United States LOSS Department of Agriculture ADJUSTMENT MANUAL Federal Crop Insurance Corporation (LAM) STANDARDS HANDBOOK Product Development Division FCIC-25010 (1-2005) FCIC-25010-1 (7-2005) 2005 and Succeeding Crop Years UNITED STATES DEPARTMENT OF AGRICULTURE WASHINGTON, D.C. 20250 NUMBER 25010 (1-2005) FEDERAL CROP INSURANCE HANDBOOK 25010-1 (7-2005) SUBJECT: OPI: Product Development Division LOSS ADJUSTMENT MANUAL (LAM) APPROVED DATE: STANDARDS HANDBOOK 2005 and SUCCEEDING CROP YEARS /S/ Tim B. Witt 7/12/2005 Deputy Administrator, Research and Development SUMMARY OF CHANGES/CONTROL CHART The following list contains significant changes to this handbook, as determined by us. It may not represent all changes made. All changes made to this handbook are applicable regardless of whether or not listed. Major Changes: Highlight identifies changes or additions in the text. Three stars (***) identify where information has been removed. July 2005 changes to the 2005 crop year FCIC-25010 issued January 2005. 1. PAR. 21 C (3) Added subparagraph (b) stating that for the purpose of determining a MIF, share will be excluded from liability. 2. PAR. 29 G and I Added that for the purpose of determining a MIF or LAF, share will be excluded from liability. 3. PAR. 69 C (2) Clarified that if the insured has all of the information to submit and sign the claim within the time required by the policy provisions but the insurance provider does not make the inspection and complete the claim within that timeframe, the claim will not be denied. 4. PAR. 110 D (1) Clarified that for crops requiring pack factors, the pack factor is applied to ALL farm-stored production not weighed; i.e. production in a storage structure, cone, inverted cone, conveyance, conical pile, etc. Added that for production in cones and inverted cones, apply the same pack factor that is applicable to the greatest portion of the structure. 5. PAR. 111 B Added a cone, conical pile, and inverted cone to the formula for determining square feet of floor space for a round structure. 6. Exhibit 1 Added note underneath definition of Liability stating that for the purpose of determining a LAF or MIF, share will be excluded from liability. In the definitions for Liability Adjustment Factor and Misreported Information Factor, indicated that when liability is determined, share is excluded. 7. Exhibit 3 Added cause of loss code, “09” for Asian Soybean Rust, and for cause of loss FIE, corrected year of Contract Change Date for 8/31. 8. Exhibit 18 Added a sentence to clarify that the liability used to determine a LAF or MIF is a separate liability for a replant payment, prevented planting payment, or indemnity payment. 9. Exhibit 19 Added an index. JULY 2005 SC 1 FCIC-25010-1 (LAM) LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK SUMMARY OF CHANGES/CONTROL CHART (Continued) CONTROL CHART FOR: LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK SC TC Text Page(s) Page(s) Page(s) Exhibits Date Directive Number Remove 1-10 7-8 33-34 1(311-312) 01-2005 FCIC-25010 47-50 3(331-332) 01-2005 FCIC-25010 143-144 18(377-378) 01-2005 FCIC-25010 239-240 01-2005 FCIC-25010 Insert 1-2 7-8 33-34 1(311-312) 07-2005 FCIC-25010-1 47-50 3(331-332) 07-2005 FCIC-25010-1 143-144 18(377) 07-2005 FCIC-25010-1 239-240 19(378-388) 07-2005 FCIC-25010-1 Current 1-2 07-2005 FCIC-25010-1 Index 1-6 01-2005 FCIC-25010 7-8 07-2005 FCIC-25010-1 1-32 01-2005 FCIC-25010 33-34 07-2005 FCIC-25010-1 35-46 01-2005 FCIC-25010 47-50 07-2005 FCIC-25010-1 51-142 01-2005 FCIC-25010 143-144 07-2005 FCIC-25010-1 145-238 01-2005 FCIC-25010 239-240 07-2005 FCIC-25010-1 241-298 1(299-310) 01-2005 FCIC-25010 1(311-312) 07-2005 FCIC-25010-1 1(313-321) 01-2005 FCIC-25010 2(322-330) 01-2005 FCIC-25010 3(331-332) 07-2005 FCIC-25010-1 3(333) 01-2005 FCIC-25010 4(334-336) 01-2005 FCIC-25010 5(337-338) 01-2005 FCIC-25010 6(339-340) 01-2005 FCIC-25010 7(341) 01-2005 FCIC-25010 8(343) 01-2005 FCIC-25010 9(344-345) 01-2005 FCIC-25010 10(346-347) 01-2005 FCIC-25010 11(348-351) 01-2005 FCIC-25010 12(352-356) 01-2005 FCIC-25010 13(357) 01-2005 FCIC-25010 14(358-366) 01-2005 FCIC-25010 15(367-369) 01-2005 FCIC-25010 16(370-373) 01-2005 FCIC-25010 17(374-376) 01-2005 FCIC-25010 18(377) 07-2005 FCIC-25010-1 19(378-388) 07-2005 FCIC-25010-1 JULY 2005 SC 2 FCIC-25010-1 (LAM) LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK TABLE OF CONTENTS PART 1 GENERAL INFORMATION Page 1 Purpose.......................................................................................................................................1 2 Special Instructions.....................................................................................................................1 3 Operating Policy..........................................................................................................................3 4 Abbreviations or Acronyms.........................................................................................................4 5 Documents/Procedures..............................................................................................................5 6 FCIC’s RMA Product Development Division Responsibilities.....................................................5 7 Insurance Provider Responsibilities............................................................................................6 8 Loss Adjustment Responsibilities...............................................................................................7 9 Insured’s Responsibilities.........................................................................................................11 PART 2 INSPECTION DUTIES SECTION 1 PRODUCER ELIGIBILITY AND ENTITIES 10 General Information..................................................................................................................13 11 Insurance Provisions.................................................................................................................13 12 Insurance Qualifications............................................................................................................14 13 Verifying and/or Determining Insurable Share..........................................................................15 14 Entities......................................................................................................................................21 SECTION 2 INSURED’S CONTRACT INFORMATION 15 Contract Information and