5 Things Crop Insurance Will Protect You From – and 3 Things It Won’t (And What To Do Instead)

5 Things Crop Insurance Will Protect You From – and 3 Things It Won’t (And What To Do Instead)

Should I get crop insurance? Will the costs be worth it for me and my business? Many farmers have these questions at first, especially if they’re starting new businesses or just beginning to grow.

1. Loss of revenue
2. Adverse weather events
3. Loss of crops
4. Unborn livestock
5. Fluctuations in market prices
1. Death or loss of livestock
2. Direct loss or spoilage of product (dairy, produce, other)
3. Farmer- or personnel-related accidents or losses

The basis for this: naturally, like any newcomer to anything, business owners aren’t sure about how crop insurance works. What will it cover? What won’t it? If you’ve been asking yourself these questions, or hemming and hawing over whether or not to get in touch with a crop insurance agent (without fear of being sold something you don’t need), never fear. We’ve got answers for you here.

Read on to learn 5 things crop insurance will protect you from, and 3 things it won’t (and what to do instead). Crop insurance won’t directly cover or compensate you for every single loss. But, it will protect you in other ways that may surprise you, making for those losses in other ways no matter what.

5 things crop insurance will protect you from:

1. Loss of revenue.

Whether it’s fruits, vegetables, hemp, livestock or dairy, the foremost thing most major crop insurance policies are designed to protect you from is any loss of expected revenue from your main product—that will always stand.

The way it works: regardless of your product—projected row crop harvest, dairy production, livestock sales or meat products, etc.—insurance works with you to determine your expected and guaranteed maximum revenue. If you are a dairy farmer especially, agents will also work with whatever the most recent market prices may be at the moment, as set out by the USDA (though this applies to all products across the board of course, even if they fluctuate less regularly).

Come the close of the year, coverage compensates you for anything below the ground floor you would expect from your enterprise’s revenue established with your agent—no matter the cause of revenue loss! This way you know your business is always maintaining or moving forward, never backward.

However, this can be huge for row crop farmers especially, who face the most risks to their guaranteed revenue than other farmers and deal with the tightest profit margins. In fact, crop insurance could even be considered a mainstay for annual row crop farming, though don’t discount the undeniable financial security year-to-year it grants for livestock, dairy, and perennial crop growers as well.

2. Adverse weather events.

Regardless of what you grow once again, crop insurance will have you covered. These policies are set aside as more specialized coverage options, so you are able to “shop” for and customize your protection based on the weather risks you’re most likely to face, depending on the climate and region you reside: such as hail, rainfall, frost, wind, or heat/drought events.

Any specific single weather event spelled out in your insurance policy makes it a Named-Peril Insurance product, which also has the added benefit of being purchasable any time of year (unlike other policies). That said, you can save a bundle by literally “bundling” all possible weather risks you could face together with Multi-Peril Insurance products, especially if you find more than one of these events at your doorstep (or threatening to) with any regular frequency.

And no, Multi-Peril doesn’t just apply to row crop farmers or fruit growers! Whether a wind event takes out a good portion of your field or an entire livestock facility, it won’t matter. For a wide spectrum of farmers (including diversified growers that produce both row crop AND livestock or dairy), Multi-Peril Insurance is considered yet another mainstay for fully insured and financially progressive farming. Built into these policies are included Revenue Protect (RP) and Yield Protection (YP), giving you options to approach compensation from either the financial or product side of things—or, both.

3. Loss of crops.

Any substantial and financially threatening loss of crops—whether it be fruit, vegetable, hemp, or other row crops—will be covered in some way by crop insurance. While this technically tends to be caused directly by weather events, you will also find protection against common nature-related crop losses such as excess moisture or disease, which tend to go hand-in-hand with weather causes.

Loss of any crop you grow (especially if you deal with disease or moisture issues) is best addressed and protected through a Multi-Peril Insurance product. This is because these types of issues could be caused by any number of weather events: hail, excessive rain, heat stress, wind damage, and more. Again, you also get the benefit of Yield Protection (YP) to be rest assured you’ll be well taken care of in any instance of crop loss.

