South Dakota Crop Insurance Practice Exam

What action is taken if damage occurs before insurance becomes effective?

1. No coverage is available

2. The application is automatically voided

3. The policyholder receives a refund

4. Additional coverage can be purchased

The correct answer is: No coverage is available

When damage occurs before the insurance becomes effective, no coverage is available. Crop insurance policies typically have specific effective dates, which are outlined in the insurance contract. If an event leading to damage occurs before this date, it is excluded from coverage since the insurance is not in force at that time. This principle is fundamental to insurance agreements, where coverage is contingent on the policy being active. The other options do not apply in this context. The application voiding and the refund scenario typically refer to different situations involving policy changes or cancellations rather than pre-existing damage circumstances. Additionally, purchasing additional coverage generally pertains to future risks rather than addressing losses incurred before the effective date of the existing policy.