Crop Insurance Checkups Pay BIG

Article re-printed with persmission of Farm Journal Media

Once you’ve bought crop insurance, it pays to protect that investment. Most farmers assume that what they report to their crop insurance agent and their Farm Service Agency (FSA) office is recorded correctly. But mistakes are made in the records for nearly one out of five farms that would cause them problems with both their FSA payments and crop insurance claims, estimates Bob Betzelberger, a crop insurance specialist in Delavan, IL.  “A simple 10-minute checkup would correct the mistakes and save growers thousands of dollars,” he says.

• Do a quick math check. If you have more acres of a crop than are listed on your insurance policy, you’ll be penalized at claim time. “An insurance claims adjuster will have to spread your total production for the crop over the number of acres that were listed on the policy. You will need to correct the figures with the insurance company before you have any clams, and some corrections may require an inspection of the crop before they can be changed. So the earlier you fix the mistakes, the better,” Beetzelberger says.

• Is the right crop listed? “It seems impossible to have a completely wrong crop or missing acres. But last year we found a new client whose FSA office records had every crop reversed,” he says. “If you go in and tell them that you switched all the corn acres to soybeans, make sure it was recorded correctly.”

• Who owns the crop? The FSA and your crop insurance both make payments based on the percentage of the crop that they show you should receive. Some payments are based on how the farm is owned and some on the lease arrangements. “If you recently switched from a crop share lease to a cash rent agreement, make sure that the forms you signed at the FSA and insurance company reflect the changes,” he says.

• Watch for special situations. Double-cropped acres, high-risk insurance premiums may cost six times more than standard risk premiums. And irrigated crops cost less to insure than non-irrigated crops. So you can save premium dollars by catching these errors,” he says.

• Avoid spouse penalty.  You get a big penalty if you miss this next new rule: Is your spouse’s name and social security number listed on the policy? “There is now an automatic 50% reduction in your claim payments if you didn’t have the spouse’s information reported,” says Betzelberger. “It doesn’t make any difference if your spouse has a share in the crop or not, he or she still needs to be listed.  In the past, some married couples played games with separate insurance policies to create loopholes in coverage. But that is now against the rules.”

• If you think you have a claim. Don’t harvest the field without reporting it to the insurance company and getting permission to proceed. “If the cause of the claim is widespread throughout your area, the government may waive the pre-inspection requirements,” he says. “But it is still best to check with the claims adjusters so you don’t risk having your claim denied.

• Get written permission before you commingle the grain that you harvest. You may be tempted to top off a bin with grain from another field. But if you don’t have written permission and follow strict guidelines on how to keep the production separate, it might jeopardize how the claim will be paid.

“It seems like the federal crop insurance program is loaded with rules and red tape,” says Betzelberger, “but in a bad crop year, it may make the difference whether you keep farming or not.”