However: if these are concerns, be sure to purchase your plan before you get anything in the ground! An insurance agent will work with you on the numbers before determining or cashing out your coverage.

Unfortunately for ranchers and dairy farmers, product loss due to things like disease is not specialized to or directly covered by insurance like it is for row crop farmers. But for those with livestock, this can be indirectly covered with Revenue Protection (RP) plus these producers get a different set of advantages.

4. Unborn livestock.

While row croppers should explore and move forward with options before their planting season begins, dairy and livestock farmers get the benefit of extending coverage to unborn livestock like cows and piglets: directly protecting their assets well into the future.

Plenty can imperil the health of adult livestock and thus the financial success of your operation. But young animals represent livestock at their most vulnerable stage: they’re more easily prone to loss, whether it’s to disease, predation, or other health complications. They also represent the future of your enterprise and require protection, too.

If you’ve ever wondered if you could get coverage for unborn livestock for your dairy or other livestock operation, the answer is yes. This could even kick in if birth numbers for the year are far below what was expected, or if the unpredictable (or unthinkable) occur to reliably fertile or pregnant animals. The best named policies for this type of coverage will be a Livestock Risk Protection (LRP) product.

Not all crop insurance companies offer this type of protection. But, you’ll find that the most specialized companies and agents do—and will. If you keep tight records of expected new additions to your herd, with reliable past records showing how your livestock operation can be expected to grow, this will be instrumental to getting this type of coverage; otherwise, if you don’t have these records and this coverage could greatly help you…start keeping those records, now (even if the numbers aren’t certain)!

5. Fluctuations in market prices.

Farmers and ranchers know all too well that things are always changing on the farm—perhaps with nothing changing more often than product prices. Crop insurance companies know this very well, too. That’s why an insurance plan for any farmer (row crops, dairy and beyond) takes changes in market prices into consideration.

Prices go down to the point where you don’t meet your expected revenue? Crop insurance will take care of that. And yes, most insurance companies as a rule make policies flexible with the changing of market prices, taking into account the market forces that will never be in the farmer’s control…but that shouldn’t be the farmer’s fault!

For livestock raisers, a Livestock Gross Margin (LGM) insurance plan would be right up your alley. This will even take into consideration any price hikes in livestock feed that could impact your farm operation and bolstering overhead.

Reading the writing on the wall, having coverage that takes this into consideration is one of the biggest lifesavers most of all for dairy farmers. Getting a Dairy Revenue Protection (DRP) policy takes into account the frequent changes in dairy product prices, up to as frequently as monthly changes.

3 things crop insurance won’t protect you from:

1. Death or loss of livestock.

Unlike row crop insurance which offers policies that directly cover crop loss, most crop insurance companies won’t offer policies that directly cover or compensate for the costs of loss of livestock: whether from disease, accidents, or predation.

While this may read as disappointing on paper (and not make sense at first to dairy farmers or ranchers), once you get more deeply acquainted with other policies that extend to dairy or livestock coverage, you’ll see that they can get at the heart of what really hurts a farm business the most when death or loss happens: loss of revenue.

If possible livestock loss is of concern to your business, or you’ve dealt with loss with increasing frequency, the best thing to do is to look at Livestock Risk Protection (LRP) coverage products or Livestock Gross Margin (LGM) plans. Or, if you’re a dairy farmer, take a look at the more dairy-specialized Dairy Revenue Protection (DRP) coverage.

Take into consideration as well that Named Peril and Multi-Peril policies will cover loss of livestock due to weather related events. While you won’t get compensation dollar-to-dollar for the loss of your livestock assets, you will get money back in your pocket for how that loss impacts your product in the future.

2. Direct loss or spoilage of product (dairy, produce, other).

Accidents happen: none worse than the loss of meat product, dairy or crops after they have been harvested from the field and stored, and before they get to market.

However, a crop insurance policy—just like with loss or death of livestock—won’t match or cover you dollar-to-dollar for that product loss right as it happens. Instead, it’s best to keep record of the loss and submit it as part of your end-of-year (or other period) claims with a Revenue Protection or Gross Margin-protecting policy of some sort purchased in advance of the year.