Verification........................................................................................29 16 Application................................................................................................................................29 17 Contract Changes.....................................................................................................................29 18 Written Agreement....................................................................................................................29 19 APH Form (Production and Yield Report).................................................................................30 20 Options and Endorsements......................................................................................................30 21 Acreage Report.........................................................................................................................31 22 Hail and Fire Exclusion.............................................................................................................35 23 Assignment Of Indemnity..........................................................................................................38 24 Transfer of Right To An Indemnity............................................................................................38 25 Notice of Prevented Planting or Notice of Damage or Loss......................................................39 26 Power of Attorney.....................................................................................................................41 SECTION 3 REVISED ACREAGE REPORTS 27 General Information..................................................................................................................41 28 Revised Acreage Reports - Before the Acreage Reporting Date..............................................42 29 Revised Acreage Reports - After the Acreage Reporting Date.................................................43 JANUARY 2005 TC 1 FCIC-25010 (LAM) LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK TABLE OF CONTENTS PART 2 INSPECTION DUTIES (Continued) Page SECTION 3 REVISED ACREAGE REPORTS (Continued) 30 Revised Acreage Reports - Acreage Report Reviews.............................................................49 31 Revised Acreage Reports - Examples.....................................................................................50 SECTION 4 UNREPORTED ACREAGE 32 Unreported Acreage Discovered After Acreage Report Filed for the Crop..............................52 33 Unreported Acreage Which May Be Late Planted...................................................................53 SECTION 5 ACTUARIAL DOCUMENTS AND VERIFICATION 34 Usage.......................................................................................................................................54 35 Actuarial Classification - Document Precedence.....................................................................55 36 Using Actuarial Documents for Verification..............................................................................55 SECTION 6 INSURABLE FARMING PRACTICES 37 General Information.................................................................................................................55 38 Continuous Cropping Practice.................................................................................................56 39 Summerfallow Practice............................................................................................................56 40 Irrigated Practice......................................................................................................................57 41 Non-irrigated Practice..............................................................................................................70 42 Initial Planting Practice (IBR, NIBR, etc.).................................................................................70 43 Organic Farming Practice........................................................................................................70 SECTION 7 INSURABLE ACREAGE 44 Verifying Insurable Acres.........................................................................................................75 SECTION 8 INSURED CROP 45 Verifying Insured Crop.............................................................................................................80 SECTION 9 FIRST, SECOND, AND SUBSEQUENT CROPS PLANTED ON SAME ACREAGE IN SAME CROP YEAR 46 First Insured Crop Planted and Second Crop .........................................................................82 47 First Insured Crop Prevented From Planting and Second Crop .............................................87 48 Additional Information About Reduction of Payments and Premium Due to Second Crop......87 49 Indemnity Payment and PP Payment as They Relate to Double Cropping.............................88 50 Subsequent Planted Crops......................................................................................................93 JANUARY 2005 TC 2 FCIC-25010 (LAM) LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK TABLE OF CONTENTS PART 2 INSPECTION DUTIES (Continued) SECTION 9 FIRST, SECOND, AND SUBSEQUENT CROPS PLANTED ON SAME ACREAGE IN SAME CROP YEAR (Continued) Page 51 Loss Adjustment......................................................................................................................93 52 Claim Form Entries Relative to First Insured and Second Insured Crops...............................95 53 First and Second Crop Questions and Answers....................................................................104 SECTION 10 UNIT DETERMINATION 54 Unit Verification......................................................................................................................106 55 Unit Structures.......................................................................................................................107 SECTION 11 USDA FARM PROGRAM COMPLIANCE 56 Controlled Substance Violation..............................................................................................118 SECTION 12 HAZARDS CONNECTED WITH PESTICIDES OR OTHER CHEMICAL SUBSTANCES 57 Pesticide or Other Chemical Substance Hazards..................................................................118 SECTION 13 FSA OFFICE 58 FSA Information......................................................................................................................119 59 Information Requests..............................................................................................................120 60 ***............................................................................................................................................120 61 Verification Materials/Information............................................................................................120 PART 3 ON-THE-FARM INSPECTION SECTION 1 TYPES OF INSPECTIONS 62 General Information................................................................................................................123 63 Indemnity Inspection - Preliminary..........................................................................................123 64 Replant Payment Inspection and Certification....................................................................... 