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Understanding Agricultural Insurance Claims

UNDERSTANDING AGRICULTURAL

 

INSURANCE CLAIMS

Table of Contents

[]Introduction 3

Chapter 1. Understanding Agricultural Insurance Terms 4

Chapter 2. Types of Agricultural Insurance 6

Crop Insurance 6

Actual Production History (APH) 6

Actual Revenue History (ARH) 7

Adjusted Growth Revenue (AGR) 7

AGR-Lite 7

Combined Insurance 7

Crop-Hail 8

Livestock Insurance 8

Livestock Risk Protection (LRP) 8

Livestock Gross Margin (LGM) 9

Livestock Indemnity Program (LIP) 10

Other Types of Agricultural Insurance 10

Chapter 3. Filing an Agricultural Insurance Claim 12

Filing a Claim with the USDA-RMA 12

Step One: Contact your agricultural insurance agent 12

Step Two: Schedule with an adjustor 13

Step Three: Give the adjustor a comprehensive tour of the damages 13

Step Four: Submit supporting documents if required by the insurance company or adjustor 14

Filing a Claim with a Private Insurance Provider 14

Step One: Contact your insurance provider 15

Step Two: Prepare your documentation 15

Step Three: Make temporary repairs if necessary 16

Step Four: Accompany the adjustor during the inspection of the damages 16

Step Five: Submit additional documentation if asked for 16

Chapter 4. Disputing Claims: The Basics 17

Step One: Hire a lawyer 18

Step Two: Mediation versus arbitration 18

Step Three: Begin the arbitration proceedings 19

Step Four: Wait for the response of the insurance company 19

Step Six: Appoint an arbitrator 19

Step Seven: Preliminary hearing 20

Step Eight: Arbitration proceedings 20

Step Nine: Settlement and awarding 20

Chapter 5. Agricultural Insurance Tips 23

Choosing an Agricultural Insurance Policy 23

Maintaining Your Good Standing 24

Filing Claims 26

Conclusion 28

INTRODUCTION

  • * *

 

Agricultural products like fruits, vegetables and meat face many risks during its production cycle. Because these natural products are cultivated outdoors in vast tracts of land, it is susceptible to damage and spoilage due to factors outside the control of the farmers and producers.

 

Even with the most advanced equipment and materials readily available to ensure optimized growth of crops and livestock, nature can still unleash events that can affect the quality of the products. Storms, tornadoes, drought and pests can cause losses to agricultural products and damage to farming structures, equipment and machinery.

 

Because weather can be unpredictable and extremely damaging to crops, livestock and structures, the best way to be prepared for potential damages is to be protected by agricultural insurance.

 

Agricultural insurance provides coverage for most Acts of God events, diseases and other causes of damages. It is an important risk management tool that the United States Department of Agriculture encourages farmers and producers to take advantage of.

 

It is in the best interest of farmers and producers to have some type of coverage for their crops, livestock and farming structures, equipment and machinery. Aside from the agricultural insurance policies that the USDA administrates, private insurance companies can also provide farmers and producers with coverage that the USDA may not be able to provide. This includes the farms of hobbyists or non-commercial products.

 

In this e-book, we will look at the main types of agricultural insurance in the country. We will also look at the different procedures in filing an insurance claim and how you can dispute a denied insurance claim or payment of an undervalued amount.

CHAPTER 1. UNDERSTANDING AGRICULTURAL INSURANCE TERMS

  • * *

 

Accident – An unplanned and unexpected event that occurs suddenly in a specific location.

 

Act of God – A natural event that occurs without human intervention and cannot be prevented even with reasonable care or foresight.

 

Actuary – An individual tasked to apply probability and statistical concepts to determine insurance figures like premium, reserves and rating.

 

Adjustment – The calculation of a variable premium and/or a calculation of a loss.

 

Agent – The person offering the insurance to buyers. The sales representative of the insurance company.

 

Amortization – The reduction of a value of an asset over time until the value is zero. The writing off of the value is typically done over a period of years.

 

Annuity – A sum that is paid for either through scheduled payments or a one-time payment of a lump sum.

 

Assessor – The person assigned by the insurance company to evaluate a claim made under an insurance policy.

 

Basis of Valuation – The basis on which a property is valued. This is taken into consideration when determining the policy or premium of insurance. In agricultural insurance, the basis of valuation is typically the cost of producing and growing crops.

 

Blanket Policy – A single policy that covers a wide range of individual items. The insured will only be required to pay one premium for all the items covered by the blanket policy.

 

Claim – A formal request submitted by the insured to the insurance company in order receive payment after a covered event occurs.

 

Claims Adjustor – The person who represents the insurance company when a claim is filed. It is their responsibility to verify the claim and negotiate the settlement with the insured.

 

Comprehensive Policy – A single policy that covers a number of events and perils

Coverage – The extent of insurance provided by the insurer.

 

Crop Insurance – Protection and coverage for growing crops against loss and damages caused by environmental perils and events. There are also policies which protect crops from loss of physical production.

 

Deductible – The amount that the insured is required to pay in order to receive the determined claims amount from the insurer.

 

Fixed Premium – A premium determined at the onset of the policy and is not subjected to any adjustment throughout the course of the insurance contract.

 

Forestry Insurance – Insurance coverage for trees against damages and losses caused by natural events like windstorms, fire, flood, snow, etc.

 

Guaranteed Yield – The expected yield of a crop that is stated in the insurance policy. The guaranteed yield will be the basis of comparison for the actual yields at the time a claim is filed.

 

Indemnity – The amount that the insurer must give the insured in the event that damages or losses are incurred when a covered event happens.

 

Indemnity Period – A period of time that the insurance company must provide indemnity to the insured after a claim is filed, verified and assessed.

 

Insurable Yield – Used in crop insurance, it is the maximum yield that is insured according to a policy. Usually expressed in percentage, the insurer will review past production of the area to determine its potential yield.

 

Insured – The person or entity that is covered by an insurance policy.

 

Insured Peril – The covered cause of loss according to the insurance policy. May include droughts, flood, pests and diseases.

 

Insurer – The insurance company that provides insurance coverage to the insured.

 

Livestock Insurance – This type of insurance provides coverage for deaths and losses of livestock due to accidents or diseases. Claims can be filed on a per animal or per herd basis.