It’s a no brainer anyway: the bottom line being impacted with loss or spoilage of product (or damage in transit, for example) is loss of revenue regardless. Out of all categories of growers and producers, dairy farmers are the most vulnerable to this type of product loss, damage or spoilage. This is why dairy-covering policies like Dairy Revenue Protection (DRP) are so well-tailored and suited to dairy farmers: this type of loss happens and it is guaranteed to be covered in some way.

3. Farmer- or personnel-related accidents or losses.

Larger agricultural companies with plenty of employees and workers may occasionally have to deal with the occasional accident or incompetence with equipment, product or animals. No matter how careful a farmer is, sometimes the workers aren’t!

Operators may wonder: how are these mistakes covered by insurance? Are they at all? Rest assured that any loss of revenue due to an accident or incompetence, even if done by an employee or worker, will be covered by most crop insurance plans. It doesn’t matter if it is you or someone you hired. However, once again, the expenses of the loss won’t be covered dollar-to-dollar.

Like with damage to product or death of livestock, you can turn to a Revenue Protection or Gross Margin-protecting policy of some sort in order to gain those losses back, especially if they impacted your bottom line significantly at the end of the year. Worried about especially high losses? Look into enhancing your coverage with an Enhanced Coverage Option (ECO) or Supplemental Coverage Option (SCO) to make sure your deductibles can be easily met, and that your coverage will go the extra mile.

Farmers are resourceful and cautious by nature. We don’t blame you for looking twice at whether a crop insurance plan would really be worth it, or “right” for you and your business—it’s wise to do so.

We also know that farmers are outcome- and results-oriented! Once you get in touch with a specialized crop insurance agent, and they’re able to walk you through how crop insurance works and addresses all your financial concerns, you may just find that policies are perfectly crafted for just about any situation, and the proof is in the pudding: crop insurance is a mainstay for successful farming all over the country.

When Does Your Business Need Crop Insurance? Can I Afford Crop Insurance?

When Does Your Business Need Crop Insurance? Can I Afford Crop Insurance?

At some point, every growing farm business owner or operator sits down at the table and begins asking these questions: when does your business need crop insurance? Can I afford crop insurance?

Here are some reasons why you should consider having some sort of crop insurance policy in place to protect you.

Get insured if farming is a large part of your income.
Get insured if you’re vulnerable to floods, wind or hail.
Get insured if pests, predation or disease are a problem.
Even if you’re organic, specialty or a “microfarm” – you can still get insured.
Can I afford crop insurance?

Get insured if farming is a large part of your income.

Some people keep the “back 40” in the family as part of a tradition or a hobby. In that case, you probably don’t need (or want) crop insurance. But, if you insist on making farming of some sort a substantial part of your income, you will probably want to be insured.

Even the biggest livestock, row crop or dairy operations can operate on razor thin margins. A brush with sickness, high pest numbers that year, or even just an operation accident—whether on the corporate or the family farm— can mean the difference between finishing the year in the black or finishing in the red.

The right coverage options, however, can make sure you stay in the black.

Get insured if you’re vulnerable to floods, wind, or hail.

That’s certainly not a comprehensive list of all the natural disasters you could face as a farmer. Having insurance in tornado alley, the flood plain, increasingly fire-prone areas, or other disaster-vulnerable regions can draw the line between treading water year to year or putting food (for both for your family and your customers) on the table.

As farmers around the country report increasingly unpredictable climate and weather patterns, the most vulnerable areas should absolutely consider insurance—especially with some patterns predicted to worsen.

In some areas, crop insurance may in fact be foundational to your enterprise’s survival owing to the possibility of weather events there. Be sure to look into a policy that covers natural disasters, even more, important if you’ve experienced losses from more than one already. ether on the corporate or the family farm— can mean the difference between finishing the year in the black or finishing in the red.

The right coverage options, however, can make sure you stay in the black.

Get insured if pests, predation or disease are a problem.

From the smallest microbe to the largest predator, farmers are constantly working against all the forces of nature. If your operation borders or is otherwise exposed to wildlife hungry for a taste of your product, an insurance plan can help protect you from the losses caused by this expected yet pesky (and pesty) part of the agricultural business.

