When Federal Hemp Crop Insurance Fails: What One Farmer’s $4 Million Claim Can Teach Your Family Farm

What Happened: $142,000 in Premiums, Zero Indemnity

For the 2020 crop year, the farmer obtained two standard multi-peril crop insurance claim (MPCI) policies through an Approved Insurance Provider (AIP) operating under the Federal Crop Insurance Program. The policies were federally reinsured through the Federal Crop Insurance Corporation (FCIC), with the Risk Management Agency (RMA) administering the program on FCIC's behalf.

The farmer paid his premiums. The crop insurance company issued the policies. No concerns were raised about insurability at the time of application or during the underwriting process.

Then the losses hit. The farmer reported total hemp crop losses across all four counties due to excess moisture and rain, with an August 2020 date of loss. He submitted his notices of loss and waited for the indemnity process to begin.

On March 9, 2021 — more than six months after the loss — the crop insurance company denied all claims. Its reason: the farmer could not provide acceptable evidence of prior hemp production, which meant, under federal rules, that his hemp crop was never insurable to begin with. The local FSA office had no records of hemp production before 2020. The farmer acknowledged during arbitration that he did not have the two required record types — though he did have independent private testing results.

The insurer refunded his premiums and walked away. Over $4 million in coverage simply evaporated.

"The insurance company accepted the premiums, issued the policies, and said nothing about insurability concerns — then denied every claim after the losses came in. That pattern is exactly why farmers need a crop law attorney reviewing their coverage before a single seed goes in the ground."

The Documentation Rule That Voided Everything

At the heart of this case is a specific, technical requirement buried in the Hemp Crop Insurance Standards Handbook (CISH), the federal guidance document that governs insurability under the Federal Crop Insurance Program for hemp producers.

To insure a hemp crop, a producer must provide — at the time of application — acceptable production evidence verifying that they grew hemp in a prior crop year. Under FCIC procedures, acceptable evidence is limited to one of two sources:

1. Records documented at a local FSA office for the county where the hemp will be insured, or for any other county; or
2. Where FSA records are unavailable, documentation from an applicable governing authority verifying official THC testing of hemp grown by the producer.

Independent private testing results — the kind the farmer in this case possessed — do not qualify. The FCIC confirmed this in a binding interpretation issued February 13, 2024: the list of acceptable records is exhaustive. No additional or alternative forms of production evidence are authorized.

Because the farmer could not satisfy this requirement, the arbitrator found the hemp crop uninsurable. The RMA reached the same conclusion when the farmer later sought a Section 20(i) Determination — a formal finding that would have allowed him to pursue damages against the crop insurance company in court.

The Section 20(i) Determination: A Door That Closed

Under the Common Crop Insurance Policy Basic Provisions, Section 20(i) provides a critical legal pathway for farmers who believe their insurance coverage was mishandled. If a dispute is in judicial review, an AIP failed to comply with the policy or FCIC procedures, and that failure caused the producer to receive less than the indemnity owed, the producer can obtain a Section 20(i) Determination from RMA — and use it to pursue compensatory damages, attorney fees, and other costs against the crop insurance company in court.

This matters enormously because federal crop insurance law preempts state law under 7 C.F.R. § 400.352. Without a Section 20(i) Determination specifically authorizing it, courts are prohibited from awarding damages against an AIP or its agents. The determination is the key that unlocks the courthouse door.

The farmer in this case sought that key. RMA denied it, finding that the farmer had not established that the AIP failed to follow FCIC procedures, and that — because the crop was uninsurable — no indemnity was owed in the first place. Without a shortfall in the payment the farmer was entitled to, the second prong of the two-part test under Section 20(i) could not be satisfied.

NAD Administrative Judge Fallon A. Coleman upheld the agency's decision on May 7, 2026, finding that the farmer had not met his burden of proving by a preponderance of the evidence that the agency's decision was erroneous.

The result: over $4 million in potential coverage, a six-figure premium outlay, and no legal recourse.

Why This Case Matters for Every Farm and Ranch Operation

This case is not just about hemp. It illustrates a set of principles that apply across the Federal Crop Insurance Program — principles that can determine whether a crop denial claim succeeds or fails, and whether a farmer has any legal recourse at all when a claim goes wrong.

Insurability is a precondition, not a formality. Under agricultural law, if your crop does not meet the program's insurability requirements at the time of application, no coverage attaches — regardless of what the policy documents say, what your agent told you, or what premiums were accepted. A crop insurance company's decision to issue a policy and accept premiums does not guarantee that your crop is actually insurable under federal rules.

The documentation burden falls on the farmer. Good farming practices mean more than how you grow your crop. They include how you document your history as a producer. The FCIC's hemp insurability rules require specific, government-sourced records — not private testing results, not personal records, not affidavits. An experienced farmer lawyer can help you understand exactly what records you need to establish insurability before you apply.

Section 20(i) has a two-part test — and both parts must be met. Even if you can show your AIP made a procedural misstep, you also must show that the misstep caused you to receive less than you were entitled to. Where a crop is determined to be uninsurable, courts have found that no indemnity was owed — which forecloses the Section 20(i) pathway entirely. Understanding this two-part structure is essential for any law firm advising agricultural clients on crop insurance disputes.

Post-hoc denials are particularly painful — and potentially avoidable. The AIP in this case raised no insurability concerns at application or underwriting. The denial came only after substantial claims were filed. While NAD ultimately upheld the denial, this pattern — accepting premiums and then denying coverage after losses — is exactly the kind of situation that warrants pre-purchase legal review of every federal crop insurance policy.

What Our Law Firm Does to Protect Your Family Farm

Our agricultural law practice represents farm businesses at every stage of the federal crop insurance process — from pre-application review to NAD hearings to federal litigation. We understand the regulatory framework that governs the Federal Crop Insurance Corporation, the Risk Management Agency, and the Approved Insurance Providers who deliver farm and ranch insurance to producers across the country.

For hemp producers and other farmers entering new or specialty crop markets, we offer:

• Pre-application policy review — identifying insurability requirements, documentation obligations, and coverage gaps before premiums are paid
• Records compliance guidance — ensuring your production history documentation satisfies RMA and FCIC standards under the applicable Crop Insurance Standards Handbook
• Claim support and advocacy — if a crop insurance company denies your claim, we evaluate whether the denial was proper and what remedies remain available
• NAD appeal representation — if you have received an adverse decision from RMA or an AIP, strict deadlines apply; our team moves quickly to protect your appeal rights
• Section 20(i) strategy — where an AIP has failed to follow policy terms or FCIC procedures, we build the record needed to pursue a favorable compliance determination and, where warranted, damages in court

We have built a track record of success advocating for farmers whose claims were wrongfully denied or whose insurance coverage failed to deliver what they paid for. Whether you operate a diversified row crop operation, a specialty crop farm, or hold agricultural real estate subject to lending obligations that depend on crop revenue, we are here to help.