 

Loss Adjustor – The individual/s sent by the insurance company to assess the extent of damages or losses as outlined in the claim filed by the insured.

 

Policy – A document that outlines the details of the insurance coverage, premiums and other terms agreed upon by the insured and the insurer.

 

CHAPTER 2. TYPES OF AGRICULTURAL INSURANCE

  • * *

 

Agricultural insurance is one of the most confusing and comprehensive types of insurance in the country. Because farming is an unpredictable and risky business, insurance coverage for crops, livestock, farm machinery and structures has become an essential aspect of the agricultural industry.

 

There is now a wide variety of agricultural insurance types to choose from. Having an array of choices helps farmers customize their own policies depending on the coverage that they need.

 

Crop Insurance

 

Crop insurance is an essential risk management tool for farmers who rely on growing produce for their livelihood or business. The most basic crop insurance policies pay for indemnity if “farm production inventory value or revenue is less than the guaranteed amount due to an insurable cause” (University of New Hampshire).

 

The policy will also state what perils or events are included in the coverage. Crops are almost always left defenseless against severe weather and natural elements or Acts of God. Some policies also cover market losses which are always helpful for individuals and businesses that rely their produce to earn a living.

 

Some crop insurance policies cover specific types of crops. For a better understanding of the different types of crop insurances available to farmers, here are some of the most common policies in the country:

 

Actual Production History (APH)

 

Policies of this nature protect farmers against yield losses and shortages due to natural events like droughts, hail, moisture, frost, disease and other causes. It is also up to the producer to choose amount of the average yield to insure. In some areas, APH policies can insure up to 85% of a producer’s average yield.

 

It is also the producer who chooses the percentage of the predicted price of his goods to insure. The predicted price is set by the Risk Management Agency (RMA) annually depending on social, economic and environmental factors. You can choose to insure up to 100% of your production based on the prices set by RMA for the crops that you are growing.

 

If the harvested crops fall short of the amount of insured yield, the producer can file a claim with the insurance provider and indemnity will be paid out. The amount that the

producer will receive will be based on the difference between the insured amount and the actual crop yield.

 

Actual Revenue History (ARH)

 

This type of policy is similar with an APH type, but instead of insuring historical yields, ARH insures historical revenues. ARH follows much of the same procedures as APH policies, but instead of reflecting an average or percentage of products, it reflects a percentage of the total revenue for a certain crop.

 

In order to arrive at the policy coverage, the producer and the insurance provider will negotiate the terms based on the revenue history of the crop and other factors. ARH policies protect producers from seasons of low revenues caused by low prices, low yields or low quality of the harvested crops.

 

Adjusted Growth Revenue (AGR)

 

This policy also insures revenues of the producer but instead of insuring the revenue of just one crop, AGR insures the revenue of the entire farm. The products that can be insured include all agricultural yields, as well as livestock and aquaculture products.

 

This form of insurance is only available in selected counties in 10 states and state-wide in eight others. The basis of the coverage will be the producer’s historical Internal Revenue Service (IRS) tax form and an annual farm report. The percentage of coverage and the rate of the premium will also depend on the number of commodities produced.

 

AGR-Lite

 

This is similar to AGR but on a smaller scale and it can be used in conjunction with other insurance policies except for AGR. Livestock and aquaculture can also be insured along with crops, as in the AGR. AGR-Lite is available in 35 states.

 

The basis for the level of guaranteed revenue is a producer’s average five-year historical farm revenue that they reported on their IRS tax return, as well as an annual farm report. Like the AGR, the coverage percentage and rates will depend on the number of commodities produced in the farm. Unlike the AGR however, the maximum allowable income to be insured is significantly lower.

 

Combined Insurance

 

This insurance policy specifies the different environmental events that may cause the loss of revenue or damages to crops. The events in the policy may include drought, crop disease, pests and excessive moisture.

 

For this type of insurance, application must be made prior to planting. Producers can choose whether to opt for yield protection, revenue protection or both.

 

Crop-Hail

 

This policy is only offered by private insurance companies and is excluded from the list of policies of the Federal Crop Insurance Program (FCIP). Producers can apply for crop-hail insurance at any time of the year, even after the crops have been planted.

 

Producers often choose this insurance type because it provides them with the flexibility of receiving indemnity for the parts of their field that was damaged by hail. Hail often leaves only certain parts completely damaged while other parts remain relatively untouched.

 

There are other types of crop insurance policies that cover specific crops against specific perils or events. Different states also offer its own versions of FCIP policies that reflect the needs of farmers in their area. Some producers combine insurance policies from a private insurance company with that of FCIP. This gives them maximum coverage for a wide variety of situations and events.

 

Livestock Insurance

 

Aside from crop insurance, producers can also apply for a separate insurance coverage for their livestock products which can include cattle, swine, poultry and dairy.

 

There are federal insurance programs that offer livestock insurance for producers in certain states but is limited only to livestock that is raised and slaughtered for commercial uses. There are two major types of livestock insurance offered by the United States Department of Agriculture’s Risk Management Agency:

 

Livestock Risk Protection (LRP)

 

This insurance policy protects producers against price fluctuations during the period when the insurance is active.

 

If market prices of livestock fall below the insured amount, the indemnity paid to the producer will be based on the difference of the insured cover price and the ending value or price published by the corresponding agency for each livestock type. For cattle for example, the ending value will be based on the Chicago Mercantile (CME) Feeder Cattle Cash Price Index.

 

Let’s use a simple illustration to further explain the concept of LRP.

 

Let’s say that Producer A purchased an LRP with coverage of $110 per hundredweight (cwt).

Producer A has 600-pound calves.

At the ending date of the policy, the CME Feeder Cattle Cash Price Index reflects a price of $107 per cwt.

Because the final value falls short of the insured amount, Producer A will receive indemnity.

 

To compute for the amount that Producer A will receive, let’s look at the figures: The calves are 6 cwt

The coverage is $110 per 1 cwt The final value is $107 per 1 cwt [6 cwt x ($110-$107)]

Producer A will receive $18 per calf.

 

It may not seem like a lot but remember, the LRP is designed to make up for the difference in the prices, not for the entire value of the herd. It should also be noted that for cattle, the values released in the CME Feeder Cattle Cash Price Index is applied to LRP indemnity computations and not the prevailing market prices of the geographic location of the farm. However, the CME Feeder Cattle Cash Price Index is only applicable in 12 states. For other states that are not included, there is also a specific agency or index that the LRP is based from.