While some policies may not directly cover or compensate for the loss of livestock (calves, pullets, lambs, etc.), the product you derive from your livestock can be protected. That way predation losses won’t hit you or your business so hard.

For row crop growers, any loss of crop from pest or disease—even the occasional hungry deer or, worse, pest swarm— can be compensated for.

Even if you’re organic, specialty or a “microfarm” – you can still get insured.

If anything, small specialty and organic growers can be even more vulnerable to the above risks than the “average” or “typical” large or conventional farm business. Even with higher premiums, organic growers and ranchers face greater challenges against the elements, volatile markets, pests and disease than their conventional counterparts owing to the methods they use. In many cases, these businesses deal with even tighter profit margins as well.

It’s a big myth that small farmers and specialty growers can’t get crop insurance, or that it’s not a worthwhile investment for them. It is. Many specialty products—diverse vegetables, CSA’s, heritage breed livestock, hemp, specialty fruits, and beyond—can easily have a crop insurance coverage policy that protects them from losses that could endanger their businesses.

Can I afford crop insurance?

We get it: the overhead adds up quickly when you’re running an agricultural business. The thought of another bill or payment, stacked up against thin profit margins, can make even the most financially meticulous farmer’s head spin. “Can I really afford another expense or payment? Will I need it in the end?”

Crop insurance is the mainstay it is in agribusiness for a good reason. Insurance companies are not just invested in the success of farmers financially for the wellbeing of their families, health and livelihood; they’re also invested in the vital role farmers play in the economy. Insurance companies all over the country pay out farmers on their losses in the billions of dollars every year. Let’s just say: we’re invested in farmers!

Farmers grow food and bring crucial commodities to the table, keeping their communities and other parts of the country clothed, fed, and nourished. Any loss to the farmer means a loss to the economy and the community. It could mean a less stable commodity or food system!

While you may not think you can afford crop insurance payments, nobody can afford to lose the farm. Even if you’ve managed to run your farm business without facing major risks or losses like natural disasters, pests, or volatile markets, that moment could be right around the corner—and for many farmers, it’s when that blindsiding moment hits that makes them grateful for coverage…or pushes them to seek it after as soon as they can.

These moments—never expected, but sometimes inevitable—can be the ones that make or break the future of an enterprise, which for some is the entire family legacy. If you’re concerned about crop insurance payments being costly, chatting with a specialized crop insurance agent can allay your fears. It’ll give you the information you need on policies perfect for your business, and completely affordable to you in the present—while being completely worth it for you further down the line, if anything were to happen.

How Farmers Can Make the Most of Their Data

How Farmers Can Make the Most of Their Data

The agriculture industry has become increasingly dependent on data. Tractors and farming equipment are now essentially computers on wheels that collect tons of data about soil, crops, and machinery. The fact that John Deere now employs more engineers in software rather than mechanical illustrates this point further. They are doing this so that they can gather data from their machines and use that data to improve farming practices. What is the best way to manage all this data? Data management can be a challenge, especially when you must be out in the field or in the shop. Take advantage of your data by following these steps.

Who’s Using Your Data?
Four Vs of Big Data
Use your Data

Who’s Using Your Data?

Considering how your data will be used is the first step. In the same way, you should also consider who you will partner with. For a bank, for example, we’re going to find the most useful data related to profitability and efficiency. Your financial data helps us determine whether you are able to take on more debt, get a new loan, or purchase a new home.

An agronomist will also want access to all kinds of map data in order to understand your soil health, including pH, fertility, and moisture. Data may also be of interest to your employees, especially those who operate machinery. Equipment performance, yield, outputs, and overall efficiency will be important to them. Don’t forget to consider how you and your partners will use the data you collect. In some cases, it may be necessary to collect different data, or to interpret it in a different way. Your data collection process will be guided by knowing how and who will use it.

Four Vs of Big Data

If you do not understand how to read data, it is just numbers. It is critical to compare data year after year as well as to other operations. To put it another way, context is essential.

Benchmarking your data will help you uncover and address problems, inefficiencies, and areas for improvement, allowing you to understand it.

