It will take months to calculate the damage Hurricanes Harvey and Irma unleashed this summer on the states of Texas, Louisiana, and Florida: dozens of lost lives, hundreds of thousands of destroyed homes, tens of billions in property damage and untold suffering and disruption. Some losses will take years to mend, some can never be mended at all.
For farmers, once conditions clear enough to inspect fields, a first order will be to assess losses to their crops. For many, this disaster, as bad as it was, could have been worse. Texas farmers had been anticipating records crops in 2017 before the storm struck. About 75 percent of rice and 15 percent of cotton was harvested or ready for harvest. Cotton modules already dotted many fields. But much remained exposed, and Harvey’s fierce winds and unprecedented 30-plus inch rains wreaked havoc on rural infrastructure. Cotton gins and rice storage facilities suffered on a wide scale, potentially blocking many crops from reaching markets even if they survived the immediate hit.
In Florida, some $1.2 billion in crops stood exposed at the time Irma struck. Damage there too could be wide and deep.
In picking up the pieces from this historic disaster, farmers will learn first-hand the benefits as well as the limitations and pitfalls of protection under USDA’s Federal crop insurance program, run by USDA’s Federal Crop Insurance Corporation (FCIC). FCIC crop insurance can be a blessing in a crisis like this, providing certainty of timely payment at pre-agreed levels. Its financial guarantees are tailored to individual farm production histories and reflect deductibles chosen by the farmer. Its payments are based on contracts; no need to rely on politicians. And once claims are filed, checks normally go out within thirty days.
But FCIC crop insurance also has limitations. Its indemnities are not designed to make farmers 100 percent whole. Rather, its policies contain deductibles to ensure that farmers have “skin in the game” and an ability to control cost by choosing lower guarantees. FCIC crop insurance is also tightly controlled by often-complex rules and procedures applied far more strictly than commercial insurance (a result of taxpayer subsidies and related government oversight).
Navigation of the crop insurance claims process requires care and patience. Here are a few basics:
- Notice of Loss: The FCIC basic policy requires farmers to notify their insurance company of potential losses with 72 hours of discovery, allowing the company to inspect the damage while evidence is fresh. This is a strict rule; your indemnity can be blocked for non-compliance. If in doubt, err on the side of caution and call your company immediately. FCIC has announced it will provide farmers in the Harvey region some leeway where a delay in reporting results from hurricane damage, but companies will likely be strict in making case-by-case determinations;
- Document your actions: If a disagreement comes up later over your claim, you may need to demonstrate that you followed the rules. Keep accurate notes and records of interactions with your company, agent, and loss adjustor, including dates of phone calls, copies of emails, and notes on any instructions from your adjustor. Take plenty of photographs of the damage;
- Know your responsibilities: FCIC rules require a farmer to assist the company loss adjustor, allow access to your field, and get their permission before you either destroy the crop or put the field to another use. Sometimes, you may be asked to leave representative strips of the damaged crops for later inspection. Failure to follow these rules can derail your claim. If you aren’t sure what to do, ask your company loss adjustor (and remember to write down the answer). FCIC rules sharply limit the role your insurance agent can play in helping to adjust a claim (based on conflict of interest concerns), but you can still ask their advice if questions arise.
- Collect documents: Be sure you have copies of your insurance policy and key documents like your summary of coverage and APH worksheets. As your loss adjustor works the claim, ask that he provide you copies of his final production report and any document that he asks you to sign.
- Check USDA notices: USDA’s Risk Management Agency, which manages the FCIC insurance program, has already issued several special bulletins instructing its insurance company on Harvey and Irma-related emergency claims. You can track these directly on RMA’s website, www.rma.usda.gov See, for instance, its Bulletins on Emergency Procedures for Crops Damaged by Hurricane Harvey and Cotton Modules at Risk of Flood Damage Due to Impending Tropical Storm Harvey.
- Disagreements: Finally, if a disagreement arises over your claim, work closely with your company to resolve it. Provide any information they ask for, and don’t get frustrated over delays. The hurricanes will place enormous pressure on the companies to handle large numbers of claims quickly and accurately, so don’t be surprised if they have a logjam or two themselves. Disputed claims generally follow a process called the Controversial Claims Procedure spelled out in section 1204 of FCIC’s Loss Adjustment Manual. Finally, your insurance policy gives you the right to contest any company decision either through Mediation or Arbitration.
Should you talk to a lawyer about a crop insurance claim? In the large majority of cases, no, there is no need. Crop insurance loss adjustors and company staff are highly trained professionals who generally do a great job under tough conditions. But if you have a disagreement over a claim that is large enough to require arbitration (the normal venue for crop insurance disputes), or if you feel the company truly acted unreasonably, that’s the time to speak with a lawyer, and to do it quickly. Beyond handling actual legal challenges, a knowledgeable attorney with FCIC claims experience can give you a quick, realistic assessment as to the seriousness of the problem and the strength of your argument, while also helping you avoid early technical or procedural mistakes that can jeopardize your claim in the long run.
To all our friends in the hurricane zones, we wish you the best, and hope you weather the storms safely and with a minimum of damage.