 

Livestock that can be covered by the LRP are:

*
p<{color:#000;}. Feeder Cattle

*
p<{color:#000;}. Fed Cattle

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p<{color:#000;}. Lamb

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p<{color:#000;}. Swine

 

The same basic concepts apply to the other variations of LRP, with the main differences centering on the values and formula used to compute for the indemnity.

 

Livestock Gross Margin (LGM)

 

Under the USDA-RMA, the livestock gross margin is applicable to three major livestock products: cattle, dairy and swine. LGM is designed to protect the producer’s gross margin. The gross margin is the difference between the actual market value of the product minus the feeding costs.

 

The goal of having LGM is to protect a minimum income over feed costs (IOFC). Before the insured IOFC amount is determined, the gross margin is estimated by the producer.

 

Dairy is the most common product that an LGM insurance policy is applied for. Because the prices for dairy products and cattle feed can be unstable at times, dairy farmers invest in state-sponsored insurance policies to protect their finances.

 

At the end of the insurance period, if the insured gross margin is higher than the actual gross margin of the producer, they will receive indemnity from their insurance provider.

The administration of LGM is through the USDA-RMA but the policies are sold through third-party licensed agents. In later chapters, you will be shown the claims procedure if you are qualified for LGM indemnity.

 

Livestock Indemnity Program (LIP)

 

This type of livestock insurance policy protects producers against catastrophic events like floods, hurricanes, tornadoes or cattle diseases that cause the death of a producer’s herd. The LIP livestock insurance policy is administered by the Farm Service Agency of the USDA. It is one of several programs that it offers for livestock protection.

 

Unlike other the programs of the FSA, producers’ farms need not be located in counties that are designated as a natural disaster area by the Office of the United States President or the Department of Agriculture. The main basis for the indemnity that will be paid out to the producer are the losses that that they specify on their claims.

 

LIP also has eligibility rules for producers who wish to have their livestock covered. One important consideration is that the livestock that was produced only for commercial purposes or as farming implements. There is also a wide variety of livestock that can be covered by LIP, including the most common types of poultry, swine, cattle and even alpacas, horses and llamas.

 

To compute for the indemnity amount that the producer will receive, the USDA will multiply the eligible livestock with the national payment rate of the category that they belong to. To qualify for indemnity, the livestock must have perished through eligible weather and natural events.

 

Private agriculture insurance companies also offer livestock insurance. Producers may choose to use the private insurance options to complement federal insurance if they need more coverage for their farm, crops and/or livestock.

 

Other Types of Agricultural Insurance

 

Agricultural insurance is not just limited to crops and livestock. There are also private insurance companies that offer coverage for a wider range of agricultural products and items that are not covered by the USDA or state governments. Each state has its own list of farm and agricultural business insurance tailored to producers and farmers in their local counties.

 

Here are some of the most common types of private insurance for the biggest agricultural states in the US:

 

*
p)))))<>{color:#000;}. Texas. Homeowners’ insurance policies that provide coverage to barns or outbuildings, comprehensive barn/farm insurance policies that provides extended coverage for farming equipment, manufacturing equipment, tractors, grains and implements.

Oklahoma. Agricultural insurance for individuals who farm as a hobby. Some policies can cover off-road vehicles, boats, equipment and personal liability against injuries within the property.

Georgia. Coverage for family-owned farms, including farming structures connected to the home, farming implements, equipment and can also include coverage for the main dwelling place and additional living expenses.

North Carolina. Umbrella policies that covers the home and farm structures including barns and silos. Coverage for farm hands and other personnel against accidents and injuries are also common.

Illinois. Common policies that farmers and producers get in Illinois provide coverage for farm equipment, homes and farm structures and business risks.

Pennsylvania. Private agricultural insurance providers offer coverage for farm products (grain, feed, seeds and fertilizer), farm buildings including silos, fencing, building materials, machinery and supplies.

 

Private agricultural insurance providers are essential for rural farmers because it gives them extended coverage that a federal insurance policy may not be able to provide. Most state insurance policies only covers the crops, livestock or revenues, leaving other farming implements like structures, machinery and supplies vulnerable to unforeseen events.

 

When covered events or perils happen, it is your responsibility as the insurance holder to file a claim for your farm. In the next chapter, we will look at the different procedures of filing claims with federal and private insurance providers.

 

CHAPTER 3. FILING AN AGRICULTURAL INSURANCE CLAIM

  • * *

 

It is very hard to predict the damage that a natural event may cause to a farm’s livestock and crops. Even after taking the utmost care in preparation for what’s to come, it is still very hard to prevent losses and damages. For this reason, producers and farmers alike invest in agricultural insurance to protect their crops and livestock from severe weather conditions, diseases and price drops.

 

When a covered event occurs, the insured must follow the procedures and file a claim with the insurance provider in order to get an indemnity for their losses. It is the producer who needs to initiate the claims process. This important step is the same whether the provider is the federal government or a private insurance company.

 

In this chapter, we will explore the proper procedures in filing a claim. The process may vary depending on the state or the insurance provider so the steps outlined here should only serve as a guide to give you an idea of how things work.

 

Filing a Claim with the USDA-RMA

 

With the USDA-RMA, filing a claim follow the same procedures in any state where their insurance policies are offered.

 

Step One: Contact your agricultural insurance agent

 

Insurance policies of the USDA-RMA are sold through licensed third-party agents. When filing a claim, the first step that you’ll need to do is to contact the agent that sold you the insurance policy, whether it’s for your crops or livestock.

 

It is important for you to give all the necessary details of the event and the damages that you incurred. Be as thorough as possible. If possible, document the losses and damages through photos, videos or paperwork.

 

Your insurance agent will be responsible for scheduling with an adjustor who will go to your property to inspect the extent of the damages.

 

This might be a goof time to get an experienced agricultural policyholder attorney involved in the claims process. An attorney specialized in these types of claims normally are worth their weight in gold and can usually make a claims process run as smoothly as possible and should be able to steer the policyholder away from the perils of a complicated claims process.