The Four Vs of Big Data will help you make the most of your data. These are volume, velocity, variety, and veracity. Using the Four Vs will help ensure your data is accurate and useful. Read a breakdown of the Four Vs here.

Use your Data

It would be a waste of time and money not to collect data using the equipment you’ve invested in. You probably have a lot on your plate, so using your data is easier than it seems. Here are some things to consider.


The use of data goes beyond exporting it to a spreadsheet or writing down notes on paper. You may want to invest in software that helps interpret and organize your data depending on the size of your operation. Data collection and analytics can be integrated into one platform if you choose a company that offers both hardware and software. You should at least look for patterns in the data so you can set benchmarks. This will help you track and measure your improvements.

Crop consultants can also interpret the data that farmers provide them. The data you have might not be easy to analyze, but no matter what, you should have someone analyze it for you. There are many tools and resources available to you. If you need help determining the right path, you can speak to your crop insurance agent.

Make changes

It is possible to identify problems and then fix them using the data that you collect and interpret. Using your data to improve your operation will help you get the most out of your investment. Using the data, you might discover that certain sections of your field need more water than others. The soil nutrient density may be higher in certain parts, allowing you to adjust your fertilizer prescription and save money. Data analysis can be used to optimize your yields, saving you time and money as well.

Backup your data

The importance of backing up your data may seem obvious, but it can be easy to overlook. Losing all your data makes it hard to recognize patterns and set benchmarks. This can be as simple as printing out some of the files or just buying a backup hard drive to download your files to. You’ll be glad you did.

Don’t Forget About Privacy

Since consumers own more devices that collect personal data, data privacy has become a hot topic. Similar to Siri and Alexa, farm equipment has also been scrutinized for its ability to collect your data. It’s important for farmers to read the terms and conditions so they understand what’s being shared. Don’t forget that all the information you collect about your farm allows companies to gain insight into how you operate it. You also need to consider the equipment you use and the inputs you use. Sharing your data is not necessarily a bad thing, but make sure you understand how it is used by third parties other than you and your partners. Don’t share your data portal login information, and when sharing data, ensure it is “read-only”, which means other users cannot edit it.


You should treat your data like any other tool in your shed. When you use it effectively, your operation can run smoother, more efficiently, and more profitably. The information you collect doesn’t need to be analyzed every day. Identifying patterns and setting some benchmarks can make a real difference in your decision-making process.

Important Tasks for Farmers After the Fall Harvest

Important Tasks for Farmers After the Fall Harvest

Although there are many different types of farms out there, most farmers take time during the late fall and winter months for reflection and planning for the next crop year. We put together a detailed checklist of important tasks that the farmers we talk to do during that off-season timeframe.

Data Review and Decision-Making
Equipment Maintenance
Risk Assessment
Caring for Your Livestock
Tend Winter Crops
Analyzing the Market
Touching Base with Others

Data Review and Decision-Making

Data is only numbers if you don’t know how to read it. Data must be compared year-over-year and to other operations. In other words, it must have context. To understand your data, you need to benchmark it, and then use it to discover and address problems, inefficiencies, and target areas for improvement.

To make the most of your data, adopt what’s known as the Four Vs of Big Data. These are volume, velocity, variety, and veracity. Using the Four Vs will help ensure your data is accurate and useful. 


It is important to have a large amount of data to compare and identify patterns. For example, knowing the temperature for one day doesn’t tell us much. We need weather data over a long period of time so we can see patterns. As the volume of your data increases, it’s likely to get more complex so being able to sort and filter will be critical. Having yearly weather records can provide you with useful data for nearly every infield decision. For example, having data for average daily temp can help you decide when you’re going to plant, if you need to change seed variety, when to spray and when to apply nitrogen. This will allow you to better predict your growing degree days and schedule other activities accordingly.


You could also think of this as timing. For your data to be relevant it needs to be on time. Using aerial imagery, you can provide information such as ground and crop temperatures, crop health, weed pressure, and expected yield. This data isn’t useful if it comes to you a month late. Collecting timely data and delivering and interpreting it is critical to success. Taking a little time each week to look at your data will be more beneficial than looking at it only once a year.


