Be aware of drought loss insurance policies before filing claims

ST. PAUL, Minn. (8/15/2006) -- With dry conditions in many areas of Minnesota, farmers may not only be faced with a short grain and forage crop this year, but also the need to file a crop insurance loss claim.

If the need to file a claim arises, there are issues producers should be aware of in order to comply with insurance policy rules, says Gary Hachfeld, educator in agribusiness management with the University of Minnesota Extension Service.

"Being aware of these issues can prevent you from becoming ineligible for an indemnity payment that you purchased insurance to protect against," said Hachfeld. "It's important to consult your crop insurance agent during this process. Ask questions and dig out your insurance policy. Check some of the provisions that relate to drought loss."

For grain producers, Hachfeld says it's critical to maintain accurate production records by insurance unit. He recommends keeping a load log or scale tickets to ensure an accurate count of bushels harvested.

Producers will need to account for previous year's production, if it's currently in their grain bins. This can be done by having the bin measured by the USDA's Farm Service Agency before any 2006 crop is added to the bin.

Hachfeld reminds producers of the following insurance policy rules:

• A crop cannot simply be abandoned. If any possibility for yield exists, the producer must continue to care for the crop. An example of this would include irrigated corn for grain.
• If it appears there will be no production at all, the field must be appraised by the insurance company before the crop can be abandoned.
• If a crop will be put to a use other than what it was insured for, it must be appraised before the new use is initiated. An example of this would include corn insured for grain, but the producer now wants to chop it for silage.
• Insurance companies require a "representative sample" of a crop to conduct an appraisal. The sample must be 10 feet in width and the full length of each field in the unit.

Hachfeld points out that if a crop is put to another use without appraisal or consent by the insurance company, the appraisal for loss will be identical to the insurance guarantee. If that's the case, there is virtually no way the producer can collect an indemnity payment for loss on the acres in question, he says.

Source: Gary Hachfeld, Extension educator in agribusiness management, (507) 389-6714

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URL: http:// www.extension.umn.edu/extensionnews/2005/droughtlossclaims.html  This page was updated Aug. 16, 2006 .
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