On September 18, 2019, the Risk Management Agency (RMA) issued a “2019 Claims Advisory – Contained Water.” RMA stated that it received reports concerning prevented planting eligibility on acreage affected by water contained by or in structures that are designed to contain a specific amount of water. RMA refers to section 12(c) of the Common Crop Insurance Policy Basic Provisions for the policy language and the Loss Adjustment Manual Standards Handbook for the procedures on how to administer loss determinations.
In its action section, RMA states that approved insurance providers must determine prevented planting eligibility on a case-by-case basis, regardless of land elevation, and that AIPs must follow approved policy and procedure. RMA states that if the producer can prove that conditions exist that prevented them from planting, AIPs may pay the claim despite subsequent contained water inundating the acreage. RMA states that the loss file must contain supporting evidence and that blanket loss adjustment determinations are not allowed.
ANALYSIS – It is unclear the purpose of this advisory since it contains so little information. Is this bulletin referring to the waterways, like the Mississippi, flooding acreage and preventing planting? Is the question low elevation versus high elevation acreage and the need to determine whether the acreage was truly prevented from planting? Is this bulletin referring to breaches of contained water structures caused by excess moisture or authorities opening dams or levees to mitigate flooding.
From the advisory, it is unclear but the answers to these questions are necessary to make a determination of prevented planting eligibility. If the contained water structure is breached by excess moisture, and there is no negligence, then this is a natural disaster covered by the policy and the acreage should be eligible for prevented planting regardless of whether the acreage had been prevented from planting before the breach. If the contained water structures were opened to mitigate flooding, the question is whether the producers acreage would have flooded or been prevented from planting notwithstanding the opening. For example, years ago RMA allowed coverage for acreage damaged by the opening of the Morganza Spillway because the Army Corps of Engineers provided evidence that the acreage would have been damaged regardless of whether the spillway was opened and that opening the spillway reduced the damage. One assumes the same principle applies here. However, from the information provided it is hard to determine what RMA intended.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.