Types of Crop Insurance Policies Available

There are several types of crop insurance policies available to farmers and growers, each with its own unique features and benefits.

The Multiple Peril Crop Insurance (MPCI) policy is a popular choice, covering crops against a wide range of natural disasters such as drought, hail, and excessive rain.

Farmers can also opt for the Crop Revenue Coverage (CRC) policy, which provides protection against revenue losses due to crop yield and price declines.

Crop Revenue Guarantee (CRG) is another option, offering a guaranteed revenue level for the crop, helping farmers to manage their financial risks.

The Actual Production History (APH) policy is based on a farmer's actual production history, providing a more accurate assessment of their crop yields and revenue potential.

The Group Risk Plan (GRP) policy allows farmers to pool their resources and share the risk, providing a more affordable option for smaller farms or those with limited resources.

The Crop-Hail policy provides protection against crop damage caused by hail, a major threat to many crops, especially in areas prone to severe weather events.

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Crop insurance comes in various forms, each with its own unique characteristics. There are individual plans, which are based on the insured's individual production or yield history, revenue, or both.

Individual plans, such as the Catastrophic Coverage (CAT) plan, offer protection at a lower cost, but with lower coverage levels. For example, the CAT plan provides 50% yield coverage and 55% price coverage, with premiums fully subsidized.

Area plans, on the other hand, are based on information from the entire county, using averages from surrounding agricultural producers. This includes the Area Catastrophic Coverage (ACAT) plan, which offers 65% yield coverage and 45% price coverage, also with fully subsidized premiums.

Here are some examples of crop insurance plans:

Crop insurance can be complex, but understanding the differences between types can help you make informed decisions. There are several types of crop insurance, including Yield Protection and Revenue Protection.

Yield Protection insurance covers crop yields, but it doesn't account for price fluctuations. This type of insurance is often used for crops like corn and soybeans.

Revenue Protection insurance, on the other hand, covers the actual revenue generated by your crop. This type of insurance takes into account both yield and price fluctuations, making it a more comprehensive option.

Crop insurance policies can be tailored to fit your specific needs, including the type of crop you're growing and the level of risk you're willing to take.

Catastrophic Coverage is a type of crop insurance plan that can provide financial protection for farmers in the event of crop failure or yield loss.

The Catastrophic Coverage plan is offered at 50% of the APH yield and 55% of the projected price, and premiums are fully subsidized, meaning the producer does not have to pay any premium costs.

However, the administrative fee for this plan is significantly higher than other plans, at $655 for each crop per county.

Miss Farmer Junior would need at least 15 acres of corn or 24 acres of soybeans to have her net indemnity equal the administrative fees she paid for the Catastrophic Coverage plan.

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The Area Catastrophic Coverage plan is similar, but uses county yields instead of unit yields and has different coverage levels, available at 65% of the yield coverage and 45% of the price coverage.

The administrative fee for the Area Catastrophic Coverage plan is also $655.

Ms. Cropp Junior would need at least 21 acres of corn and 7 acres of soybeans to have her net indemnity equal the administrative fees she paid for the Area Catastrophic Coverage plan.

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There are several types of crop insurance available, each with its own unique features and benefits.

Individual plans are based on the insured's individual production or yield history, revenue or both. This is in contrast to area plans, which are based on information from the entire county.

Area plans, like the Area Yield Protection (AYP) plan, use averages from surrounding agricultural producers as well as county data to determine insurance payouts.

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The Actual Production History (APH) plan, one of the oldest Federal Crop Insurance plans, provides protection against a loss of production due to nearly all unavoidable, naturally occurring events.

The APH plan guarantees the producer a yield based on the actual production history of their crops. This plan is available for many perennial crops, such as apples and peaches, as well as some grain crops like oats and rye.

The Yield Protection (YP) plan, on the other hand, provides protection against a loss of production and works similarly to the APH plan. However, the YP plan uses the Projected Price to calculate the guarantee, premium, and loss payments.

Other types of crop insurance include the Actual Revenue History (ARH) plan, which is based on the insured's revenue history for the crop, and the Area Yield Protection (AYP) plan, which provides coverage based on the experience of the county.

Here are some examples of the different types of crop insurance available:

Global Perspectives on Compulsory Crop Insurance vary greatly. In the United States, crop insurance is mandatory for farmers receiving subsidies, which can be up to 80% of the premium cost.

Farmers in the European Union, on the other hand, are not required to purchase crop insurance. However, some EU countries offer voluntary insurance programs to help mitigate crop losses.

In Australia, crop insurance is not compulsory, but many farmers choose to purchase it to protect against drought and other natural disasters.

