2001 Montana Legislature

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SENATE BILL NO. 389

INTRODUCED BY J. COBB



A BILL FOR AN ACT ENTITLED: "AN ACT PROVIDING FOR THE IMPLEMENTATION OF A CROP INSURANCE PROGRAM THAT MAY INCLUDE FIRE INSURANCE AS AN OPTION WHEN PROVIDING HAIL INSURANCE FOR CROPS; AND AMENDING SECTIONS 2-15-3003, 80-2-201, 80-2-202, 80-2-203, 80-2-204, 80-2-205, 80-2-206, 80-2-207, 80-2-208, 80-2-209, 80-2-221, 80-2-222, 80-2-226, 80-2-227, 80-2-228, 80-2-229, 80-2-230, 80-2-231, 80-2-232, 80-2-241, 80-2-242, 80-2-243, 80-2-244, AND 80-2-245, MCA."



     WHEREAS, the state Board of Hail Insurance has authority, as originally enacted by the Legislature in 1917, to provide hail insurance to agriculture producers who seek to purchase this service from the State of Montana; and

     WHEREAS, recent fire events affecting producers of agricultural commodities suggest that it may be in their best interest to have, in addition to or as an option to hail insurance, the ability to purchase fire insurance for crops; and

     WHEREAS, the Legislature of the State of Montana finds it advisable to grant authority to the state Board of Hail Insurance to consider the addition of fire insurance for crops if, in the Board's judgment, the demand exists and the costs of providing fire insurance for crops are reasonable.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:



     Section 1.  Section 2-15-3003, MCA, is amended to read:

     "2-15-3003.  Board of hail and fire insurance. (1) There is a 5-member board of hail and fire insurance of five members consisting of the state auditor, the director of agriculture, who is secretary of the board, and three other members to be appointed by the governor and confirmed by the senate.

     (2)  The governor shall designate one of the appointive members to act as chairman presiding officer of the board.

     (3)  Whenever the term of any member expires, either by death, resignation, removal for cause, or expiration of his the member's term of office, the governor shall appoint his a successor and shall also appoint one of the board for chairman presiding officer in case of a vacancy in that office.

     (4)  Each appointive member of the board shall must be appointed for 3 years, except when such the appointment is made to fill a vacancy on the board, in which event such the appointee shall fill out the unexpired term of the member whose place he fills is being filled.

     (5)  All members of the board shall be are subject to removal for cause by the governor.

     (6)  The board is allocated to the department of agriculture for administrative purposes only as prescribed in 2-15-121. The department may charge the board for services provided by the department pursuant to 2-15-121. The costs charged by the department must be commensurate with the cost of the services provided."



     Section 2.  Section 80-2-201, MCA, is amended to read:

     "80-2-201.  Powers and duties of board of hail and fire insurance. The board of hail and fire insurance provided for in 2-15-3003:

     (1)  shall hold meetings when necessary and essential for the proper conduct of its business;

     (2)  is hereby authorized, directed, and empowered to make may adopt rules as it may from time to time find practical, necessary, and beneficial for the administration of this part;

     (3)  shall prescribe blank forms for all purposes necessary, proper, and incidental to the effective operation and enforcement of this part; and

     (4) shall use any appropriate means of communication to inform Montana producers of the purposes, scope, and benefits of this part in furnishing protection against loss by hail or fire at the actual cost of the risk to all taxpayers persons who may elect to become subject to the provisions of this part."



     Section 3.  Section 80-2-202, MCA, is amended to read:

     "80-2-202.  Compensation of chairman presiding officer and officers. (1) The appointed members of the board of hail and fire insurance shall must receive a per diem of $25 for each day they are engaged in the transaction of official business.

     (2)  All board members and employees shall must be allowed expenses as provided in 2-18-501 through 2-18-503.

     (3)  All other public officials specified in this chapter shall perform the duties relative to hail or fire insurance without other compensation than that allowed by law."



