The following message was received from the Risk Management Agency (RMA) regarding insured losses due to third party damages and the impact to Actual Production History (APH).
Washington and Oregon wheat growers,
As you are aware, RMA has received concerns from insureds whose insurance guarantees are reduced because of crop losses caused by third party damage or unavoidable, uninsured fire. For example in the case of wheat, situations have occurred where an unavoidable, uninsured fire caused by a passing train ignites a fire and destroys a portion, or in some cases an entire field, of wheat. Third party damage refers to situations in which the actions of a third party lead to losses for the insured, such as when a neighbor negligently applies chemicals and the resulting spray drift damages the insured’s crop. Because such situations are not insurable causes of loss under the Federal Crop Insurance Act, insureds who experience such losses are not owed an indemnity. Nevertheless, the loss from the third party or unavoidable, uninsured fire reduces the actual yield for the year, which subsequently reduces the insured’s guarantee for at least 10 subsequent crop years or length of time the yield remains in the insured’s Actual Production History (APH) database.
I am pleased to announce that beginning with the 2018 crop year, in the event an insured suffers losses due to third party damage and/or unavoidable, uninsured fire for crop production being reported for the prior crop year, a producer will have the option to not have the acres and production associated with such causes included in the APH database, when certain criteria are met. In these instances, no actual yield would be reported for the damaged acreage. As a result, reduced yields due to third party damage and unavoidable uninsured fire will not impact the insured’s approved APH yield. Production from any remaining acres in the field will be included in the APH database and will be used to calculate the approved APH yield. This will allow production lost due to third party damage or unavoidable, uninsured fire in the 2017 and subsequent crop years to not impact the 2018 and subsequent approved APH yields.
This change was released in the 2018 Crop Insurance Handbook issued by RMA on June 29, 2017, which can be found on the RMA website here.
Risk Management Agency