Crop Insurance, Disaster Assistance: Tips For Working Through the Rules

By Jane Fyksen, Crops Editor
Wednesday, June 18, 2008 10:37 AM CDT

The demand for crop insurance claim adjustment will be significant in the aftermath of recent flooding, says Paul Mitchell, UW-Madison cropping systems economics specialist. Time is of the essence, as yield potential decreases daily for late-planted and replanted crops. Farmers want rapid and accurate loss adjustment and to move onto replanting or converting insured acres to other crops as soon as possible.

Mitchell has some advice for producers filing late and prevented planting or replant claims. He cautions that to be covered, policy rules must be followed. However, producers can help speed the process along, he points out.

Start by contacting your crop insurance agent to launch the loss claim process. Stay in regular contact with the agent and follow up to make sure your claim doesn’t "fall through the cracks." Mitchell says your agent may need to keep reminding the company of the need for adjustment on your behalf, as it’s the company that sends the loss adjusters out to the farm. The agent can’t be present or involved directly in loss adjustment, other than filing the necessary forms with the insurance company.

Growers should also check with their agent to ensure that their file is as complete as they can make it before the adjuster begins to process their claim. Delays can happen if the adjuster needs additional forms or other paperwork. “This can be especially frustrating if the farmer could easily have had the information ready if he or she knew it was needed. This may entail requesting paperwork from the county FSA office,” says Mitchell.

Once the loss adjuster has completed the adjustment process, the grower can replant or put in an alternative crop. Get your options clarified with the agent before the loss adjustment occurs so once the process is completed, work can get underway as soon as possible. “In all cases, the farmer should make sure the loss adjuster has completed the loss adjustment process,” Mitchell warns.

Finally, be ready to certify planting dates for all acres — on which specific date each specific acre was planted. For late-planted acres, this will be important for establishing unit guarantees and losses. “Having clear and accurate records of which acres were planted when will be very useful and speed the process along,” says Mitchell.

“In the end, a farmer must wait for the agent, the adjuster, and the insurance company, or risk losing coverage,” he reports. In the midst of it all, assess agents and companies as to the service they provide to see if you’ll continue to want to do business with them in the future.

With this year’s high crop and input prices, many farmers bought crop insurance who didn’t do so before. They may be unfamiliar with the rules. Mitchell describes replant provisions and late and prevented planting coverage for APH and CRC and the forage seeding and forage production policies. He cautions that “if you have a question, contact your crop insurance agent and find out the rules and your options.”

The final planting dates in Wisconsin for corn for grain, corn for silage and soybeans are past. If growers plant insured corn or soybean acreage after those dates, they must notify their agent - even if they haven’t elected late and prevented planting coverage. Mitchell notes that small areas don’t trigger late and prevented planting provisions; the area must exceed 20 acres or 20 percent of the unit’s acreage to qualify. That’s known as “the 20-20 rule,” he says.

The final planting date for the forage seeding policy is also long gone, and that policy doesn’t have late and prevented planting coverage or replant provisions as described below, but its own specific provisions.

Once late or prevented planting is triggered by missing final planting dates, farmers have different options, which should be discussed with their agent. The crop can be planted late and the unit’s yield guarantee reduced. A different crop can be planted (possibly with reduced insurance coverage). Or, the land can be left fallow and an indemnity received for prevented planting, Mitchell describes. Don’t miss indemnities you’re due or inadvertently forfeit insurance coverage, he warns.

“Crop policies with late planting provisions allow planting the crop after the final planting date, but the unit’s yield guarantee is reduced. The contribution of late planted acres to calculating a unit’s APH yield guarantee is reduced by one percent for each day after the final planting date the acres are planted, up to 25 days. If planting occurs 25 days after the late planting date, the contribution of these late planted acres is fixed at 60 percent of their timely planted yield,” he explains.

“A farmer prevented from planting acres to the insured crop can choose to plant a different crop (possibly with insurance coverage), or not plant any crop. For example, a farmer prevented from planting corn may elect to plant soybeans, and, if APH soybean coverage had been purchased, could receive insurance coverage for these soybean acres, with reduced coverage for late planting if applicable,” says Mitchell.

“Alternatively, a farmer can leave the land fallow and receive a prevented planting indemnity equal to 60 percent of the yield guarantee - more if higher prevented planting coverage is elected. Farmers leaving land fallow should communicate with their crop insurance agent concerning allowable activities on this land. Grazing or haying a volunteer or cover crop prior to Nov. 1 constitutes a second crop and reduces prevented planting indemnities,” he warns. “Always check with your crop insurance agent before doing something with insured acres.”