     Section 4.  Section 80-2-203, MCA, is amended to read:

     "80-2-203.  Participation in program -- tax. (1) A taxpayer person or an association of taxpayers persons engaged in the growing of crops other than those specified in this part or other agricultural or horticultural products subject to injury or destruction by hail or fire may, by individual or joint election filed with and approved by the board of hail and fire insurance, accept the provisions of this part and elect to become subject to this part. The risks may be classified by the board, and suitable levies may be imposed as agreed upon by the board and the taxpayers persons. The taxpayers persons are entitled to the benefits and protection afforded by the insurance provisions of this part.

     (2)  Each farmer taxpayer person who signifies a desire to become subject to the provisions of this part shall file with the department of revenue the properly filled out form not later than August 15. The taxpayer person is chargeable with the tax provided for on lands growing crops subject to injury or destruction by hail or fire and shall share in the protection and benefits under the hail or fire insurance provisions of this part. The application for hail or fire insurance is in full force and effect at 12:01 a.m. the day immediately following the acceptance of the application by the department of revenue.

     (3)  This part may not be construed to empower anyone except the actual owner of the land to make the land subject to the hail or fire tax provided in this part."



     Section 5.  Section 80-2-204, MCA, is amended to read:

     "80-2-204.  Duty of department of revenue -- election of benefits of law. The department of revenue shall upon request explain to each taxpayer person engaged in the growing of crops subject to injury or destruction by hail or fire the provisions of this part. The department of revenue shall issue hail or fire insurance policies to each taxpayer person who desires to become subject to this part, to become liable for the tax levies provided in this part, and to be eligible for the benefits and protection of this part. A taxpayer person who elects to become subject to this part is liable for the taxes levied for hail or fire insurance and shall participate in the benefits and protection afforded by this part. Either the The owners of lands worked by others under lease or contract may make the election for hail or fire insurance, or the lessee of the land may tender payment, in cash, of the tax levied for hail or fire insurance to protect the lessee's crops, in cash, to the officer authorized to receive payment."



     Section 6.  Section 80-2-205, MCA, is amended to read:

     "80-2-205.  What crops subject to provisions of law. The crops grown on the lands of all taxpayers persons who shall elect to become subject to this part shall must be insured under the provisions of this part for the acreage and the kind of crop for which taxes for hail or fire insurance will have been levied,. which The insurance shall must be provided for, determined, and adjusted and paid for as provided by this part."



     Section 7.  Section 80-2-206, MCA, is amended to read:

     "80-2-206.  Cash payment. When an applicant for hail or fire insurance tenders cash for the insurance to the department of revenue, the applicant is allowed a discount of 4%. The hail or fire insurance must be issued upon the cash payment less the 4%. The charge for the insurance must be based on the maximum rates shown on the application for hail or fire insurance. If the current rates are reduced later, the board of hail and fire insurance shall arrange for the proper refund to the insured. All cash received by the department of revenue must be promptly turned over to the county treasurer, who shall furnish the insured with a current receipt and place the money in the hail and fire insurance fund."



     Section 8.  Section 80-2-207, MCA, is amended to read:

     "80-2-207.  Delinquent taxes -- application by delinquent -- crop lien. (1) An owner of land who has more than 1 year's delinquent taxes on the land may not be allowed hail or fire insurance under the provisions of this part, unless the owner's application is accompanied by a cash payment for the amount that would be due on the application in the event of a maximum levy for that year.

     (2)  Any grain grower unable to secure state hail or fire insurance under the provisions of this part because of delinquent taxes or for other reasons may make an application to the department of revenue, and the department of revenue may receive and accept the applications application when the applicant furnishes a sufficient crop lien that is subject only to a seed lien. The crop lien may be accepted only under rules and requirements that may be prescribed by the board of hail and fire insurance and under the provision that the board may cancel any hail or fire insurance accepted in violation of the rules and requirements. Upon receipt of the application, the department of revenue shall make a record of the application and shall file the original in the office of the clerk and recorder of the county. The department of revenue shall also cause an assessment for the proper amount to be made on the property tax record in the same manner provided for in the case of other special levies or assessments.

     (3)  A tenant who has delinquent hail or fire insurance that was secured by a crop lien only and was not secured by real estate may not be allowed another policy in any succeeding year until the delinquent account or accounts are paid or until the tenant pays cash for the current hail or fire insurance.