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Crop insurance provides protection from a variety of naturally occurring perils or hazards. These perils can be devastating to crops and farmers, which is why understanding what they cover is crucial.

Most Federal Crop Insurance policies cover adverse weather conditions, such as droughts, floods, and hail. Fire is also a covered peril, which can be a significant threat to crops, especially during dry seasons.

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Insects and plant diseases are also covered, but only if they are not caused by the farmer's failure to properly apply control measures. This means that if you don't take the necessary steps to prevent insect or disease infestations, the insurance won't cover the damage.

Wildlife, earthquakes, and volcanic eruptions are also covered perils, which can be unpredictable and destructive. If your irrigation system fails due to an unavoidable cause of loss, the insurance will also cover the loss of production or yield.

Here are some of the specific perils covered by most Federal Crop Insurance policies:

Crop insurance policies can be tailored to specific crops, such as citrus fruit or wheat, which address unique risks associated with them.

Yield-based policies, like Actual Production History (APH) and Yield Protection (YP), provide coverage based on the actual yield of the insured crop.

Revenue-based policies, including Revenue Protection (RP) and Revenue Protection with Harvest Price Exclusion (RP-HPE), consider both yield losses and fluctuations in crop prices.

Area-based policies, such as Area Risk Protection Insurance (ARPI) and Group Risk Plan (GRP), provide coverage for a specific geographic area rather than individual farms.

Whole-Farm Revenue Protection offers comprehensive coverage for all crops and livestock produced on a farm, considering the overall revenue generated by the farm.

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Crop insurance policies offer crucial protection to farmers against potential losses caused by various perils. There are several types of crop insurance policies to choose from, each with its own unique characteristics.

Yield-based policies, such as Actual Production History (APH) and Yield Protection (YP), provide coverage based on the actual yield of the insured crop. This type of policy protects farmers against yield losses caused by factors beyond their control.

Revenue-based policies, like Revenue Protection (RP) and Revenue Protection with Harvest Price Exclusion (RP-HPE), offer protection against both yield losses and fluctuations in crop prices. They consider the farmer's actual yield and the market price of the crop to determine the coverage amount.

Area-based policies provide coverage for a specific geographic area rather than individual farms. Examples of area-based policies include Area Risk Protection Insurance (ARPI) and Group Risk Plan (GRP).

Crop-specific policies are tailored to specific crops and address the unique risks associated with them. For example, policies like Citrus Fruit Crop Insurance or Wheat Crop Insurance provide specialized coverage for citrus fruit growers or wheat farmers.

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Whole-Farm Revenue Protection offers comprehensive coverage for all crops and livestock produced on a farm. It considers the overall revenue generated by the farm, providing a safety net for farmers with diverse agricultural operations.

Different policies have varying deductibles and premiums, which can impact the affordability and effectiveness of the policy. Farmers should consider their financial situation and risk tolerance when selecting a policy.

The Harvest Price Exclusion plan is a type of insurance that excludes the possibility of benefiting from higher harvest prices.

This plan is similar to the Revenue Protection plan, but it carries a lower premium because the revenue guarantee is determined by the projected price only.

For example, Mr. Farmer Junior saved some money by purchasing this plan instead of the Revenue Protection plan, paying premiums of $3.38 per acre of corn and $5.03 per acre of soybeans.

However, Mr. Farmer Junior does not benefit from the price increase between the projected and harvest prices for corn and soybeans, which means his revenue guarantee is lower than his neighbors who purchased the Revenue Protection plan.

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The Area Revenue Protection with Harvest Price Exclusion plan offers similar protection to the Harvest Price Exclusion plan, but it uses county revenue instead of unit revenue for indemnity calculation.

This plan is similar to the ARP plan, but it excludes upside harvest price protection, which means the revenue guarantee is calculated using only the projected price and not the harvest price.

For example, Mr. Cropp Junior decided to insure his corn and soybeans with this plan because it requires lower producer premiums per acre than the ARP plan.

However, Mr. Cropp Junior does not benefit from the price increase between the projected and harvest prices for corn and soybeans, which means his revenue guarantee is lower than his mother's for both corn and soybeans.

The Revenue Protection With Harvest Price Exclusion plan is similar to the Revenue Protection plan, but it does not provide coverage against price increases.

The producer does not receive the benefit of price movement with this plan, which means the revenue guarantee is always based on the projected price.

The Area Revenue with Harvest Price Exclusion plan is similar to the ARP plan, but it does not adjust the guarantee up by the harvest price.

This plan is very similar to the RPE-HPE plan, except it is based on the experience of the county, rather than the individual producer.

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The Actual Production History (APH) plan is the oldest Federal Crop Insurance plan available, providing protection against losses due to unavoidable events.

