By Timothy S. Donahue

Top Takeaways:

• Settlement reached: Two North Carolina tobacco farmers have settled a federal suit against Hudson Insurance over disputed crop-loss payments.
• Payment dispute: The farmers allege that the insurer improperly reduced insurance payments by half because they shared a bank account.
• Arbitration costs: An arbitrator found the farmers had been underpaid $126,322 plus interest.

Two North Carolina tobacco farmers have finally put their insurance dispute out to pasture.

David and Samuel Cox, who grow flue-cured tobacco in Craven, Greene, Lenoir, and Pitt counties, have settled their federal lawsuit against Hudson Insurance Group after alleging the insurer improperly reduced their 2023 crop-loss payments by half because they shared a bank account.

The settlement resolves a dispute involving arbitration over more than $126,000 in unpaid insurance proceeds. The settlement was reported on Oct. 6 in the U.S. District Court for the Eastern District of North Carolina. Financial terms were not disclosed publicly.

The farmers filed their lawsuit on May 6, seeking reimbursement for arbitration expenses and additional damages after alleging that Hudson improperly reduced their insurance payments.

Both farmers held separate federal crop insurance policies covering their tobacco operations. According to the complaint, Hudson notified them in March 2024 that their payments would be reduced by 50% because they used a shared bank account.

The farmers argued that the shared account did not mean they held only half the insured interest in their crops. They said the arrangement had existed for years without the insurer previously questioning their coverage.

The dispute proceeded to arbitration, where the farmers presented documentation demonstrating their separate farming operations, including federal acreage reports, tobacco contracts, sales receipts, and other records.

According to the subsequent lawsuit, the arbitrator found that Hudson had failed to adequately review the records before reducing the payments and that the farmers were owed a combined $126,322, plus interest.

The dispute also prompted a finding from the Federal Crop Insurance Corporation. In a May 1, 2026, letter, the agency’s deputy administrator for compliance found that Hudson had failed to follow applicable crop insurance policies and procedures, resulting in underpayments to the growers.

The farmers subsequently filed federal claims alleging breach of contract, bad faith, and unfair and deceptive trade practices. They sought compensatory damages, statutory and punitive damages, attorney’s fees, and reimbursement of arbitration costs.

The settlement ends the litigation without a publicly disclosed determination on those additional claims.

The case is Cox et al. v. Hudson Insurance Group, No. 4:26-cv-00071, in the U.S. District Court for the Eastern District of North Carolina.