     (4)  If a tenant becomes delinquent for hail or fire insurance after having failed to apply for relief as provided by the board under 80-2-229, the tenant may apply to the board for a reduction. If the reasons for requesting a reduction are approved by the board, the board may reduce the charge to not less than one-half the original amount charged."



     Section 9.  Section 80-2-208, MCA, is amended to read:

     "80-2-208.  Maximum insurance. When the reserve fund is determined actuarially sound, as provided in 80-2-228, the board of hail and fire insurance may write not more than $24 insurance on each acre of grain which that is on nonirrigated land and not more than $48 per an acre on irrigated land. When more than one party desires hail or fire insurance on the same crop, each party is entitled to the share of the maximum provided per on each acre as represented by his the party's interest in the crop. Either party may insure his a share in the crop for any amount up to and including the maximum per on each acre if the others waive their right to insure."



     Section 10.  Section 80-2-209, MCA, is amended to read:

     "80-2-209.  Reinsurance. Because of the unusual or unexpected variation in the severity of damage to grain crops which occur that occurs from year to year and in order to enable the board of hail and fire insurance board to spread the effect of these variations more evenly over all years, the board is hereby authorized to may negotiate for and to secure reinsurance of a part of the risk in any year when the need of such for reinsurance appears advisable to the board. The board is hereby authorized to may use moneys money from hail or fire insurance levies for the purchase of such reinsurance whenever it appears to the board that such reinsurance is necessary and advisable."



     Section 11.  Section 80-2-221, MCA, is amended to read:

     "80-2-221.  Tax for hail or fire insurance. (1) A tax is hereby authorized and directed to be levied on all lands in this state growing crops subject to injury or destruction by hail or fire, the owners of which have elected to become subject to the provisions of this part.

     (2)  The board of hail and fire insurance shall annually estimate, as accurately as possible, the amount required to pay all losses, interest on warrants, and costs of administration and shall recommend a levy to be made on each kind of land respectively, subject to the provisions of this part, to the department of revenue. The rates recommended to apply on the lands of owners shall must be applied in the same proportions to the crops of those insured on a personal assessment basis."



     Section 12.  Section 80-2-222, MCA, is amended to read:

     "80-2-222.  Board to establish amount of levy -- disposition of funds. (1) The board of hail and fire insurance may, when it considers it advisable, establish as many districts as it considers advisable and may maintain maximum rates in various parts of the state,. which The rates must be commensurate with the risk incurred as nearly as it can determine from past experiences or from any records available.

     (2)  Notice of the various rates established for any year must be plainly printed on the application for hail or fire insurance, and the rates for the year must be determined and levied by the board of hail and fire insurance for each of the various districts as established, in such proportions as that will in its the board's judgment be fair and equitable.

     (3)  The board of hail and fire insurance has authority to may accept and expend all funds received by it, including amounts repaid as principal and interest on investments. The funds are statutorily appropriated, as provided in 17-7-502, to the board of hail insurance for the purposes of this chapter. Expenditures for actual and necessary expenses required for the efficient administration of this part must be made from temporary appropriations, as described in 17-7-501(1) or (2), made for that purpose.

     (4)  In making the levy provided in this section and 80-2-223 and this section, the board of hail and fire insurance shall provide for:

     (a)  the payment of all expenses of administration, together with all interest owed or to be owing on registered warrants;

     (b)  that portion of the losses incurred during the current year that are not paid from funds drawn from the reserve;

     (c)  the maintenance of the reserve, a part or all of which may be used in any one 1 year for the purpose of paying the costs of administration, interest on the warrants, and losses as settled and adjusted by the board, including the losses sustained in any prior year or years under the hail and fire insurance law that have not been paid.

     (5)  If at the end of any hail or fire insurance season the board of hail and fire insurance determines that more funds are accumulating from the current year's levies than were estimated when the levy was made and are in excess of the need for the payment of losses and expenses and maintenance of the reserve, the board may, at its discretion, refund the excess to the farmers persons insured for the year, on a pro rata or percentage basis.

