Final Agency Determination: FAD-006
Subject: The Raisin Crop Insurance
Provisions, 7 C.F.R. § 457.124, subparts 9 and 10.
On February 8, 2001, the Risk Management Agency was asked for
a final agency determination concerning the Raisin Crop Insurance
Provisions for the 2000 crop year. Readers may access subparts
9 and 10 of §457.124 on RMA's web site to review policy language
for which interpretation was requested.
Final Agency Determination
Approved insurance providers must indemnify
insureds for all losses of production under 7 C.F.R. § 457.124,
when an insured is unable to pick up a raisin crop due to wet
conditions caused by rain during the insurance period and the
crop is subsequently damaged by rains occurring after the insurance
period, irrespective of whether FCIC's Product Development Division
and Insurance Services has authorized additional time for harvest
under FCIC-25010-2 §79(A) because FCIC-25010-2 §79(A)
was NOT published in the Federal Register and because FCIC-25010-2
§79(A) can not be used by RMA to limit payments to policyholders.
It is the final agency determination that under the terms of
the raisin policy published at 7 C.F.R. § 457.124, damage
to the raisins that results from the insured cause of loss ( rain),
that occurred after the insurance period may be insurable provided
that there is evidence that:
(1) Rains damaged the raisins during the insurance period;
(2) As a result of the rain that occurred during the insurance
period, it was not possible to box and remove the raisins before
the end of the insurance period;
(3) Rains occurred after the insurance period that caused further
damage to the raisins; and
(4) As a result of the rain that occurred during or after the
insurance period, it was not possible to box and remove the raisins
at any time between the end of the insurance period and the subsequent
rains that caused the additional damage.
If the above stated conditions are met, the loss to the raisins
that occurs after the end of the insurance period is indemnifiable,
provided that all other conditions of the policy are met.
It is the final agency determination that the policy provides
additional time for harvest of the crop and no other authorization
is needed. However, under sections V.G.2.g and V.H of the Standard
Reinsurance Agreement, reinsured companies are required to comply
with FCIC's loss adjustment procedures. Loss adjustment procedures
are not required to be published in the Federal Register. Such
procedures are only intended to be interpretative of the policy
and to provide guidance on how loss adjustment should be done
to ensure that all claims are adjusted the same, regardless of
which reinsured company is doing the adjustment.
While reinsured companies must comply with FCIC's loss adjustment
procedures, there is an apparent conflict between the terms of
the policy and the loss adjustment procedures. It is the final
agency determination that when such conflicts occur, the terms
of the policy control.
In accordance with 7 C.F.R. § 400.765(c), this constitutes
the final agency determination and is binding on all participants
in the Federal crop insurance program.
Date of Issue: May 9, 2001