The variety of data you can collect has increased with the advancement of technology. Previously, if you had a low yield spot, you might not know why. The more data points you have, the more you will be able to see the whole picture. Having data about ground temperature, moisture levels and nutrients in the soil can help you pinpoint what’s causing issues and then address it. You won’t have all the pieces of the puzzle if you don’t have a variety of data.


The final V is veracity, also known as the quality of the data. In order to make informed decisions, you must make sure your data is accurate. Your equipment must be calibrated correctly in order to perform this function. Using multiple machines to collect data requires accurate data as well. There is a good chance that the data is not accurate if one machine gives a different reading than the others. The data you get could be filled with anomalies that aren’t explained if your equipment isn’t calibrated. Another reason you need accurate data? Your data is used for benchmarking and seeing patterns. If you’re collecting a lot of inaccurate data that information is not valuable. Lastly, make sure that you aren’t comparing apples with oranges when comparing data. The timing, duration, location, and equipment used for collecting data can cause great variances. When trying to set benchmarks it’s important that you’ve considered potential variables.

Equipment Maintenance

Machine malfunctions can be expensive, so it is imperative to take steps to minimize unnecessary expenses. As with many other industries, farming relies on various types of machinery and equipment to run. The assets need to be maintained properly to remain in working condition. You can keep your farm more efficient by keeping a well-organized, practical and handy maintenance checklist. Here is a quick farming equipment maintenance checklist to follow and refer to often.

1. Inspect Equipment For Potential Damage

  • Leakage from the valve stem
  • Oil or hydraulic leaks on the ground beneath the tractor
  • Corroded battery terminals
  • Dirty cab windows that obstruct your vision
  • Headlights and warning lights

2. Change Fluids Frequently
3. Survey All Equipment, Regardless Of Size
4. Safely Store Equipment And Machinery

Risk Assessment

Farm Safety Risk Assessment – Animal Handling

You can assess potential animal handling risks in many ways:

  • Walk through all animal-handling areas and look for hazards, such as broken gate latches, broken posts, or restraining equipment not working.
  • Consult with WorkSafe Victoria’s advisory service or visit WorkSafe’s farming information page.
  • Reflect on injury records to pinpoint recurring dangers, including less obvious ones like lacerations and sprains.
  • Talk over safety issues with family members, workers and other animal handlers.
  • Make sure at least one person on the farm is trained in first aid.
  • Remember that inexperienced workers and bystanders are more likely to be injured.

Yard Design, Equipment and Safety

General suggestions for improving yard safety include:

  • Yards, crushes, cradles and sheds should be suitable in size and strength for the animals being handled.
  • Avoid blind corners and sharp turns in the design of your yard.
  • Keep the walkways and laneways dry and non-slip wherever possible.
  • Make sure your gates, footholds and access ways are well positioned.
  • Keep all equipment in good repair: gates moving and hung, latches working, hinges greased.

Caring for Your Livestock

Farmers and farm workers can easily be injured by livestock. Cattle, pigs, horses, sheep, dogs and other farm animals can be unpredictable and should be treated with caution at all times. It is possible to injure animals by lifting them or pushing them, and animals may also transmit certain diseases if they are handled in this way. Get help if you need it, plan ahead, and maintain a barrier between yourself and the animals.

Feeding and Nutrition

Diets for all classes of cattle should meet the recommendations of a nutritional consultant. For local recommendations and advice, contact your state agricultural extension as a potential resource. Like other species, cattle are susceptible to infectious diseases, metabolic disorders, toxins, parasites, neoplasia, and injury. In order to reduce risks and maximize efficacy, control programs should be based on risk assessment and available products. By implementing health management programs early, economic losses are reduced. Healthy herds are more productive. Check out some more agricultural and management practices for the care of farm animals.

Tend Winter Crops

Farmers may grow crops throughout the year depending on where they live. Cover crops are also being planted by more farmers these days. There are a variety of root structures in cover crops, and they can also leave nutrients in the soil when they are harvested. Working on soil improvement during the winter is a good choice, and it doesn’t require going outdoors in the cold.

