period where intervening causes of loss may have occurred. AIPs must determine whether they can accurately adjust the loss. This provides another mechanism for dispute in a policy that mandates that producers timely file a notice of loss. It effectively renders to timely notice requirements irrelevant because producers will always argue that the loss can still be accurately adjusted. AIPs either agree or get sued. Non-compliance of a policy provision by the producer should not add to the burden of the AIP. If the deadlines are too tight to allow compliance, the deadlines should be adjusted.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.