Buying a crop insurance policy is one risk management option. Producers should always carefully consider how a policy will work in conjunction with their other risk management strategies to insure the best possible outcome each crop year.
Crop insurance policies are available for more than 100 crops. There are studies being conducted to determine the feasibility of insuring many other crops and is conducting pilot programs for some new crop policies in selected states and counties. Federal crop insurance policies typically consist of the Common Crop Insurance Policy, the specific crop provisions, the policy endorsements and special provisions.
The Noninsured Crop Disaster Assistance Program (NAP), managed by USDA's Farm Service Agency, provides financial assistance to producers of noninsurable crops when low yields, loss of inventory, or prevented planting occurs due to natural disasters.
Types of Policies
Farmers may select from various types of policies. 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 listed below are not available nationwide; they are being tested in pilot programs and are only available in selected states and counties.
Yield-based (APH) Insurance Coverage
Actual Production History (APH) - These policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease. The farmer selects the amount of average yield he or she wishes to insure; from 50 to 75 percent (in some areas to 85 percent). If the harvest is less than the yield insured, the farmer is paid an indemnity based on the difference. Indemnities are calculated by multiplying this difference by the insured percentage of the established price selected when crop insurance was purchased.
Group Risk Plan (GRP) - These policies use a county index as the basis for determining a loss. When the county yield for the insured crop, as determined by the National Agricultural Statistics Service (NASS), falls below the trigger level chosen by the farmer, an indemnity is paid. Payments are not based on the individual farmer's loss records. Yield levels are available for up to 90 percent of the expected county yield. GRP protection involves less paperwork and costs less than the farm-level coverage described above. However, individual crop losses may not be covered if the county yield does not suffer a similar level of loss. This type of insurance is most often selected by farmers whose crop losses typically follow the county pattern. See our GRP factsheet.
Dollar Plan - The dollar plan provides protection against declining value due to damage that causes a yield shortfall. The amount of insurance is based on the cost of growing a crop in a specific area. A loss occurs when the annual value of the crop is less than the amount of insurance. The maximum dollar amount of insurance is stated on the actuarial document. The insured may select a percent of the maximum dollar amount equal to CAT (catastrophic level of coverage), or additional coverage levels. The dollar plan is available for several crops, including fresh market tomatoes, strawberries, and cherries (on a pilot program basis in limited areas only).
Revenue Insurance Plans
Note: All revenue-based options determine revenue differently. See each policy's provisions for their definition of revenue.
Group Risk Income Protection (GRIP) - GRIP makes indemnity payments only when the average county revenue for the insured crop falls below the revenue chosen by the farmer. Please see GRIP Frequently Asked Questions (FAQ).
Adjusted Gross Revenue (AGR) - insures the revenue of the entire farm rather than an individual crop by guaranteeing a percentage of average gross farm revenue, including a small amount of livestock revenue. The plan uses information from a producer's Schedule F tax forms, and the current year's expected farm revenue, to calculate the policy revenue guarantee. See our AGR factsheet (PDF format;)
Crop Revenue Coverage (CRC) - provides revenue protection based on price and yield expectations by paying for losses below the guarantee at the higher of an early-season price or the harvest price.
Income Protection (IP) - protects producers against reductions in gross income when either a crop's price or yield declines from early-season expectations. To determine coverage, see the policy provisions.
Revenue Assurance (RA) - provides dollar-denominated coverage by the producer selecting a dollar amount of target revenue from a range defined by 65-75 percent of expected revenue. To determine coverage, see the policy provisions.
Catastrophic Coverage (CAT) - pays 55 percent of the established price of the commodity on crop losses in excess of 50 percent. The premium on CAT coverage is paid by the Federal Government; however, producers must pay a $100 administrative fee for each crop insured in each county. Limited-resource farmers may have this fee waived. CAT coverage is not available on all types of policies.
Report acreage accurately,
Meet policy deadlines,
Pay premiums when due, and
Report losses immediately.
Note: Contact a crop insurance agent for additional information regarding your specific obligations.
Producers will receive:
Accurate answers to questions on types of coverage,
Prompt processing of their policy, and
Timely payments for covered losses.
Sales closing date - last day to apply for coverage.
Final planting date - last day to plant unless insured for late planting.
Acreage reporting date - last day to report the acreage planted. If not reported, insurance will not be in effect.
Date to file notice of crop damage - after damage; the date the producer decides to discontinue caring for the crop; prior to the beginning of harvest; immediately, if farmer determines that the crop is damaged after harvest begins; or the end of the insurance period, whichever is earlier.
End of insurance period - latest date of insurance coverage.
Payment due date - last day to pay the premium without being charged interest.
Cancellation date - last day to request cancellation of policy for the next year.
Production reporting date - last day to report production for Actual Production History (APH).
Debt termination date - date insurance company will terminate policy for nonpayment.
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