By planting a cover crop in summer or fall and letting it overwinter, you can:

  • Improve soil organic matter and soil fertility.
  • Suppress cool-season weeds.
  • Prevent soil erosion.
  • Create a better seedbed for spring planting.

For farmers in more moderate climates they may have vegetable crops they are growing.

Analyzing the Market

A lot of the winter months are spent looking at market trends, pricing structures, crop demand, current loan packages, insurance policies, etc. The budgets of farmers and ranchers are constantly evolving, just like any other business. It is particularly important for farms to pay attention to details during times of high volatility, like we are experiencing today, and to do so on both the revenue and cost sides. When farmers regularly evaluate their budgets, they can anticipate expected profits and losses and implement risk management strategies if crop damage or revenue decline occurs.

Touching Base with Others

Farmers meet regularly – locally, regionally, nationally – to discuss new technologies, the horizon for politics, new crops, processes for transferring ownership to younger generations, etc. The local co-op is also a great place to grab a cup of coffee and hear a story. Find a local farm.

It doesn’t matter if a farm is one acre, 100 acres or 10,000 acres. Food producers who dedicate their lives to putting food on other tables are not fooled by below-zero temperatures, frost, and blustery winds. For farmers, winter serves as a reminder to tend to the tasks that will help them reach their goals—whether they be social, environmental or economic—in the seasons to come.

What is the Supplemental Coverage Option?

What is the Supplemental Coverage Option?

Supplemental Coverage Option (SCO) is an optional crop insurance endorsement that provides coverage for a portion of the deductible of your underlying crop insurance policy.

1. How Do I Buy SCO?
2. How Do I Decide If I Should Buy SCO?
3. How Does SCO Work?
4. What Happens if I Elect SCO and Signed Up for ARC?
5. How Much Does SCO Cost?

SCO can be elected only when a producer has purchased one of the following underlying plans of crop insurance:

blank one with code in Advanced CSS
Yield Protection
Yield Protection policies insure producers in the same manner as APH policies, except a projected price is used to determine crop insurance coverage.

Similar to APH, Yield Protection is available only on crops that qualify for Revenue Protection. A Yield Protection plan protects against production loss.

It works the same as the APH plan but instead of using a price election established by RMA, the price is established according to the applicable board of trade/exchange as defined in the policy document called the Commodity Exchange Price Provisions (CEPP). The price that is used is called the Projected Price. The Projected Price is used to calculate the guarantee, premium and loss payments.

The producer selects the percent of the projected price they want to insure, between 55 and 100 percent. The guarantee is established by multiplying the average yield by the coverage level and by the Projected Price, and an indemnity may be due when the value of the production to count is less than the yield protection guarantee plan.

By offering revenue protection, you are protected against a loss of revenue due to an increase or decrease in price, a reduction in production, or a combination of the two.

Revenue Protection
In Revenue Protection (RP) crop insurance, the Commodity Exchange Price Provisions (CEPP) are used to determine the price, but it differs from other types of crop insurance crop insurance plans from the Yield Protection (YP) plan since it uses two different price discovery periods. The projected price is determined in the same manner as YP and is used to calculate the premium, replant and Prevented Planting payments. Near harvest time, the harvest price is released. An indemnity is calculated using this price.

The revenue protection guarantee is established by: Average Yield X Coverage Level X Insured’s Share Percentage X Projected Price.

If the calculated revenue (production X harvest price) is less than the crop acreage’s revenue protection guarantee, an indemnity may be due.

Note: When the harvest price is released, if it is greater than the projected price, the revenue guarantee will be recalculated using the harvest price as well.

While the revenue guarantee is increased, the insured is not charged any additional premium for this increase. The policy guarantee remains at the projected price even if the harvest price is lower than the projected price.

Revenue Protection with the Harvest Price Exclusion
A minimum crop insurance revenue guarantee will not be recalculated when harvest prices are released when Revenue Protection with Harvest Price Exclusion Plan (RP-HPE) is selected.

The Revenue Protection Plan with Harvest Exclusion Plan (RP-HPE) crop insurance plan is similar to the Revenue Protection (RP) plan, however it provides coverage against loss of revenue caused by price decrease, low yields or a combination of both – the price increase is not covered because the guarantee is not adjusted up by the harvest price for this plan.