Replant provisions eyed

If a stand was damaged so projected yield is less than 90 percent of the APH yield guarantee, you can receive an indemnity for part of the actual cost of replanting. The affected area must exceed 20 acres or 20 percent of the unit’s acreage (i.e. the 20-20 rule). The maximum indemnity is the chosen price election multiplied by 20 percent of the yield guarantee, up to 8 bushels for corn, 3 bushels for soybeans and one ton for corn silage. The replanted crop has the same production guarantee as for the original plant date (i.e. no reduction for late planting is imposed). Note that the replant option is not available for all policies or crops, so contact your agent for clarification.

Forage policies in focus

For those with a forage seeding policy, an indemnity is paid if the established stand is less than 75 percent of a normal stand due to wet weather and flooding. Indemnities are reduced by half if the established stand is above 55 percent. If a loss occurs, farmers can elect to replant, receiving 50 percent of the normal indemnity, but must first receive permission to replant. “If you have stand losses on your seeded acres due to the recent weather events, contact your crop insurance agent to be sure you know the rules so you will receive indemnities you are owed and know your replant options, so you do not inadvertently forfeit your coverage,” he warns.

For those with a forage production policy, the key is to keep proper records of harvest; if you are unsure how, contact your agent. If you lose first cutting because of weather, call your agent to properly document your loss; usually a field visit will be required to adjust the loss.

“If flooding is sufficiently severe, you may want to officially abandon the insured acreage, but again, you must receive permission to do so in order to document your losses and not to forfeit your coverage,” says Mitchell.

“Forage policies also have specific rules regarding use of the acres for grazing. In general, you must receive permission before grazing the crop; if you fail to do, you may forfeit your coverage,” he warns.

This year with skyrocketing crop prices and soaring input costs, Mitchell says crop insurance is “more valuable than it has been in past years.” “This is not a year to inadvertently lose your indemnities because you did not understand the rules or to fail to take advantage of your options because you did not know you had them,” he says.

Disaster assistance for uninsured

Not all farmers have crop insurance. Wisconsin farmers suffering significant crop loss from recent disasters should contact their county FSA office to report their losses - even if they don’t have federal crop insurance or NAP coverage, Mitchell suggests. Disaster declarations have already been made for some counties and more may be coming. Keep records of acreage planted, yields and production, as well as photographs of damaged crops, buildings, fences, and other structures.

Besides federal disaster programs specifically for recent losses, FSA does have other types of disaster assistance available, Mitchell explains.

FSA’s Emergency Conservation Program (ECP) provides emergency funding and technical assistance to rehabilitate farmland damaged by natural disasters. For farmers affected by flooding and excessive rainfall, funding may be available to remove debris and restore fences and conservation structures. Eligibility requirements must be met and payment limits exist. For more information, see http://www.fsa.usda.gov/Internet/FSA_File/ecpagi07.pdf. Producers seeding ECP funding to help with flood cleanup should contact their county FSA office before taking any action to determine their eligibility and begin the process for obtaining funding.

Mitchell says FSA also provides Emergency Farm Loans to help producers recover from natural disasters. These loans can be used for restoring or replacing essential property, paying part or all of production costs during a disaster year, family living expenses, reorganizing the farm operation, and refinancing some debts. These loans are generally short-term (less than seven years) and have competitive interest rates (currently 3.75 percent, according to Mitchell). Eligibility and collateral requirements apply.

Loan recipients must keep acceptable farm records and may be required to participate in financial management training and buy crop insurance.

FSA also administers other loan programs to help farmers recover from disasters, including loans for beginning or socially disadvantaged farmers and providing loan guarantees for qualifying farmers.

NAP examined

For farmers growing less common crops, crop-specific federal crop insurance policies may not exist. To fill this gap, FSA manages the Noninsured Crop Disaster Assistance Program (NAP) to provide insurance coverage. NAP coverage is similar to catastrophic coverage for standard insurable crops; a 50 percent or greater yield loss is needed to trigger payments. Losses are paid at 55 percent of the established conventional price for the crop, and premiums are generally low. Affected farmers with NAP coverage should contact their county FSA office to report losses and determine eligibility for payments, Mitchell advises. For more information see http://www.fsa.usda.gov/Internet/FSA_File/nap07.pdf.

Another insurance to consider is AGR-Lite, a policy that insures a farmer’s Schedule F income as a whole farm insurance policy. While it’s too late for this year, Mitchell says this insurance is worth serious consideration for future years. (See http://www.rma.usda.gov/pubs/rme/agr-lite.pdf.)

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