Crop Insurance Claim Denied Due to Fungal Disease

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A recent claims dispute regarding a farmer's faba bean crops has garnered attention, as the insurer has denied the claim based on the presence of a fungal disease.

The farmer argued that a hailstorm was the cause of the disease outbreak, but the decision went against him.

Let's delve into the details of this case and understand the ruling.

The Claim and Policy Coverage

The farmer lodged a claim for potential yield loss after a hailstorm damaged his crops. The insurance policy defined "potential yield" as the average harvest per hectare without any insured event occurring. While the insurer accepted that the hail caused some damage, they engaged an agricultural loss assessor to assess the extent of the damage.

Agronomist Findings and Contradictory Opinions

The loss assessor's agronomist reported that the crops showed signs of "light" hailstone damage, with evidence of browning on the leaves indicating the presence of fungal damage or chemical burns from a herbicide. Further investigations revealed that the main impact on the crop was due to fungal and chemical burn, while the hail damage only caused cosmetic leaf damage without affecting the achievable yield.

In response, the farmer claimed that the hailstorm created an entry point for fungal pathogens, causing the disease to spread and damage the crops. Although he attempted to minimize the damage by spraying fungicide, it proved ineffective.

While the farmer provided findings from a separate agronomist who attributed the hail damage to earlier in the season, the insurer maintained that their policy excludes losses caused by diseases, even if they arise as a consequence of an insured event. The insurer also highlighted contradictory opinions between the farmer's agronomist and their own assessor regarding the effectiveness of the fungicide.

The Ruling and Policy Exclusion

The Australian Financial Complaints Authority (AFCA) reviewed the case and ruled in favor of the insurer. AFCA emphasized that the policy clearly excluded coverage for losses caused by diseases, regardless of whether they arose from an insured event.

In their statement, AFCA acknowledged the farmer's claim that the hail damage led to fungal disease, adversely impacting the crop's yield. However, they emphasized that the disease exclusion outlined in the policy's Product Disclosure Statement (PDS) prevails, denying coverage for losses caused by disease, even if it arises from hail damage.

The ruling also took into account the contradictory opinions regarding the effectiveness of the fungicide. With the policy exclusion and the lack of conclusive evidence supporting the farmer's claim, AFCA concluded that the insurer was entitled to deny the claim.

For more details on the ruling, you can read the full document here.

Published:Thursday, 28th Sep 2023
Source: Paige Estritori

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