Step Two: Schedule with an adjustor

 

This is actually one of the trickiest steps in the claims process for a variety of reasons. First, adjustors often follow a guide detailing the level of urgency of a claim. If the damage on your crops or livestock doesn’t gravely affect your ability to earn, it may not be prioritized.

 

This in turn affects your operations because the window of opportunity for replanting or removing damaged crops may be small and you may not be able to keep the evidence of the event for as long as it is needed until an adjustor visits your property. If this is the case, you should inform your insurance agent of this as soon as possible. They will guide on you on what you can do until an adjustor is available.

 

Your intention for filing a claim can also affect the urgency of sending an adjustor to your property. If for example you wish to plow or remove the damaged crops as soon as possible in order to stick with your harvesting schedule, then the insurance company should provide an adjustor as soon as practically possible.

 

If on the other hand, you decide to continue care for the crops or undamaged crops, the adjustor or insurance company may not see the need to send someone to your property as soon as possible.

 

Whatever the case may be, it is still the insurance company’s or your agent’s responsibility to send an adjustor to your property at a reasonable time. The adjustor will give you call at the behest of the insurance agent or company and will be scheduling a visit on a date and time that is agreed upon by both parties.

 

[]Step Three: Give the adjustor a comprehensive tour of the damages

 

It is important for the adjustor to know the extent of the damages to your crops and/or livestock in order for the insurance company to give you a fair and accurate indemnity amount.

 

To this end, you will need to show the damages as is. As much as possible, keep the evidence where they are to help the adjustor make an accurate assessment. The adjustor may take photographic evidence, visit neighboring farms to see if their crops or livestock are in the same conditions as yours and they may also check the weather data in your locale.

 

These adjustors follow strict and scientific guidelines when determining how much the damages have cost your business. It is not simple guesswork or creating assumptions. It is therefore your responsibility to ensure that the adjustors have a basis to sample and observe. Again, as much as possible, keep the evidence of the damages in their place unless instructed by the insurance company.

[] Step Four: Submit supporting documents if required by the insurance company or adjustor

 

Having supporting documentation of your farm, finances and the effects of the damages to your livelihood is to your advantage. The insurance company often asks for supporting documents during the investigation of a claim and these documents can be expansive and time-consuming to gather. If you want to receive your indemnity much faster, it is your responsibility to submit the required documents at a timely manner.

 

To avoid disputes in your crop or livestock insurance claims, you should consider hiring a third-party contractor or field expert to make assessments of the damages to your property and how much it has cost or hindered your livelihood or business. Having written statements from consultants and experts can greatly speed up the claims investigation.

 

You should also provide farm reports, applicable samples, videos or photographs or even weather data to your insurance company to give them a valid comparison of the reports that they will get from their adjustor. A lot of claims disputes can be avoided if the producer is able to provide necessary and essential documentation in a timely manner.

 

It will also be helpful for you in the future should you need to file another claim to have all the documentation ready before filing a claim.

 

Unfortunately, there are no set laws or limits on how long you will have to wait to receive your indemnity if your claim was approved. Once the insurance company agrees to pay for the damages incurred in your farm, it is their responsibility to pay you in a timely manner as a good faith practice which they are bound to according to the policy that you signed.

 

In the next chapter, we will explore the different ways to file a dispute for the results of your claims and how to file a complaint if you believe that you have been treated unfairly by your insurance provider who sold you the federal agricultural policies.

 

Let us first look at the procedures in filing an agricultural or farming claim with a private insurance company.

 

[]Filing a Claim with a Private Insurance Provider

 

Different states may have different procedures for filing a claim with a private agricultural insurance provider. However, the most basic and fundamental steps are similar across the board.

[] Step One: Contact your insurance provider

 

Private insurance companies often provide a hotline or a toll-free number specifically to report or file a claim. You may even be allowed to file your claim online.

 

Before you file a claim, be sure to have your policy on hand and with you to see if the damages to your crops, livestock or farming structures and equipment are covered by the event that transpired. This will save you a lot of time and stress from going back and forth with the representative that you will speak to. You will also be asked to provide information about your identity and coverage so having your policy ready will make the verification go faster.

You will also be asked to provide the details of your claim. You should provide as much information as possible about the damages or losses to your farm property, crops or livestock. Be sure to itemize any equipment or machinery that needs to be repaired or replaced.

 

If you need to make quick repairs or remove debris from the damaged items or structures, be sure to inform the agent so that they could make a note of it for the adjustor. If you need to replant crops immediately, you should also inform the agent.

 

[]Step Two: Prepare your documentation

 

The insurance provider will arrange for an adjustor to visit your property and assess the extent of the damages on their behalf. The adjustor may contact you to determine the exact date and time you can expect his arrival. While waiting for the adjustor, you should use this time to gather as much documentation as possible.

 

Images are very important evidences for the damages in your property. Before moving anything, take photos first to show the damages as you have discovered it. If for example, you are to move a collapsed tree that fell on your barn, take photos of the tree in its original collapsed position before moving it elsewhere.

 

You may also want to seek the opinion of consultants and contractors. Invite them to look at the damages to your crops, livestock or structures and have them make written reports of their findings. If the damages have impeded your operations or ability to earn a living or continue with your daily life, these consultants can provide you with their findings supporting your case. These types of documentation will be extremely helpful for you during the investigation of your claim.

 

You may also hire a third-party estimator to assess the costs of repairs or replacement for the damaged items. If the damages are very minor (broken windows, etc.) you may forward the estimates from a qualified contractor to your agent if they decide that the damages aren’t big enough to warrant an on-site assessment.

[] Step Three: Make temporary repairs if necessary

 

It is your responsibility to ensure that the damage is contained and that no further damages will be incurred. This may mean that you have to pay out of pocket for temporary repairs. If you do need to hire a contractor to make the repairs for you, be sure to keep the receipts and written transaction details in order to get reimbursed by the insurance provider.

 

Before making any temporary repairs however, be sure to document the damages as they were. You may need to present those photos to the adjustor or to the insurance company to help with their investigation.

 

[]Step Four: Accompany the adjustor during the inspection of the damages

 

When the adjustor goes to your home, it is important for you to be there as well. You should also have all the necessary documentation on-hand and ready to show the adjustor, including your policy and the photos that you have taken. If you have video evidence, show that to him as well.