124 65 Replanting Provision Issues................................................................................................... 131 66 Purpose of the Certification Form...........................................................................................136 67 Indemnity Inspection - Final (Including No Indemnity Due Claims)........................................138 68 Indemnity Inspection (Final) - End of the Insurance Period....................................................140 JANUARY 2005 TC 3 FCIC-25010 (LAM) LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK TABLE OF CONTENTS PART 3 ON-THE-FARM INSPECTION (Continued) SECTION 1 TYPES OF INSPECTIONS (Continued) Page 69 Indemnity Inspection (Final) - Delayed Notice of Damage or Loss and/or Delayed Claim....................................................................................................................................143 70 Production Pre-Measurement Service Inspection...................................................................147 71 Growing Season Inspection....................................................................................................149 72 Preharvest Inspection.............................................................................................................151 73 Acreage Report Review Inspection.........................................................................................151 74 Crop Inspection To Determine Acceptance of Unreported Acreage For Insurance................152 75 Interest Payment on Claims....................................................................................................153 SECTION 2 VERIFYING THE CAUSE OF LOSS 76 General Information................................................................................................................154 77 Hail and Fire Exclusion...........................................................................................................154 78 Uninsured Causes..................................................................................................................154 79 Abandon Versus Not Following A Good Farming Practice.....................................................156 SECTION 3 ACREAGE DETERMINATION 80 General Information And Methods..........................................................................................157 81 Wheel Measuring Method and Formulas................................................................................161 82 Skip-Row Planting Patterns (Cotton)......................................................................................166 SECTION 4 ESTABLISHING PRODUCTION 83 General Information................................................................................................................166 84 Verifying Total Production - Appraised or Harvested..............................................................167 85 Appraisals...............................................................................................................................168 86 Appraisal Method Variations...................................................................................................173 87 Appraisals Involving Average Row-Width Measurements......................................................174 88 Representative Sample Area Appraisals................................................................................174 89 Bypassed Acreage..................................................................................................................182 90 Verifying Harvested Production..............................................................................................184 91 Verifying Sold or Commercially Stored Production.................................................................185 92 Verifying Fed Production.........................................................................................................186 93 Verifying and Accounting for Production Not to Count............................................................186 94 Gleaned Acreage....................................................................................................................188 JANUARY 2005 TC 4 FCIC-25010 (LAM) LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK TABLE OF CONTENTS PART 3 ON-THE-FARM INSPECTION (Continued) Page SECTION 5 ADJUSTMENTS TO PRODUCTION 95 General Information................................................................................................................192 96 Quality Adjustment (QA).........................................................................................................193 97 Adjustments for Moisture........................................................................................................211 98 Adjustments for Foreign Material (FM) and if allowed, Dockage............................................211 99 Consolidating Moisture or FM Percentage Entries On the Claim Form..................................216 100 Averaging Moisture or FM Percentage Entries On the Claim Form........................................217 101 Test Weight and Test-Weight Factor......................................................................................218 102 Mycotoxins in Grain Crops.....................................................................................................220 SECTION 6 RECORDING AND DETERMINING THE QUANTITY OF FARM-STORED PRODUCTION 103 Determining and Recording Farm-Stored Production That Requires Measurements......................................................................................................................229 104 