Two North Carolina tobacco growers say their crop insurer cut their 2023 payouts in half - because they shared a bank account.
That, in essence, is the story David and Samuel Cox tell in a lawsuit filed on May 6, 2026, in the US District Court for the Eastern District of North Carolina against Hudson Insurance Group. The two men farm flue-cured tobacco across Craven, Greene, Lenoir and Pitt counties, and each carried his own federal crop insurance policy with Hudson for the 2023 crop year, written on an Actual Production History basis. According to the filing, there is "no dispute" they suffered a covered loss and were owed proceeds.
What is in dispute is how much. In letters sent in mid-March 2024, the suit says, Hudson told each grower his payout would be sliced by half on the theory that the two ran their farming operations out of the same bank account - and therefore each held only a 50 percent share in his own policy. The Coxes say they had used that same account for years, through prior underwriting cycles and prior claims, without anyone at Hudson raising it as an issue.
The growers took the dispute to arbitration, as the policy's Paragraph 20 required. According to the complaint, the arbitrator's amended award found that each plaintiff filed his own FSA-578 forms, kept his own tobacco contracts, sales receipts and soybean receipts, and signed his own assignments of indemnity. The arbitrator also found, the filing states, that Hudson "did not review or rely on any of the above documents" before deciding each grower had only a 50 percent insured share, did not produce those documents in discovery, and put on no witness with personal knowledge of how the decision was actually made. The arbitrator concluded Hudson had underpaid the two men a combined $126,322, plus interest.
The lawsuit then leans on Paragraph 20(i) of the policy, which lets a grower go to court when an insurer "failed to comply with the terms of [the policies] or procedures issued by FCIC and such failure result[ed] in [the insureds] receiving a payment in an amount that is less than the amount to which [they] were entitled." On May 1, 2026, the complaint says, Federal Crop Insurance Corporation Deputy Administrator for Compliance Francie Tolle issued a letter finding that Hudson "failed to comply with FCIC policy and procedures," and that the failure caused the growers to be paid less than they were owed.
Building on that finding, the Coxes are now asking the federal court for relief on theories including breach of contract and bad faith, unfair and deceptive trade practices under North Carolina law, confirmation of the arbitration award, and the tort of bad faith refusal to settle. They are seeking compensatory, treble and punitive damages, along with attorney's fees.
For crop underwriters and claims teams, the allegations are a pointed reminder that insurable-share calls need a paper trail - FSA-578s, production records, sales receipts - and a decision-maker who can sit in a hearing room and defend the file.
The allegations have not been tested in court. Hudson has not yet filed a response, and no court has ruled on the claims.
