Final Agency Determination: FAD-053
Subject: Request received July 6, 2005, requesting a Final Agency Determination for the 2004 and subsequent crop years regarding the interpretation of section 14(b)(1) of the Fresh Market Tomato (Dollar Plan) Crop Insurance Provisions, published at 7 C.F.R. 457.139, as it pertains to determining the stage as described in section 14(b)(1) when an insured replants tomatoes in accordance with section 9(b)(2)(i). This request is pursuant to 7 C.F.R. part 400, subpart X.
Section 9(b) of the Fresh Market Tomato (Dollar Plan) Crop Insurance Provisions states:
Section 9. Insurable Acreage
* * * * *
(b) In addition to the provisions of section 9 (Insurable Acreage) of the Basic Provisions
* * *
(2) Whenever tomatoes initially are planted during the fall or winter planting periods and the conditions specified in sections 9(b)(1)(ii) and (iii) are not satisfied, you may elect:
(i) To replant such acreage and collect any replant payment due as specified in section 12. The initial planting period coverage will continue for such replanted acreage.
Section 14(b) Settlement of Claim states:
* * * * *
(b) In the event of loss or damage covered by this policy, we will settle your claim by:
(1) Multiplying the insured acreage in each stage by the amount of insurance per acre for the final stage ;. .
(2) Multiplying each result in section 14(b)(l) by the percentage for the applicable state (see section 3(d);
The requestor interprets section 14(b) of the Fresh Market Tomato (Dollar Plan) Crop Insurance Provisions as an insurance provider measures a loss and calculates the indemnity based on the stage that the tomatoes were in at the time of loss. In this regard, section 9(b)(2)(i) does not alter the manner in which the tomatoes" stage is determined.
The requestor provided the following example to explain the context of the interpretation: An insured plants tomatoes which reach stage 2, but they are subsequently damaged by an insurable cause of loss. Subsequently, the insured elects to replant the tomatoes as permitted by section 9(b)(2)(i). However, the replanted tomatoes are destroyed while still in stage 1. In accordance with section 14(b)(1), the requestors" interpretation is the applicable stage is stage 1. The fact the original tomatoes reached stage 2 is irrelevant to settling the claim
Final Agency Determination
The Federal Crop Insurance Corporation (FCIC) agrees that section 9(b)(2)(i) does not alter the requirement in section 14(b) that the amount of insurance per acre will be adjusted by the percentage for the stage of growth when the tomatoes were damaged.
Section 9(b) of the Fresh Market Tomato (Dollar Plan) Crop Insurance Provisions allows an insured under certain conditions to choose to replant the damaged crop or to not replant. In the event the crop is replanted, the insured would receive a replant payment and coverage for the initial planting period would continue for the replanted tomato acreage. If the crop is not replanted, the insured receives an indemnity based on the stage at the time of loss and the acreage is uninsurable for the subsequent planting period.
This means that under the example provided by the submitter, if the insured had elected not to replant the crop, the insured would have received an indemnity based on stage 2 and the acreage would not have been insured for the next planting period. However, because the insured elected to replant the acreage and collect the replant payment, any indemnity is based on the replanted tomatoes, and they are adjusted in accordance with section 14(b) and 3(e) of the Crop Provisions which states, "The indemnity payable for such acreage will be based on the stage the plants had achieved when the damage occurred."
In accordance with 7 C.F.R. 400.765(c), this Final Agency Determination is binding on all participants in the Federal crop insurance program for the 2004 and succeeding crop years.
Date of Issue: August 29, 2005