Great American denied a claim for coverage for damage to an insured’s corn and soybean crops in three Missouri counties, asserting that the insured had failed “to substantiate an insurable cause of loss” and “fail[ed] to provided adequate records to establish production ‘by unit.'” The insured brought an arbitration seeking coverage, and a three-arbitrator panel awarded him $1.4 million for the damages to his corn crop. Great American moved to vacate the award, arguing that the panel had “imperfectly executed” its powers by failing properly to break down the award “by claim” as required by federal regulations for arbitrations regarding such federally reinsured crop insurance. The district court, finding that the “by claim” requirement meant that an award must break down such claims by county and that the panel had not done this, found this argument sufficient to nullify the entire award.

On appeal, the Eighth Circuit rejected this argument entirely. Recognizing that the regulations require the insurer to determine losses “on a unit basis” and that a unit cannot cover more than one county, the court nonetheless found that a “unit” and a “claim” were not the same thing, and that the arbitrators’ obligation was to break down the award by claim, not by unit. In fact, it was Great American who chose to treat all of these alleged crop losses as one claim, and the panel simply accepted that decision.

Great American also argued that the panel’s explanation for the award amount was insufficient because it merely adopted the calculations of the insured’s expert, but the Eighth Circuit found that this was acceptable, particularly because Great American neither contested this calculation nor offered an alternative calculation. The court thus remanded the case to the trial court so that it could consider Great American’s alternative argument that the panel’s decision rested on an improper interpretation of the applicable regulations.

Great American Insurance Company v. Jonathan L. Russel, No. 17-2441 (8th Cir. Jan. 31, 2019)