Alabama Insurance Adjuster Practice Exam

Which statement about Crop-Hail insurance is FALSE?

1. It is generally subsidized by the FCIC

2. It provides all-risk coverage

3. It is based on named perils

4. It requires proof of loss

The correct answer is: It provides all-risk coverage

In the context of Crop-Hail insurance, the statement that it provides all-risk coverage is misleading. Crop-Hail insurance typically covers specific risks associated with hail damage to crops, rather than providing comprehensive coverage for all potential risks. This insurance generally operates on a named peril basis, meaning that it explicitly covers certain types of damages that are stated in the policy, like hail and related weather events, rather than automatically covering all possible risks that could affect crops. The other statements reflect factual aspects of Crop-Hail insurance. The coverage is often subsidized in part by the Federal Crop Insurance Corporation (FCIC) to make it more accessible to farmers. Additionally, a proof of loss is required for claims, ensuring there is documentation and verification of the damage incurred. Understanding these nuances helps clarify why the notion of all-risk coverage does not accurately fit within the typical provisions of Crop-Hail insurance.