Revenue guarantee, premium, and replanting or prevented planting payments are determined by the projected price. In order to count in a loss in production or revenue, the harvest price is only used to value the production. In the event of an increase, the guarantee is not recalculated.

The producer does not receive the benefit of price movement with the RP-HPE plan.

Actual Production History (APH)
APH guarantees the producer a yield based on the actual production history of their crops.

The APH plan of crop insurance provides the producer protection against a loss of production due to nearly all unavoidable, natural occurring events. For most crops, that includes drought, excess moisture, cold and frost, wind, flood and unavoidable damage from insects and disease.

For the producer’s share of the crop, the guarantee is calculated by multiplying their average yield by the level of coverage chosen. If the production (harvested and appraised) is less than the guaranteed amount, an indemnity may be due.

The pricing for most crops insured under the APH plan of insurance is established by RMA.

Several perennial crops, such as apples, peaches, and grapes, fall under the APH plan, as well as crops with no revenue coverage. Under the APH plan of insurance, grain crops such as oats, rye, flax, and buckwheat are also covered.

The Federal Government pays 65% of the premium cost for SCO.

How Do I Buy SCO?

Producers can choose SCO as an endorsement of the underlying policy. It is imperative that you make this choice by the sales closing date for your underlying policy, and it must be with the same insurance company. Farmers who have chosen to participate in the Agriculture Risk Coverage (ARC) program at Farm Service Agency (FSA) are not eligible for SCO coverage.

Contact your trusted agent, Scott Colville today to discuss policy details and availability.

How Do I Decide If I Should Buy SCO?

For those crops and farms eligible for SCO coverage, the type and amount of SCO coverage are determined by the type and coverage level you choose for the underlying policy. You should talk to Scott Colville to determine what best meets your individual risk management needs.

How Does SCO Work?

SCO follows the coverage provided by the underlying policy. In the event that Yield Protection is selected, then SCO will cover yield loss. If Revenue Protection is chosen, then SCO covers revenue loss.

As a result of the liabilities, coverage levels, and yields of the underlying policy, there are many factors that determine how much SCO coverage is provided. In contrast, SCO triggers a loss payment differently from the underlying policy. Whenever there is a loss in yield or revenue, the underlying policy pays a loss and triggers an indemnity. SCO pays a loss on an area basis, and an indemnity is triggered when there is a county-level loss in yield or revenue.

A farmer’s SCO crop insurance indemnity payment is based on county-average revenue or yield and is not influenced by the amount you receive from the underlying crop insurance policy. Individual losses can result in SCO payments not being received, and vice versa.

The dollar amount of SCO coverage is based on the percent of crop value covered. SCO also allows producers to customize their amount of coverage with a coverage percentage. The coverage percentage is selected from a range of 50% to 100%, and the maximum amount of SCO coverage is multiplied by that percentage.

What Happens if I Elect SCO and Signed Up for ARC?

In the event that a producer elects SCO and ARC for the same crop on their farm, SCO coverage for that crop on that farm will be canceled, and the producer must report the crop covered by ARC on their acreage report. If they do not report a farm covered by ARC, the acreage of that farm will be ineligible for an SCO payment. As a result of the ineligibility, the producer must still pay 60% of their SCO premium for that crop and farm. The underlying policy will remain in effect.

A farmer’s SCO crop insurance indemnity payment is based on county-average revenue or yield and is not influenced by the amount you receive from the underlying crop insurance policy. Individual losses can result in SCO payments not being received, and vice versa.

The dollar amount of SCO coverage is based on the percent of crop value covered. SCO also allows producers to customize their amount of coverage with a coverage percentage. The coverage percentage is elected from a range of 50% to 100%, and the maximum amount of SCO coverage is multiplied by that percentage.

How Much Does SCO Cost?

The exact premium cost depends on the crop, county, coverage level you choose for the underlying policy, SCO coverage level percent you choose, and the type of coverage you choose, such as Yield Protection or Revenue Protection. The Federal Government pays 65% of the premium. You should talk to Scott Colville for more information.