Crop production is a cash intensive, high risk venture. Many unknowns exist that farmers must deal with, such as production costs, market conditions and weather/growing conditions. Production costs can be controlled by early purchases or prepayments to take advantage of discounts and other incentives, and future contracts and forward pricing can control market conditions.
The financial impact of unpredictable weather can only be mitigated by crop insurance. Once you have purchased your policy, how do you go about making sure you do not miss out on an indemnity (claim) payment?
Let’s work through a scenario. Our producer has Multi-Peril Crop Insurance, which provides the grower/producer protection that is based on a data set of historical yields (generated from the producer’s past experience). He has a yield history of 150 bushels per acre, and he has purchased coverage at the 70% level. This means that his guarantee per acre is 105 bushels. (In other words, if his production drops below 105 bushels/acre he will have a claim; 150 Bu/ac x 70%.).
The farmer’s corn was planted in a timely fashion in the spring and the weather/ground conditions are ideal. By mid-July the rains have stopped and the corn is beginning to show heat stress and stalks and husks are beginning to turn brown.
Steps to file a claim:
Call his crop Insurance agent and file a “Notice of Damage.” This puts the company on notice that there is the possibility of a loss. Technically, this is to be done within 3 days of when the producer thinks he may have a claim. (NOTE: This only serves as a notice of a possible loss.)
As the growing season progresses, if it becomes apparent that there is a loss, then the producer must call his agent and file a “Notice of Loss.” This will trigger an adjuster to come and look at the crop. The producer should file a notice at the first sign of loss.
The adjuster should advise the producer what steps he must take to provide viable samples or records of the crop to evaluate and substantiate the actual production.
Important considerations depending on type of crop and coverage
If the corn crop, “insured as grain”, will be chopped for forage, it is now being harvested for “an alternative use.” For the crop insurance claim to be adjusted accurately, the corn must be measured in the field before it is chopped. This is called a “field appraisal.” It is imperative to have a conversation with the adjuster to make sure procedures are followed accurately so the settlement of the crop claim is not compromised.
It is helpful to give the adjuster as much lead time as possible to visit the farm before chopping would begin. If the adjuster cannot get to the farm before it is time to chop, he can advise what kind of “representative samples” must be left in the field for post-harvest appraisals.
If the crop is chopped before it is appraised, then the chopped acreage will be given an imposed yield equal to the guarantee on the Crop Insurance Policy. This will adversely affect your indemnity payment.
If you have “Revenue Protection” on your policy then you may have a “revenue loss,” even though you do not have a “production loss.” This may not be known until after harvest is complete. Field appraisals taken for all corn that is chopped for forage can help to avoid missing a claim payment.
Always remember to inspect your crops throughout the growing season, and call your crop insurance agent to ask questions or address concerns. Crop Insurance is insurance, and you are still further ahead if you do not have a claim.
This is a guest post by Nevin Dourte, CIC, AFIS. Nevin is the Vice President of Ruhl Insurance, one of the leading crop insurance agencies in Pennsylvania.
Over 21,000 farms use Farm At Hand. Join us!