This plan guarantees a yield based on the actual production history of the crops, which is why it's called the APH plan. The guarantee is calculated by multiplying the average yield by the coverage level elected for the producer's share of the crop.

An indemnity, or loss payment, may be due if the production (harvested and appraised) is less than the guaranteed amount. Many perennial crops, such as apples, peaches, and grapes, fall under the APH plan.

Some grain crops, like oats, rye, flax, and buckwheat, are also covered under the APH plan of insurance. The pricing for most crops insured under the APH plan is established by the RMA, and these prices are called price elections, which are posted online.

County-Level ARPI Products are a type of risk management tool that insure against widespread loss of yield or revenue in a county due to natural causes.

ARPI was developed on the basis that when an entire county's crop yield is low, most farmers in that county would also have low yields.

This type of insurance has less paperwork and generally lower premium costs than individual farm-level insurance.

However, a farmer may have low yields or low revenue on their acreage and still not receive a payment.

ARPI provides four plan choices: Area Yield Protection, Area Revenue Protection, Area Revenue Protection with Harvest Price Exclusion, and Catastrophic Coverage.

Catastrophic Coverage is only available under Area Yield Protection.

The requirements for corn and soybeans to be insurable under ARPI are similar to those to be insurable under the COMBO products.

Corn planted for seed may be insurable under ARPI but not under the COMBO products.

Crop insurance costs paid by farmers depend on area insured, premiums per acre, and administrative fees per crop per county.

ARPI insurance policies offer coverage levels ranging from 70-90% in 5% increments.

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Choosing the right crop insurance policy requires careful consideration of your specific crop, risks, and financial circumstances. Farmers should assess the risks associated with their crop, such as weather patterns, pest infestations, and market fluctuations, to determine the best coverage options.

There are different types of crop insurance policies, including yield-based, revenue-based, area-based, crop-specific, and whole-farm revenue protection policies. Understanding the specifics of each policy can help farmers make informed decisions.

A unit structure is crucial in determining how acreage is grouped for crop insurance coverage, and there are five different types of units: Basic Unit (BU), Optional Unit (OU), Enterprise Unit (EU), Enterprise Unit by Practice (EP), and Whole Farm Unit (WU). The way acreage is grouped can affect the premium and the likelihood of a claim payment.

Here are the five types of units:

Carefully reviewing policy exclusions is also essential to understand what losses are not covered. By being aware of these exclusions, farmers can make informed decisions and explore additional risk management strategies if necessary.

Crop insurance policies can be overwhelming, but understanding the different types can help you make an informed decision.

There are five main types of crop insurance policies: Yield-Based Policies, Revenue-Based Policies, Area-Based Policies, Crop-Specific Policies, and Whole-Farm Revenue Protection.

Yield-Based Policies, such as Actual Production History (APH) and Yield Protection (YP), protect farmers against yield losses due to factors beyond their control.

Revenue-Based Policies, like Revenue Protection (RP) and Revenue Protection with Harvest Price Exclusion (RP-HPE), offer protection against both yield losses and fluctuations in crop prices.

Area-Based Policies, including Area Risk Protection Insurance (ARPI) and Group Risk Plan (GRP), provide coverage for a specific geographic area rather than individual farms.

Crop-Specific Policies, such as Citrus Fruit Crop Insurance or Wheat Crop Insurance, are tailored to specific crops and address the unique risks associated with them.

Whole-Farm Revenue Protection offers comprehensive coverage for all crops and livestock produced on a farm, considering the overall revenue generated.

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Understanding your crop's risks is essential before selecting a policy, as different crops face unique challenges such as weather patterns, pest infestations, and market fluctuations.

Carefully review policy exclusions to understand what losses are not covered, as some policies may exclude certain perils or limit coverage for specific circumstances.

It's crucial to strike a balance between deductibles and premiums, as higher deductibles may result in lower premiums but could also mean higher out-of-pocket expenses in the event of a claim.

Consulting with agricultural experts, insurance agents, or fellow farmers can provide valuable insights and recommendations to enhance your decision-making process.

A Whole Farm Unit (WU) is the least common type of unit structure in crop insurance. It consists of all insurable acreage of all crops in the county where the insured has a share.

The WU is a single unit that encompasses all the farmer's fields and acreage, making it a straightforward approach to crop insurance. This means that if one field is damaged, the entire WU is affected, and the farmer may be eligible for a claim.

The WU is often used by farmers who have a small number of fields or who want to simplify their crop insurance coverage. However, it's worth noting that the WU may not be the most cost-effective option for farmers with multiple fields or diverse crops.

