Avoiding crop insurance claim denials
NORTHEAST, IN — Over the years I have had friends and family ask me to go to Las Vegas and partake in the casino experience. My standard response is that as a farmer every year I gamble enough. Fortunately, as famers we have the ability to purchase a safety net in the form of crop insurance so as to protect us from our gambling ways.
However, like any safety net, crop insurance can be wrought with holes. Over the years I’ve seen producers have their claims denied for many different reasons. Often times these reasons are really no fault of the producer. Simply stated, the federal crop insurance rules are very complex and can be unforgiving.
Generally, when a producer believes they have a claim, they call up their agent. The agent then submits a claim and at some point an adjuster is assigned to the case. The adjuster comes out to the farm and evaluates the crop, measures bins, and so forth. Although the adjuster should be well versed in the procedures, sometimes such is not the case. We had a case a few years ago where the producer had frost kill the corn before it reached maturity. The producer wanted to have the corn salvaged for silage. The adjuster informed the producer that strips would have to be left in the field for further analysis. So, the producer left 2 rows of corn at various areas of the field. However, the claim was denied because the insurance company said a full combine header width should have been left, not just two rows.
Unless a producer is going to become well versed in the Loss Adjustment Manual (LAM) that governs the procedures for evaluating certain losses, and is several hundred pages long, the producer is at the mercy of the instructions given to them by the adjuster.
When you are faced with a loss, and given instruction by an adjuster or other insurance company representative, it is critical that a producer document what is told to them. It is even advisable that you have the individual write out the instructions and sign. That way if the actions of the producer are ever questioned, there is hard evidence that the producer was following the instructions given to them. The crop insurance rules generally allow a “no harm-no foul” relief if the producer was following the direction of the crop insurance company. But, if the producer cannot prove they were following such directions, it turns into an uphill battle quickly.
It is advisable that a producer keep a log that keeps track of the following:
1. Date that loss was first detected by producer.
2. Date that insurance company was contacted and who was spoken to by the producer.
3. Date that adjuster contacted producer and name of adjuster.
4. Date that adjuster made an onsite visit.
5. Specifics that were told to the producer, especially instructions, by the adjuster.
6. What action was taken by the producer and when.
In addition, if a picture is worth a thousand words, a video is worth a million. Take pictures of the issues that you encounter, and even a video. Further, with the adjuster’s consent, even videoing the conversation with the adjuster and the instructions given should not be looked at as being overbroad.
Although none of us want more paperwork, doing some of the above can ensure that holes in the safety net are stitched shut. Just like a chain is only as strong as its weakest link, the crop insurance safety net is only as strong as the weakest cord. Unfortunately, a producer may not know of the weakest cord until the claim is denied. Most importantly, if a producer disagrees with the denial of a claim, there is generally a one year limitation to appeal the denial. Failure to file an appeal in that time frame will close the door on the ability to appeal.
John J. Schwarz, II, is a lifelong farmer and farms 4,000 acres with his family in Northeast Indiana and has been an agricultural law attorney for 12 years. He can be reached at 260-351-4440, firstname.lastname@example.org, or visit him at www.farmlegacy.com. These articles are for general informational purposes only and do not constitute an attorney-client relationship.