 

The adjustor should thoroughly assess the damages in your property in a methodical manner. You being there as the investigation is being done is essential because you will be able to show exactly where the damages are and how it got to that condition. You will also be able to answer any questions that the adjustor may have or provide proper documentation when asked for.

 

[]Step Five: Submit additional documentation if asked for

 

The insurance company may ask for additional documentation during their investigation of your claim, especially if major damages were incurred in your property. Provide the documentation that you prepared in Step Two promptly to avoid delays in the processing of your claim.

 

The claims process is always an uphill battle if you are not prepared. The easiest way to make the procedure as stress-free as possible is to always have documentation ready, even if the insurance provider does not initially ask for it. Most delays in the indemnity payout occur because of the lengthy investigation for the claim. To ensure that you will receive the amount due to you in a timely manner, the investigation should ideally go without a hitch. You do have responsibilities as the insured during this process. Provide all the materials needed by the insurance provider as promptly and as best as you can.

 

If after you’ve done all the necessary steps during the claims procedure and you still got denied, or had an undervalued indemnity, you have the option to file a dispute. In the next chapter, we will look at the procedures of filing a dispute with your insurance company.

 

[] CHAPTER 4. DISPUTING CLAIMS: THE BASICS

  • * *

 

Not all agricultural insurance claims get the desired results by the producers or farmers who filed them. When this happens, producers have the option of filing a dispute against their insurance provider.

 

Agricultural insurance claim disputes is one of the most difficult and convoluted cases that are handled by insurance lawyers. It is a specialized field that requires lawyers to not only be familiar with federal crop insurance laws and provisions, but also the federal regulations, crop insurance policies and to a certain degree, the agricultural industry and farming practices as well.

 

There are steps that you will need to follow if you want to dispute a denied claim or if you feel that you didn’t receive the sufficient amount for the damages in your farm, crops or livestock. In this chapter, we will explore the procedure that you will be undertaking when disputing the result of a claims investigation.

 

There are three main ways to dispute an insurance claim:

 

#
p)))))<>{color:#000;}. Mediation. Mediation is a non-binding dispute resolution method where a neutral third-party mediator will review the case of the policyholder and the insurance company. Mediation is simply a form of assisted settlement between you (the insured) and the insurance provider. Because the result of mediation is non- binding, both parties need to mutually agree on a settlement for it to be successful.

 

#
p)))))<>{color:#000;}. Arbitration. Arbitration on the other hand is a binding dispute resolution method where the third party, neutral arbitrator will review evidences presented by both parties to arrive at a decision. The results of arbitration are binding and must be honored by both parties. In arbitration, one party will be the winner while the other loses.

 

#
p)))))<>{color:#000;}. Litigation. Litigation is often a way for policyholders to drive the boat in the claims process. Litigation allows policyholders, assuming they hire a qualified crop claims policyholder attorney, to control the flow of the claim and the information conveyed by each side, often giving the policyholder a direct advantage for the first time in the claims process. The results of litigation are binding and must be honored by both parties. In litigation, sometimes one party will be the winner while the other loses, or often there is a compromised settlement wherein all parties walk away with something they desire.

The procedures for claims disputes can be costly and lengthy. If you are not familiar with the different processes, regulations and policy provisions, it is best for you to hire a claims dispute lawyer that specializes in agricultural insurance even before you begin with the dispute procedures.

 

To give you an idea of how claims disputes for agricultural insurance goes, let the steps outlined below guide you.

 

[]Step One: Hire a Lawyer

 

The first and most important step that you must do is to seek the representation of an experienced lawyer to guide you through the dispute proceedings. Bear in mind that your insurance provider will be represented by a lawyer as well. If you want to have best chances of winning the dispute, you will need someone who is very familiar with agricultural insurance claims disputes.

 

This may seem like a costly investment, especially if the indemnity that you are expecting is not that large. However, the dispute proceedings in itself can also be very costly without any guarantee that you will get the result that you want. With an aggressive and reputable lawyer by your side, you will be able to effectively defend your rights as a policyholder.

 

[]Step Two: Mediation versus Arbitration

 

Your lawyer should be able to provide to you your available options, along with risks and benefits of each. You will need to decide how you want your claims dispute settled and examined.

 

Earlier, we discussed the main differences between mediation and arbitration. Most claim dispute lawyers will discourage the claimant from using mediation to resolve the dispute for a variety of reasons:

 

*
p)))))<>{color:#000;}. The result of mediation is non-binding to both parties. Even if the third-party mediator makes a decision to your favor, the insurance company is not legally bound to uphold the decision.

 

*
p)))))<>{color:#000;}. You only have guaranteed costs. Mediators will require a payment for their services. You will also need to pay for the services of your lawyer. For all those costs, you do not have the guarantee that you will be able to recoup your losses.

 

*
p)))))<>{color:#000;}. Most insurance companies will try to settle as much as they can with you, even without the services of a mediator. One of the main reasons why insurance providers cannot immediately give large indemnities with mediation is because they are closely monitored by the RMA. For the more difficult disputes, the insurance company cannot act on its own, it needs the approval of the RMA.

Before the insurance provider can settle after mediation, it needs the approval of the RMA first.

 

Arbitration on the other hand, binds you and the insurance provider regardless of the result. It is a more costly option but if you have a strong case, you have the chance to get your money back plus the right indemnity amount that is owed to you by the insurance company.

 

The arbitration is conducted according to the governing rules of the American Arbitration Association (AAA) – a third-party administrator of arbitration. It is very expensive to have the arbitration conducted within the AAA. Aside from paying for the use of AAA resources, you will also be required to pay for the AAA personnel who will oversee your case. As an alternative, you can opt to use an independent arbitrator that strictly follows AAA guidelines.

 

Consult with your lawyer about the best course of action to take in your claim dispute.

 

[]Step Three: Begin the Arbitration Proceedings

 

To begin the arbitration proceedings, you’ll need to submit a “Demand for Arbitration” to the insurance provider. Recent developments in dispute guidelines however, state that the letter of demand should be first submitted to the AAA or the arbitrating service provider and a notice should be provided to the insurance company. You have a window of one year after a claim was denied to initiate arbitration proceedings.

 

You will need to submit two original copies of the Demand for Arbitration forms to the AAA. They in turn will notify the insurance provider. You will be asked to provide a copy of the arbitration clause in your insurance policy when you file the request for arbitration. You will also need to pay the necessary fees in order for your request to be processed.

