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Third-party injury and federal crop insurance

Multi-peril crop insurance is overseen by the U.S. Department of Agriculture Risk Management Agencies. For row crop producers, the most common multi-peril crop policies purchased are revenue protection and yield protection. Both of these insurance products use the insured farmer’s actual yields in determining the level of indemnity, if any, to be paid.
 
Third-party injury to crop yields has become a topic of increasing concern since the introduction of Xtend soybeans and cotton. Since their introduction in 2016 to now (2018), farmers have experienced injury to their crops from neighbors spraying various formulations of dicamba. While off-target pesticide damage is a significant source of third-party injury, it is not the only source. Fire caused by someone (not nature, such as a lightning strike) that occurs in a field is also a third-party injury problem.
 
The Risk Management Agency mandates that all approved insurance providers follow their Common Crop Insurance Policy Basic Provisions. This manual states: "Insurance is provided only to protect against unavoidable, naturally occurring events." Naturally occurring events are frequently weather episodes, such as wind, hail, excess moisture or drought and biological problems, such as pest or pathogen infestations.
 
The manual goes on to state: "All other causes of loss, including but not limited to the following, are NOT covered: Any act by any person that affects the yield, quality or price of the insured crop (e.g., chemical drift, fire, terrorism, etc.)." Third-party injury from off-target dicamba applications is considered a chemical drift problem – not an insurable loss.
 
What this practically means is that a farmer whose yield and revenue is diminished due to a neighbor’s spraying of dicamba is not a covered loss. Any lost yield determined to be the result of an off-target injury of dicamba, will not be considered loss requiring an indemnity payment from the insurance company. Being made whole for that loss will have to be sought through some other means.
 
This does not mean that a farmer experiencing a third-party injury should not contact their crop insurance company. The Risk Management Agency modified its policy manual in 2017 to allow yield losses due to third parties to be excluded from actual production history (APH) calculations. This can be an important benefit to claim if a farmer does experience diminished yields due to any third-party acts, including off-target dicamba injury.
 
For farmers to receive the exemption of yields negatively affected by third-party acts, the farmer must notify his or her crop insurance agent within 72 hours (three days) of noticing the loss. The farmer cannot wait until harvest to claim the loss. He or she must notify the insurance agent about the damage during the growing season so the insurance company can have an adjuster observe the injury and its extent.
 
Understanding the new risk environment arising from increased third-party injury may necessitate some additional risk management. First, regularly scouting fields and notifying your insurance company when an injury is observed is essential to claim the third-party injury exception when determining future years' APH. It might also require the farmer to consider if electing different insurable units is appropriate. Location to farmers who are known to spray volatile herbicides or having geographic features that are more susceptible to inversion drift may indicate a need to separate that field from others on the farm.