Crop Insurance Bad Faith: Protection for America's Farmers

Abstract

It is anticipated a large number of farmers will be filing crop insurance claims with private crop insurers in the wake of the drought of 2012. It is also possible that there will be instances where a private crop insurer allegedly acts in bad faith concerning a claim.The future availability of a crop insurance bad faith remedy is a critical issue for America’s farmers facing the courts. This article offers an examination of the issues surrounding crop insurance bad faith liability. The first part of the article provides an overview of the history, scope and availability of the Federal Crop Insurance Corporation and federal crop insurance program which helps protect America’s farmers. Next, the article discusses reported cases which have involved situations where crop insurance bad faith has been provided as a remedy for insurer misconduct. The article also examines caselaw to date on the issue of federal preemption of bad faith claims under state law by the FCIA and the development of a general rule that bad faith claims under state law are not preempted by the FCIA. Finally, the article discusses the critical recent decision of the Tennessee Court of Appeals in Plants v. Fireman’s Fund which places the future availability of the crop insurance bad faith remedy in question. In conclusion, the crop insurance bad faith remedy is designed as a check against egregious, intentional and reckless misconduct of a crop insurer in the handling of a claim and should be preserved by the courts.