Here are the five different types of units in crop insurance, each with a specific code for easier identification:

The WU is an important consideration for farmers when selecting their crop insurance policy. By understanding the different unit structures and their implications, farmers can make informed decisions about their coverage and premiums.

County-Wide Plans are a type of crop insurance that covers an entire county, not just an individual farm.

Area Crop Insurance Plans, like the Area Yield Protection Plan (AYP), provide coverage based on the county's yield, not the producer's individual yield. This means a producer can have a low yield on their farm and still receive a payment under this plan, as long as the county yield is low.

Area Crop Insurance Plans use National Agricultural Statistical Service (NASS) county data to set expected and actual county yields. This data is used to determine the guarantee for the plan.

The Area Risk Protection Insurance (ARPI) plan is the newest Area Plan of Insurance, released in 2014. It has its own Basic Provisions, separate from the Common Crop Insurance Policy.

To be eligible for County-Wide Plans, producers must report their production at the end of the insurance period, even though their individual yields aren't used to establish a guarantee. This production history is mandatory and may be used by the RMA as a data source to establish and maintain these area programs.

The Yield Protection (YP) plan offers a production guarantee based on individual Actual Production History (APH) yield, which is an average of up to ten years of actual and/or assigned yields.

This plan protects farmers against yield losses due to factors beyond their control, such as drought, excessive rainfall, or hailstorms. The plan works similarly to the APH plan but uses a Projected Price to calculate the guarantee, premium, and loss payments.

The guarantee is established by multiplying the average yield by the coverage level and by the Projected Price. An indemnity may be due when the value of the production to count is less than the yield protection guarantee plan.

Mr. Farmer, for example, insured his corn and soybean acreage with a YP plan at the 75% coverage level and chose the basic unit coverage. He elects to use his Trend-Adjusted APH yields of 191 bushels per acre for corn and 54 bushels per acre for soybeans.

If Mr. Farmer suffers substantial yield losses due to hail that leaves him with a corn yield of 70 bushels per acre and a soybean yield of 20 bushels per acre, he would collect a net indemnity payment of $280.41 per acre of corn and $183.04 per acre of soybeans.

The Area Yield Protection (AYP) plan offers protection against loss of yield due to a county-level production loss. AYP uses county yields instead of unit yields for indemnity calculation, and the expected and final county yields are determined using RMA data.

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Crop insurance premiums can vary significantly depending on several factors.

The type of crop being grown is a key factor, with certain crops being more expensive to insure due to their susceptibility to damage or loss.

Farms located in areas prone to natural disasters like floods, hurricanes, or tornadoes are generally more expensive to insure.

A farm's location can also impact premiums due to the risk of crop damage from pests or diseases.

The level of coverage selected by a farmer can also affect the premium cost, with higher levels of coverage resulting in higher premiums.

Farmers who choose a lower level of coverage will typically pay less in premiums than those who opt for a higher level of coverage.

Crop yield potential is another factor that can influence premiums, with high yield potential resulting in lower premiums and low yield potential resulting in higher premiums.

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Government initiatives and support play a crucial role in promoting crop insurance, particularly for small-scale farmers. The Indian government's Pradhan Mantri Fasal Bima Yojana (PMFBY) scheme provides coverage up to Rs 10 lakh per crop per season.

Farmers can purchase crop insurance through various government-approved insurance companies. The National Agricultural Insurance Company (NAIC) offers crop insurance to farmers, providing financial protection against crop damage or failure.

The government also provides subsidies to farmers who purchase crop insurance, making it more affordable. The subsidy amount varies depending on the crop and the insurance coverage chosen.

Crop insurance premiums are also subsidized by the government, reducing the financial burden on farmers. For example, under the PMFBY scheme, the government pays 90% of the premium, while farmers pay the remaining 10%.

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Optional units can be established by location, type of crop, or method of farming practice, and this can vary by crop and region.

Some crop provisions allow optional units by variety, type, and non-contiguous land.

You can establish optional units to tailor your crop insurance to your specific needs.

Optional units can be a great way to customize your crop insurance to fit your unique situation.

ProAg offers Intro to Crop Insurance webinars that cover the basics of crop insurance, including optional units.

These webinars are designed to save time and include live examples of completing applications and reports.

Crop insurance is a vital tool for farmers to manage risk and ensure a stable income.

There are several types of crop insurance, but let's start with the basics.

Crop insurance can be purchased on an individual farm basis or on a countywide basis, depending on the type of insurance chosen.

In the United States, the Federal Crop Insurance Corporation (FCIC) is responsible for administering the crop insurance program.

The FCIC works with private insurance companies to provide crop insurance to farmers.