 

[]Step Four: Wait for the Response of the Insurance Company

 

The insurance provider is given 15 days to respond beginning from the time that it receives the arbitration request. This window is their opportunity to submit any counterclaims relative to the disputed claim. If the insurance company does not respond within 15 days, AAA will consider it a denial. You can still submit claims and counterclaims even after a denial, until such time that an arbitrator will be assigned to your case.

 

[]Step Six: Appoint an Arbitrator

 

The AAA will provide you and your insurance provider a list of potential arbitrators. It is highly encouraged by the AAA that both parties agree on the arbitrator who will handle the dispute. Typically, only one arbitrator is needed to oversee the proceedings. However, both parties can request a panel of three arbitrators if necessary though it is still the prerogative of the AAA whether to grant this request.

 

[] Step Seven: Preliminary Hearing

 

The arbitrator will schedule the time, date and location for the preliminary hearing. This hearing will clarify the issues being disputed and will settle the arrangements and parameters for the succeeding hearings.

 

At least five days before the scheduled preliminary hearing, both parties are required to exchange exhibits and evidences that will be presented during the proceedings.

 

[]Step Eight: Arbitration Proceedings

 

After the preliminary hearing, the succeeding hearings will proceed to hear the cases of both parties. They will be given the opportunity to present evidences, documents and witnesses to support their case. Once all the evidences have been presented, the arbitrator will declare the closing of the hearing. If necessary however, the case may be reopened as long as an award has yet to be determined or applied by both parties.

 

[]Step Nine: Settlement and Awarding

 

The arbitrator has 30 days upon the closing of the hearing to award a party. If the case was reopened, the arbitrator has 30 days after the final statements have been submitted to determine the award. The award is typically given in writing and without explanation, unless requested by both parties before the arbitrator was appointed. If both parties settled outside of arbitration, they can request for a “consent award” to bind the settlement.

 

The final judgment of the arbitrator is final and irrevocable in most cases. In extremely rare situations, the AAA can allow modification or correction of the award if these conditions are met:

 

*
p<{color:#000;}. There was a miscalculation in the figures submitted during the hearing

*
p)))))<>{color:#000;}. There was a mistake in the description of the property or person mentioned in the award

*
p<{color:#000;}. If the arbitrator made decisions outside the parameters of the arbitration

*
p))))))))))<{color:#000;}. If the “form of an award not affecting the merits is somehow flawed” Vacation of the award is only allowed in these rare cases:

*
p)))))<>{color:#000;}. If the award was obtained through corrupt and fraudulent means. Allegations of which should be supported by irrefutable evidence that the corruption or fraud influenced the arbitrator’s decision for the award.

*
p<{color:#000;}. If the arbitrator showed partiality in determining the award.

*
p)))))<>{color:#000;}. If the arbitrator showed misconduct or misbehavior that “prejudices the rights of any party.” This can include refusal to hear non-cumulative evidences or referencing items not admitted as evidence to support a finding.

If the arbitrator exceeded his powers or authority.

If the arbitrator imperfectly executed his authority that prevented a definitive, mutual and final award from being determined.

 

If you are still unhappy with the results of the arbitration, you can take it a step further and dispute the award through a judicial review. To do this, you will need to file a lawsuit in your judicial district where your insured crop is located. You can submit your application for the review within a year after the decision was made on the arbitration proceedings.

 

On the other hand, if the RMA got itself involved in your claim – whether it was modified or revised, you will need to follow a different procedure to dispute the claim. Because you are no longer disputing a claim with your insurance provider, the usual arbitration procedures are no longer applicable.

If the RMA modified, changed or corrected your claim for reasons other than not using good farming practices (GFP), you must pursue the dispute through the USDA’s National Appeals Division (NAD). You are not permitted to pursue a dispute through mediation or arbitration against your insurance provider if the RMA amended your claim.

 

Disputing against the RMA is an uphill battle, but there have been a number of producers who were able to successfully dispute claims that the RMA has established.

 

To initiate a dispute, your first task is to seek an “appealability determination” from the Director of the National Appeals Division.

 

There must be strong grounds that the RMA made an “adverse decision” and it is your responsibility to prove it. An adverse decision occurs if an employee or the Director of the RMA caused you to receive less funds that you believe you were entitled to.

 

You have 30 days upon the receipt of your claim to appeal to the RMA or NAD. If the RMA decides that the decision that it has made is not appealable, you have 30 days to seek an appealability determination from the NAD.

 

The NAD director will then appoint an officer to oversee your case. You have the option to choose between three types of hearing methods:

 

*
p)))))<>{color:#000;}. Record Review. The hearing officer will base his ruling on the records, documents and other information submitted by the RMA and the claimant.

 

*
p)))))<>{color:#000;}. Telephonic Hearing. The hearing will be done entirely through a conference call with all parties involved. Documents and evidences are required to be submitted to the agency before the scheduled hearing.

 

*
p)))))<>{color:#000;}. In-Person Hearing. The hearing will be done in person, at a predetermined location.

For hearings, the parties are allowed to give a short opening statement before evidences are presented. They will also be given time for closing statements before the case is closed by the hearing officer. This can be a costly and lengthy procedure. If you are only disputing legal facts rather than factual issues, a record review may suffice.

 

The hearing officer will provide a written decision to both parties after it has determined whether or not the RMA made the right decision.

 

If you are still unhappy with the result, or if you still do not agree with the decision, you have 30 days to request a review from the Director of NAD. If even then, you are dissatisfied with the decision of the Director, you can file a judicial review with the federal court within a year of receiving the Director of the NAD’s review.

 

Filing a claims dispute for agricultural insurance can be a highly stressful experience. The best way to endure a claims dispute is to avoid it all together. In the next chapter, we will be looking at some useful and practical tips that you can use to ensure that filing a claim won’t lead to a harrowing experience.

 

[] CHAPTER 5. AGRICULTURAL INSURANCE TIPS

  • * *

 

Choosing an insurance policy is a critically important decision, much more so for agricultural insurance. There are ways and means for you to protect your crops, livestock and farming implements but sometimes, unforeseen events happen that are beyond anyone’s control.

 

For this reason, choosing an appropriate agricultural insurance policy can make the difference for your finances and livelihood if an unfortunate event occurs.

