The Basics of Crop Insurance
Crop insurance is a vital part of the American agricultural industry and a key risk management tool for the modern farmer. It is, however, a complex topic, so we would like to provide an overview of some of the basic crop insurance concepts, practices, and tools. We hope this will be informative to those who are seeking a basic understanding of crop insurance, while also serving as a resource for those better acquainted with the topic.
Federal Crop Insurance is a complex program that offers multiple risk-management opportunities for the ag producer. The program includes multiple plans of coverage for over 100 commodities. The government has entered into a partnership with private crop insurance providers, like ProAg®, to offer crop insurance on an equal-opportunity basis to agricultural producers nationwide. This is a summary only and is meant as a supplement to the Crop Insurance Handbook, Policies and Provisions, RMA bulletins, and other documents as distributed by RMA and ProAg, not a replacement.
Types of coverage
Farmers may select from various types of policies. Standard Multiple Peril Crop Insurance (MPCI) policies are available for most insured crops. Other plans may not be available for some insured crops in some areas. In addition, some of the policies are not available nationwide; they are being tested in pilot programs and are only available in selected states and counties.
Multiple Peril Crop Insurance (MPCI)
MPCI policies must be purchased prior to planting and cover loss of crop yields from all types of natural causes including drought, excessive moisture, freeze, and disease. Newer coverage options combine yield protection and price protection to guard farmers against potential loss in revenue, whether due to low yields or changes in market price.
We Also Offer Crop Hail Insurance
Crop Hail policies are not part of the Federal Crop Insurance Program and are provided directly to farmers by private insurers. Many farmers purchase Crop Hail coverage because hail has the unique ability to totally destroy a significant part of a planted field while leaving the rest undamaged. In areas of the country where hail is a frequent event, farmers often purchase a Crop Hail policy to protect high-yielding crops. Unlike MPCI, a Crop Hail policy can be purchased at any time during the growing season.