Production Weighed and Farm-Stored...................................................................................230 105 Authorization to Accept Insureds' Bin Markings, Load Records and Combine Monitor Records .................................................................................................................................231 106 Recording and Converting Measurements.............................................................................235 107 Rounding Rules......................................................................................................................236 108 Table to Convert Fractions to Percent Figures.......................................................................237 109 Metric Conversion Table.........................................................................................................237 110 Recording Farm-Stored Production on the Claim Form..........................................................238 111 Farm-Stored Production-to-count Formula.............................................................................239 112 Gross Cubic Feet Formulas By Structure...............................................................................241 113 Unusual Storage Configurations: Measurements and Computations.....................................245 114 Round Bin Chart.....................................................................................................................253 115 Net Cubic Feet Formula (Cubic Feet Deductions)..................................................................253 116 Converting Volume to Bushels, Hundredweight, or Pounds...................................................254 PART 4 UNUSUAL/CONTROVERSIAL CASES AND SPECIAL CLAIMS PROCEDURES SECTION 1 GENERAL INFORMATION 117 General Procedures to Follow When Involved With Unusual or Controversial Cases....................................................................................................................................255 118 Report Writing - How to Document Findings...........................................................................255 119 Points to Remember While Dealing With Problem Cases......................................................256 120 Controversial Claim Procedure...............................................................................................258 JANUARY 2005 TC 5 FCIC-25010 (LAM) LOSS ADJUSTMENT MANUAL STANDARDS HANDBOOK TABLE OF CONTENTS PART 4 UNUSUAL/CONTROVERSIAL CASES AND SPECIAL CLAIMS PROCEDURES (Continued) Page SECTION 2 UNUSUAL/CONTROVERSIAL CASES 121 Controversial Claim: Uninsured Causes of Loss...................................................................259 122 Claims for Indemnity Involving Suspected Concealment or Misrepresentation......................266 SECTION 3 SPECIAL CLAIMS PROCEDURES 123 Subrogation - Third Party Cause of Loss................................................................................266 124 Mediation, Arbitration, Appeals, Judicial Review, Administrative Review, and Large Claim Review....................................................................................................................................267 125 Claims Involving Fire Damage................................................................................................270 126 Commingled Production..........................................................................................................277 127 Unreported Units.....................................................................................................................283 128 Claims Involving Severe Insect, Disease, or Weed Infestation...............................................287 129 Airplane- or Broadcast-Seeded Barley, Oats, Rye, or Wheat.................................................287 130 Severe Wind Erosion..............................................................................................................288 131 Corrected Claims....................................................................................................................290 132 Documenting Death or Incompetency of an Insured...............................................................291 133 Bankruptcy..............................................................................................................................292 134 Modification of Requirement to Destroy Crop Before Indemnification....................................292 135 Chemical Carryover Due to An Extended Adverse Weather Condition..................................294 PART 5 LATE PLANTING COVERAGE 136 General Information................................................................................................................295 137 Late Planting Coverage..........................................................................................................295 EXHIBITS Page 1 Definitions...............................................................................................................................299 2 Crop Policy Information...........................................................................................................322 3 Causes of Loss Names and Codes........................................................................................331 4 Units of Measure of Production, by Crop................................................................................334 5 Entities and Documentation Chart..........................................................................................337 6 Hail/Fire Exclusion Appraisal Factor Chart.............................................................................339 7 FSA Documents......................................................................................................................341 8 FSA Abbreviations on Aerial Photos ......................................................................................343 9 FSA Codes Used on FSA-578................................................................................................344 10 Claim Checklist.......................................................................................................................346 11 Certification Form and Completion Instructions......................................................................348 12 Self-Certification Replant Worksheet and Completion Instructions........................................352 JANUARY 2005 TC 6 FCIC-25010 (LAM)