 

[]Choosing an Agricultural Insurance Policy

 

Follow these simple guidelines when choosing an agricultural insurance policy for your farm:

 

*
p)))))<>{color:#000;}. Understand what agricultural insurance is for. The first important step that you must take is to fully understand the purpose of having agricultural insurance. Crop, livestock and farm insurance are risk management tools that will help you recover your losses in the event that an unforeseen peril affects your livelihood.

 

*
p)))))<>{color:#000;}. Understand how agricultural insurance works. Agricultural insurance is very different from your residential, health or auto insurance policies. It is more comprehensive and complicated because of the way the crops, livestock and/or revenues are protected. The most popular forms of agricultural insurance are also federally administrated. These policies follow different procedures than policies bought from private insurance companies.

 

To avoid stress and headaches later on, study and research on the applicable requirements, schedules and deadlines that you will need to take note of to keep your policy up-to-date. You should also prepare and update essential documentation like acreage and farming reports so that when it’s time for you to file a claim, you will be able to quickly present required documents.

 

*
p)))))<>{color:#000;}. Make a list of the things you need coverage for. Before meeting with an agricultural insurance agent, prepare a list of your crops, livestock and farming machinery and structures that you want to include in your coverage. An itemized and detailed list will help your agent determine the most comprehensive and appropriate policy for your needs.

 

Preparing a list will also help you know which of your crops, livestock or property will be covered by federal agricultural insurance and which will need a separate

policy from a private insurance provider. Your insurance agent will discuss with you the different options that are available to you.

 

*
p)))))<>{color:#000;}. Cheaper isn’t always better. One grave mistake that farmers and producers often commit is to choose the crop or livestock insurance policy with the smallest premium. Though it may seem like a practical choice, it is not always able to deliver 100% of the time. When an event occurs that requires them to file a claim, they are surprised to find out that their indemnity isn’t nearly enough to cover the losses on their farm.

 

*
p)))))<>{color:#000;}. More often than not, the cheaper insurance policy does not provide the complete coverage that producers and farmers need. It is better to pay more in order to get more coverage, rather than to settle for the minimum. This is especially true if you live in an area that often experiences adverse weather conditions or extreme weather disturbances.

 

*
p)))))<>{color:#000;}. Choose your insurance agent carefully. Not all insurance agents are cut from the same cloth. Some are more knowledgeable than others. If you want to get a comprehensive list of options for your farm, you will need to choose an insurance agent who has years of experience in the industry and someone with the knowledge and wisdom to effectively guide you in choosing the best agricultural insurance policy for your farm.

 

The best way to find the best agricultural insurance agent is through recommendations from your friends and family. Ask them about their coverage and how their insurance agent was able to help them find the most viable agricultural insurance available to them. Also look at the track record of the insurance agent. If they have clients that are satisfied with their insurance policies, the agent may be worth a try.

 

*
p)))))<>{color:#000;}. Do your own research. Before settling on an agricultural insurance policy, it’s best to seek a second opinion or to research it yourself. There are plenty of useful materials online that you can access for free. You can also consult with another insurance agent or even an insurance lawyer to see whether the options that are presented to you are truly the most viable choices available.

 

The importance of having agricultural insurance for your farm cannot be stressed enough. However, choosing the right insurance policy for you is just as important. Be sure to do your own due diligence before signing up for a policy.

 

[] Maintaining Your Good Standing

 

As an agricultural insurance policy holder, you have your own responsibilities to ensure that your good standing with your insurance provider is well maintained.

 

Follow these simple tips to keep your account up-to-date:

 

*
p)))))<>{color:#000;}. Pay your premiums on-time. This is a very basic and practical tip that is often overlooked by policy holders of any type of insurance, including agricultural insurance. Paying on time is the best way to keep your account up-to-date and in good standing. When renewing policies, insurance companies often base their decisions on claims history and payment records. If they see that you have been consistently paying your premium on time, you will have a greater chance of having your policy renewed or expanded.

 

Some insurance companies offer auto pay options. This will ensure that your insurance bills are paid on time every month. All you’ll need to do is to enroll your checking or savings account with the insurance company and give them authorization to deduct your premium from your account before your due date.

 

This will also ensure that what you’re paying for every month is your premium. Most companies add late fees and other charges if you are unable to pay your bill on time. The best way to avoid additional fees is to take note of your monthly due date and do your best to pay as early as possible.

 

*
p)))))<>{color:#000;}. Adhere to good farming practices. By offering you an agricultural insurance policy, your insurance provider assumes that you use only the standard practices that the USDA considers as good farming. Be sure that you stick to these guidelines throughout your policy period to ensure that you will be provided an accurate indemnity amount should you file a claim in the future.

 

There are plenty of agricultural insurance claims that get denied because the producers or farmers did not use good farming practices. These types of denials are very difficult to dispute and could take months before it gets settled. In order to avoid this from happening, be sure that your farming practices follow the USDA guidelines.

 

*
p)))))<>{color:#000;}. Regularly update your farm documents. When you file a claim, your insurance provider will ask for a wide variety of documentation pertaining to your farm, crops and/or livestock. This may include acreage reports, inventory lists, your finance reports and other relevant documents.

 

In order to ensure that you are submitting accurate and timely documentation, make it a habit to regularly check and update your books. You can set a schedule for yourself so that you have a day, or even just an evening to see whether the data that you have are accurate. This simple habit will definitely pay off in the long run.

 

*
p)))))<>{color:#000;}. Review the fine print of your policies. Another common mistake that agricultural insurance policy holders commit is not knowing the details of their policy. When the time comes to file a claim, they often find themselves at odds

with their insurance agents because they are unaware of the coverage outlined in their policies.

 

Even before you need to file a claim, make sure that you know the details of your policy. It would be beneficial for you to be familiar with your rights and responsibilities as a policy holder, as well as the responsibilities and duties of your insurance provider.

 

It may seem like a difficult task because of the technical jargon that your policy is written in, but with patience and resourcefulness, you will be able to understand what your policy is all about.

 

As in choosing an agricultural insurance provider, you must do your due diligence to maintain the good standing of your account.

 

[]Filing Claims

 

Policy holders of any type of insurance dread the procedures that they must undertake in order to initiate the claims process. It can be a very stressful and traumatic experience for those who are not aware of the steps that they need to take to file a claim.

