Thursday, August 25, 2016

Crop Insurance Update: Kentucky Court Rejects Negligent Misrepresentation Claim

Written by M. Sean High – Staff Attorney

On August 3, 2016, the United States District Court Western District of Kentucky issued a ruling rejecting a claim brought against an insurance company for the alleged negligent misrepresentation of a crop insurance policy (Buckman v. Nau Country Insurance, 2016 WL 4154463).

According to the Court, in March 2011, Marion County Kentucky farmer Joseph Buckman applied for a Federal Crop Insurance Act Group Risk Income Protection insurance policy for his 2011 corn crop.  At that time, Buckman was told by his crop insurance agent “that he would be entitled to receive an indemnity payment if Marion County’s 2011 actual corn crop yield was more than ten percent less than the expected yield…and [that] Marion County’s 2011 actual corn crop yield would be based on planted acres” (emphasis added).

The Court stated that on March 8, 2012, the same insurance agent informed Buckman that based on the crop yields for his 2011 planted acres Buckman would be receiving an indemnity payment in the amount of $104,961.  Sometime between March 8, 2012 and April 11, 2012, Buckman “leased his farm, disposed of his farm equipment, and exited farming.”

According to the Court, on April 11, 2012, the same insurance agent informed Buckman that the crop yields had been incorrectly calculated through the use of planted acres and instead should have been based on harvested acres.  As a result of the new calculation, the insurance agent informed Buckman that he would not be entitled to an indemnity payment.  Subsequently, Buckman brought suit against NAU Country Insurance Company alleging that the company’s agent negligently misrepresented the policy terms.

The Court held that “under federal law, Buckman is charged with knowledge of his corn crop policy” and because it is his responsibility to have this knowledge, Buckman “could not have reasonably relied on [the insurance] agent’s erroneous representations.”

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