     (6)  The board of hail and fire insurance may direct the board of investments to invest funds from the enterprise fund pursuant to the provisions of the unified investment program for state funds. The income from the investments must be credited to the board of hail insurance account in the enterprise fund."



     Section 13.  Section 80-2-226, MCA, is amended to read:

     "80-2-226.  Crop lien -- when created -- assessment. (1) In addition to the lien created in 80-2-225 on the land of the insured, the levy for such hail or fire insurance shall constitute is a lien on the crops insured with the exception that the crop lien may not apply to owners of unencumbered land or to the land or crops of those who pay cash for hail or fire insurance. The applications of these persons may not be filed with the county clerk and recorded as provided for in 80-2-207. The Except as provided in this subsection, the crop lien shall must be included in all applications for hail or fire insurance, with the above exceptions, and shall must be enforced, as provided in 80-2-230 and 80-2-231, against all applicable persons insured except those owning unencumbered land or those who have paid cash for hail insurance.

     (2)  All applicants securing hail or fire insurance on crop liens, as heretofore provided shall be in this section, are subject to the same charges per on each acre as provided herein to be that are made on land."



     Section 14.  Section 80-2-227, MCA, is amended to read:

     "80-2-227.  Hail or fire insurance secured by crop lien only. When any hail or fire insurance issued under this part is secured by a crop lien only, the said crop lien is hereby declared a first lien on the insured crop, except only any crop lien which that may have been given to secure the purchase price for the seed which that was bought and used to plant and produce the insured grain."



     Section 15.  Section 80-2-228, MCA, is amended to read:

     "80-2-228.  Reserve fund. (1) Each year when the board of hail and fire board insurance makes its annual levy for the payment of current losses, for expenses of administration, and for an addition to the reserve if conditions permit, it may not increase the levy enough in any year so that the addition to the reserve will exceed 5% of the maximum risk written for that year.

     (2)  The board may engage the services of a qualified actuary to conduct an actuarial valuation of the reserve. This valuation shall may include the actuary's determination of the amount of reserve necessary to absorb all reasonably anticipated catastrophic losses. This amount is the maximum permissible reserve fund for the next year.

     (3)  The reserve must be deposited in an enterprise fund.

     (4)  The board may not draw on the reserve for any purpose unless the amount required for the payment of losses for the current year, including interest on warrants and costs of administration, exceeds the amount of the estimate made by the board for the current year pursuant to 80-2-221."



     Section 16.  Section 80-2-229, MCA, is amended to read:

     "80-2-229.  Withdrawal of crop in case of destruction through other means. When any crop insured under this part shall have been is destroyed by any other a cause other than hail or fire, the applicant may, by furnishing the proof required by the board of hail and fire insurance, cause the crop to be withdrawn from the regular levy of the board for the current year. Such The proof shall must be submitted to the board of hail insurance in accordance with its rules. Said The rules shall must be plainly printed on the applications and policies issued by the department. They shall The rules must provide that the cost for such withdrawn insurance shall must be varied as nearly as practical according to the time the insurance is in force and according to the risk carried."



     Section 17.  Section 80-2-230, MCA, is amended to read:

     "80-2-230.  Collection of levies -- release of lien. (1) The county treasurer in each county in the state shall collect all levies made under this part in the same manner as other property taxes are collected and shall keep all moneys money collected by him or for him for hail or fire insurance in a separate fund to be known as the hail or fire insurance fund. The county treasurer shall and remit the money same to the state treasurer in the same manner as provided by law for the remittance of other moneys money due to the state. All county treasurers shall use due diligence in making the collections of the levies provided herein for in this part. Also the board may furnish assistance needed at any time in making collections or may take over the collection of any levy at any time, depositing any collections therefrom with the treasurer of the county where the levy therefor was made.

     (2)  All insurance levies, whether levied against land or in the form of special assessments secured by crop liens, shall be are payable in full and not in semiannual payments on or before November 30 of each year in which such the levies are made.

     (3)  Whenever the amount due on any hail or fire insurance secured by a crop lien is paid, the treasurer shall promptly endorse on the lien on file in the office of the county clerk and recorder the amount paid thereon with the date of payment, and such the endorsement shall be is a satisfaction and release of such the lien."