 

To avoid the same harrowing experience from happening to you, follow these useful tips and guidelines:

 

*
p)))))<>{color:#000;}. Report damages within 72 hours of discovery. Do not delay in getting in touch with your insurance agent when you discover damages to your farm or after a covered event occurs. Timely reporting will help you know what you can or cannot do to avoid more damages or losses.

 

*
p)))))<>{color:#000;}. Have your documents ready. After you have filed your claim, gather all the documentation that will be required by your insurance company. This may include photographic evidences, transaction receipts and written notices that your insurance agent may have provided you.

 

*
p)))))<>{color:#000;}. Do not destroy the evidences. Do not clear out damaged crops or broken machinery without the knowledge and approval of your insurance provider. The adjustor will need to see the damages themselves in order to make an accurate assessment for your indemnity.

 

*
p)))))<>{color:#000;}. Provide a notice of additional damages or losses. If your crops or farm incurred additional damages apart from what you initially reported, it is your responsibility to inform your insurance agent before an adjustor sees it. Failure to report may delay the release of your indemnity or may lower the amount that you are to receive.

To ensure the timely release of your indemnity, it is important for you to submit all the documents that will be required by your insurance provider. You also need to take necessary action to avoid further damages from happening in your farm. Your insurance agent should provide you with the guidelines and allowable actions that you can take during the investigation period of your claim.

 

[] CONCLUSION

Agricultural insurance is one of the most complicated types of insurance available. It is also an essential form of risk management for farmers and producers.

 

There are different types of insurance policies under agricultural insurance. The main administrator of these policies is the United States Department of Agriculture’s Risk Management Agency. The policies are sold by licensed third-party insurance agents or insurance companies. Farmers and producers are encouraged to apply for federal coverage for their crops and livestock in order to avoid costly financial losses when an unforeseen event occurs.

 

Federal agricultural insurance policies also have varying degrees of coverage. Farmers and producers are given a wide variety of policies to choose from in order to provide the best protection for their crops and livestock. Among the most popular policies is the Adjusted Growth Rate (AGR) insurance policy for crops. This policy covers not just the crops but other products that are produced in the farm as well.

 

For livestock, farmers and producers can choose the Livestock Risk Protection (LRP) insurance policy. This policy can protect ranchers from market price fluctuations of their livestock. If the prevailing market price for their livestock falls below the insured amount, they will be paid the difference by their insurance provider. It is a useful tool in ensuring that their finances and livelihood are secured even in the face of price fluctuations.

 

There are also other types of agricultural insurance that cover specific crops, trees or animals. These are useful policies for stud farms, petting zoos, orchards and other agricultural businesses.

 

If the federal agricultural insurance isn’t enough for a farmer or producer, they can always opt to supplement their policies with additional policies from private insurance companies. There are plenty of insurance companies all over the country that offer coverage for structures, machinery and equipment and some of them also offer umbrella coverage for the home and health as well.

 

It is your responsibility as a farmer or producer to do whatever you can to protect your crops, livestock and farm. However, unpredictable events may cause losses and damages even with your best effort to prepare for it. For this reason, an agricultural insurance with a comprehensive coverage is necessary in order for you to easily rebound from your losses.

 

At some point, you may need to file a claim with your insurance provider for damages caused by covered events. It is your responsibility to initiate the claim and to do this, all you’ll need to do is to report the losses or damages in a timely manner.

Should a dispute arise because of a denied claim or a low indemnity amount, you have different options available to you to initiate a dispute. Because of the complicated and technical nature of agricultural insurance, it is best for you to hire a qualified agricultural policyholder attorney to represent and guide you through the process.

 

The Voss Law Firm, P.C. has been representing ranchers and farmers for years and continue to offer aggressive representation with little to no risk on the part of their clients. We do this by representing our clients on a contingency fee basis – which means our clients pay us nothing unless we recover on their behalf.

 

For a free, no obligation, confidential consultation, please contact us via our website (www.DeniedClaim.com), phone (866-276-6179) or e-mail ([email protected]).

 

  1. # #


Understanding Agricultural Insurance Claims

Farmers are heavily dependent on the weather. Drought and storms can damage both crops and agricultural products. In addition, storms producing high winds, tornados, and hail can severely damage outbuildings and farming equipment. Farmers often purchase agricultural insurance in order reduce their financial exposure in the event of a natural disaster. When they suffer damages to their farm, livestock, or crops, the agricultural insurance is there to protect them from severe loss. If you suffered an agricultural loss and were denied benefits or offered an unreasonable monetary settlement, you may need to dispute your agricultural claim. Before you take action to file an agricultural insurance claim or dispute an offer from the insurance company, read our FREE e-book. It will provide you with valuable information including: Agricultural insurance overview – an overview of the various types of agricultural insurance including crop and livestock insurance. Filing an insurance claim – a review of the process for filing an agricultural insurance claim with either the USDA-RMA or a private insurance provider. Disputing an undervalued insurance claim – an explanation of the various methods available for disputing an undervalued agricultural insurance claim including mediation, arbitration, and litigation. Disputing a wrongfully denied insurance claim – hiring an agricultural insurance claim attorney to litigate a wrongfully denied agricultural insurance claim. Our FREE e-book teaches you everything the insurance companies do not want you to know about agricultural insurance claims. Fill out the form on this page and download it today! This easy-to-read book will explain the insurance claim process and answer the most commonly asked questions about agricultural insurance. It will also highlight everything you need to know before you file an agricultural insurance claim. As one of the few law firms in the country to handle agricultural claims, we see the financial toll that natural disasters take on our farmers and ranchers. As an agribusiness law firm, we have decided to make this book complimentary in order to help farmers and others who are at the mercy of Mother Nature for their very livelihood and are often treated unfairly by insurance companies. Download our FREE e-book to learn all about agricultural insurance claims. If you have additional questions, or need legal assistance with an agricultural claim, contact an agricultural policyholder lawyer at the Voss Law Firm. We have been successfully representing farmers and ranchers for many years and will be happy to review your case during a free consultation. Call us today at 888-614-7730.

  • Author: TheVossLawFirm
  • Published: 2016-08-08 18:50:19
  • Words: 9908
Understanding Agricultural Insurance Claims Understanding Agricultural Insurance Claims