Final Agency Determination: FAD-004

Subject: The Raisin Crop Insurance Provisions, 7 C.F.R. § 457.124, subparts 9 and 10.

Background

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. Section 9 states:

In lieu of the provisions of section 11 (Insurance Period) of the Basic Provisions (§ 457.8), insurance attaches on each unit at the time the raisins are placed on trays for drying and ends at the earlier of:

(a) October 20;
(b) The date the raisins are removed from the trays;
(c) The date the raisins are removed from the vineyard;
(d) Total destruction of al raisins on the unit;
(e) Final adjustment of a loss on a unit; or
(f) Abandonment of the raisins.

Section 10(a) states:

In accordance with the provisions of section 12 (Causes of Loss) of the Basic Provisions (§ 457.8), insurance is provided only against unavoidable loss of production resulting from rain that occurs during the insurance period and while the raisins are on are trays or in rolls in the vineyard for drying.

Interpretation Submitted

If an insured is unable to pick up the raisin crop due to wet conditions caused by rain during the insurance period and the crop is subsequently damaged by rains occurring after the end of the insurance period, the damage caused by the rains occurring after the insurance period is an "unavoidable loss of production," which is an insurable cause of loss under 7 C.F.R. § 457.124.

Final Agency Determination

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 inability to box and remove the raisins is caused by anything other than rain, neither the original loss nor the subsequent loss is insurable. If the subsequent damage to the raisins is caused by anything other than rain, the additional loss is not insurable. Therefore, reinsured companies must verify the cause of loss and determine the extent of damage at the end of the insurance period.

In accordance with 7 C.F.R. § 400.765(c), this constitutes a final agency determination and is binding on all participants in the Federal crop insurance program.

Date of Issue: May 9, 2001