     Section 18.  Section 80-2-231, MCA, is amended to read:

     "80-2-231.  Foreclosure of lien. If the person receiving hail or fire insurance secured by a crop lien fails to pay said the insurance to the county treasurer by December 1 of the year in which the crop so insured is grown, the county treasurer shall on that day or as soon as possible thereafter after that day deliver to the sheriff of said the county a full, true, and correct copy of the lien on file in the office of the clerk and recorder and such the sheriff must shall immediately demand from the person or persons signing such the lien payment of the amount due. thereon and, if the same If the tax is not paid to the sheriff upon such demand being made, the sheriff must forthwith shall seize and sell in the manner provided by law for the sale of personal property under execution a sufficient amount of grain belonging to such the person to pay the amount due for hail or fire insurance, together with interest and costs and expenses of seizure and sale."



     Section 19.  Section 80-2-232, MCA, is amended to read:

     "80-2-232.  State treasurer's duty -- warrants -- transfers to county and state general fund. (1) The state treasurer shall receive all money paid under this part and shall place the money in trust for the hail and fire insurance program to the credit of the enterprise fund. All money collected by the board of hail and fire insurance must be deposited in the enterprise fund, and all losses must be paid from that fund. All other costs are administrative expenses and must be paid from the board's enterprise fund. If registered warrants are presented and there is no money to pay the warrants, the warrants must be registered and bear interest at the rate of 4% per annum a year until called for payment by the state treasurer.

     (2)  Upon warrants drawn by order of the board, the state treasurer shall pay out of the board's enterprise fund to the county treasurer of each county, where state hail or fire insurance coverage is in force, 2% of the gross annual levies made and collected in that county under this part for the use of the county as the board of county commissioners may determine.

     (3)  Upon authorization from the board of hail and fire insurance, the state treasurer shall transfer out of the board's enterprise fund to the general fund of the state of Montana 1.5% of the gross annual levies made and collected in the state of Montana."



     Section 20.  Section 80-2-241, MCA, is amended to read:

     "80-2-241.  Report of losses. All losses by hail or fire to crops insured under this part shall must be reported within 14 days thereafter by the owner of such the crops, his or the owner's agent or attorney, to the board of hail and fire insurance, which shall require the claimant to make a statement of the losses sustained, the cause thereof of the losses, and such other information as that the board may require on the forms to be provided for such that purpose. If a loss is reported more than 14 days after it occurs, the board shall charge the claimant for all costs incurred in making the adjustment."



     Section 21.  Section 80-2-242, MCA, is amended to read:

     "80-2-242.  Appraisers -- appointment -- qualifications -- duties. (1) The department of agriculture shall as soon as practicable each year retain a sufficient number of appraisers to appraise all losses by hail or fire incurred under this part in the various counties. The persons so appointed shall must be actively engaged in farming or shall must have had practical experience in farming.

     (2)  The board may call on one or more of the duly appointed appraisers for the adjustment of each and every loss, and the said appraisers shall promptly report their findings to the board according to the rules provided by the board.

     (3)  No An appraiser who shall be is a relative, attorney, agent, employee, or creditor or in any manner interested by lien, mortgage, or otherwise in the crop injured or destroyed shall may not assist in adjusting any such loss.

     (4)  The board may send any duly appointed appraiser or appraisers into any county as the occasion may require."



     Section 22.  Section 80-2-243, MCA, is amended to read:

     "80-2-243.  Disputed appraisal. (1) In case If the party that has sustained the loss is dissatisfied with and refuses to accept the adjustment made by the official appraiser, then he the party that sustained the loss has shall have the right to appeal to the board of hail and fire insurance. He The party that sustained the loss shall make such an appeal by registered or certified mail within 10 days after receiving the adjustment offer of the board in writing. Also the The board may require the posting of a cash bond of $25 with the request for reappraisal of the first adjustment. In cases where in which the board requires the posting of the $25 bond, the board may retain it the bond if no an increase is not allowed. If an increase is obtained, the board will shall return the bond to the claimant.

