LDM Obtains $200,000 Victory for Agriculture Client, Federal Crop Insurance Arbitration Claim

LDM obtained a favorable ruling for a farmer from north central Nebraska whose 2021 crop insurance claim was originally denied for lack of an insurable cause of loss. The insurer would later admit to an insurable cause of loss on the farmers dryland crops but then denied the claim alleging the farmer failed to maintain contemporaneous harvest records. LDM arbitrated the matter and prior to receiving a decision, obtained a favorable ruling from the Federal Risk Management Agency (RMA) which outlined a farmer’s obligations in maintaining harvest records. Utilizing the RMA ruling the arbitrator found in favor of the farmer as to his dryland crop claim and awarded the farmer the full indemnity in the amount of $223,203.00 plus interest.

A Nebraska farmer who experienced abnormally low yields as a result of drought had his 2021 crop insurance claim on dry land acres denied for lack of an insurable cause of loss. The farmer had a valid Federal Crop Insurance Policy and submitted a claim to his insurance company for the loss, using grain scale tickets, where the farmer identified the loads which came from certain fields in accordance with the Loss Adjustment Manual (LAM), as evidence. The insurance company later admitted the drought caused a loss and paid a portion of the farmer's claim, $57,000. It unjustly denied the remainder of the claim by arbitrarily requiring the farmer's grain scale tickets be contemporaneous with the annotation of which fields the crop came from. As a result, the insurance company calculated the farmer's loss as commingled production under the LAM, which substantially lowered the farmer's indemnity.

The insurance company’s calculation of commingled production, despite the LAM not requiring contemporaneous annotation of the records, was simply an invented requirement to avoid paying the farmer's claim. To hold the insurance company accountable, LDM petitioned the United States Department of Agriculture’s RMA for an interpretation of Subparagraph 932A(4) of the LAM.

The crux of the dispute between the farmer and the insurance company revolved around whether the farmer was required to handwrite the unit and/or field identification from where the crop was harvested onto the grain scale tickets contemporaneously. LDM's argument focused on the plain language of Subparagraph 932A(4) of the LAM, which did not require the handwriting to notations be contemporaneous units the scale ticketed. The insurance company was attempting to insert their own language into the regulation to skirt their responsibility to the Producer. The RMA’s interpretation of Subparagraph 932A(4) was in line with LDM's interpretation, and ruled that the insurance company’s interpretation was wrong.

The farmer was awarded over $200,000, plus interest, for his claim.

This case is a great example of how farmers and producers should not always take the insurance company’s denial at face value. Had the farmer not stood his ground on his claim, he would have left over $150,000 on the table, and the insurance company would have continued its practice of claim denial by inserting its own language into the regulations. The outcome of this case was a major win for the farmer who was able to hold the insurance company accountable and collect the payout to which he was entitled. It was also a win for other farmers who have been properly submitting their claims pursuant to the requirements under the LAM.

Lessons learned from the experience, which may be applicable to similar situations or future projects. The insurance companies are held to the requirements of the policy and governing law and should be held accountable when they deride from those requirements.