     (2)  In case If the adjuster who makes the second appraisal fails to secure an agreement, the claimant may at his option submit the matter to arbitration as herein provided in this section or sue the board in the district court of the county where the loss occurred, within 90 days from the date of receipt of written notice of the second appraisal. Such The actions shall must be trials de novo tried anew, and the Montana Rules of Civil Procedure shall apply. Where When any claimant demands arbitration, he the claimant shall, if required by the board, furnish a $50 cash bond to the board in the sum of $50, which shall must accompany his the application. If there is not sufficient allowance made to any claimant after arbitration to cover the cost of arbitration without the use of the $50 bond, then the board may use a part or all of said the cash bond. In cases where in which the claimant secures an increase, the bond shall must be promptly returned to the claimant. If the claimant elects to submit the matter to arbitration, he the claimant shall then appoint one disinterested person as appraiser and the official appraiser shall appoint another person as appraiser and the two shall select a third disinterested person and the three shall then proceed to adjust the loss in the same manner as specified in 80-2-242. The judgment of the majority shall must be the judgment of said the appraisers and shall must be binding upon both parties as the final determination of said the loss.

     (3)  (a) If the insured person does not recover a greater sum than allowed by the official appraiser in the first instance, he the insured person shall pay the expenses of the three appraisers and their witnesses in making said the adjustment, but if he the insured person is awarded a larger sum, then the expenses of the three appraisers and their witnesses in making the adjustment same shall must be paid by the board.

     (b)  If the insured shall be person is required to pay the expenses of such the reappraisement as above provided in this section, the board is hereby authorized to may deduct the amount of such the expenses from the amount allowed said awarded to the insured person before making settlement for said the loss.

     (4)  The board shall examine and verify all reports of appraisers and verify the same and adjust all losses and for such those purposes may order hearings, subpoena witnesses, conduct examinations, and do all things necessary to secure a fair and impartial appraisement of losses by hail or fire."



     Section 23.  Section 80-2-244, MCA, is amended to read:

     "80-2-244.  Payment of losses. (1) The board of hail and fire insurance shall, as soon as practicable after the loss has been sustained, arrange for the payment of the loss in the following manner. From the amount of the loss as adjusted for each claimant, the board shall deduct the amount that the claimant then owes as delinquent hail or fire insurance tax and the maximum amount assessed as a hail or fire insurance tax for the current year.

     (2)  The board shall on or before November 1 order payment for the amount so deducted,. which The payment shall must be remitted to the county treasurer of the county in which the tax was assessed. The board shall then order payment for the balance of the adjustment to be sent to the claimant, provided that in no case may the payment for loss may not exceed $24 per an acre for grain crops on nonirrigated lands, or $48 per an acre on irrigated lands. No A claimant may not receive payment for any loss incurred where if the loss does not equal or exceed 5% of the total value of the crop insured. If the losses in any year exceed the current levy plus the reserve, if any, then the payment of all losses shall must be prorated, share and share alike, among all grain growers having loss claims adjusted and approved, and the unpaid balance of the losses shall must be paid out of the reserve without interest in such the order as that the board directs, when, in the judgment of the board, there are is sufficient moneys money to provide for the payment of the same claims and other items payable out of the reserve. In any year, the board may by resolution authorize its chairman presiding officer and secretary to borrow as needed from any person, bank, or corporation such sum or sums of money as that the board may consider considers necessary for the purpose of paying all warrants as issued.

     (3)  For any moneys money borrowed under the provisions of this part, the board shall cause warrants to be drawn. The warrants shall must bear interest at a rate not to exceed 6% a year, and the warrants and the interest thereon shall on the warrants must be paid out of funds from the state hail and fire insurance program as they are collected from the various counties in the state. The board may not at any time borrow a total sum greater than the amount of levies as made for taxes for the current year, together with such delinquent taxes that as remain unpaid on the books of the county treasurer."



     Section 24.  Section 80-2-245, MCA, is amended to read:

     "80-2-245.  Benefits exempt from execution. All money or benefits received from hail or fire insurance are exempt from execution, are not liable to attachment, and may not be seized, taken, or appropriated by any local process to pay any debt or liability of the insured unless the amount is assigned and then for no more than the amount of the claim intended to be secured by the assignment, with lawful interest."

- END -




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