From the RMA Website:
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 agents and other agri-business specialists can assist farmers in developing a good management plan.
RMA provides policies for more than 100 crops. Federal crop insurance policies typically consist of general crop insurance provisions, specific crop provisions, policy endorsements and special provisions. See RMA's county crop program listings for information about crop policies available in specific counties and states.
Multiple-peril crop insurance (MPCI) policies are available for most insured crops. Some policies are being tested as pilots or have not been expanded nationwide so are not available in all areas.
Available Insurance Plans
- Actual Production History (APH) 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 50-75 percent (in some areas to 85 percent). The farmer also selects the percent of the predicted price he or she wants to insure; between 55 and 100 percent of the crop price established annually by RMA. If the harvested plus any appraised production 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 price selected when crop insurance was purchased and by the insured share.
- Adjusted Gross Revenue (AGR) and AGR-Lite policies insure 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 policies use information from a producer's Schedule F tax forms, and current year expected farm revenue, to calculate policy revenue guarantee.
- Revenue Protection policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease, and revenue losses caused by a change in the harvest price from the projected price. The farmer selects the amount of average yield he or she wishes to insure; from 50-75 percent (in some areas to 85 percent). The projected price and the harvest price are 100 percent of the amounts determined in accordance with the Commodity Exchange Price Provisions and are based on daily settlement prices for certain futures contracts. The amount of insurance protection is based on the greater of the projected price or the harvest price. If the harvested plus any appraised production multiplied by the harvest price is less than the amount of insurance protection, the farmer is paid an indemnity based on the difference.
- Revenue Protection With Harvest Price Exclusion policies insure farmers in the same manner as Revenue Protection polices, except the amount of insurance protection is based on the projected price only (the amount of insurance protection is not increased if the harvest price is greater than the projected price). If the harvested plus any appraised production multiplied by harvest price is less than the amount of insurance protection, the farmer is paid an indemnity based on the difference.
- Yield Protection policies insure farmers in the same manner as APH polices, except a projected price is used to determine insurance coverage. The projected price is determined in accordance with the Commodity Exchange Price Provisions and is based on daily settlement prices for certain futures contracts. The farmer selects the percent of the projected price he or she wants to insure, between 55 and 100 percent.
- Catastrophic Coverage (CAT) pays 55 percent of the price of the commodity established by RMA on crop losses in excess of 50 percent. The premium on CAT coverage is paid by the Federal Government; however, producers must pay a $300 administrative fee (as of the 2008 Farm Bill) 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.
- Producers must:
- Report acreage accurately,
- Meet policy deadlines,
- Pay premiums when due, and
- Report losses immediately.
New Policies and Policy Expansion
- 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 - for a planted crop, notice must be provided within 72 hours of discovery of damage or loss of production (but not later than 15 days after the end of the insurance period). If there is no damage or loss of production and a revenue plan of insurance is in effect, notice must be given no later than 45 days after the latest date the harvest price is released. For crops that are prevented from being planted, notice must be provided within 72 hours after the final planting date or the time the producer determines it will not be possible to plant during any applicable late planting period.
- 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.
If an established crop policy is not available in a particular state or county, farmers may request that their RMA Regional Office expand the program to their county the next crop year. They may also request insurance under a written agreement, a kind of individual policy which bases premium rates on data from other counties. Farmers are required to have documented experience in growing the crop, or in growing an agronomically similar crop, to obtain the agreement and written agreements must be allowed by the applicable policy. See the RMA fact sheet Requesting Insurance Not Available in Your County.
Although RMA has streamlined the process of developing new policies, much must be done before a policy can be made available nationwide, especially if it is a new type of policy or a policy on a crop which is not similar to any crop already insured. Generally, the process takes several years. Frequently Asked Questions provides information regarding new insurance policies developed under contract for RMA by private entities or privately developed 508(h) insurance products approved by the Federal Crop Insurance Corporation. Also see the Concept Proposals option for submitting proposals for 508(h).
Any examples are for illustrative purposes only. Contact a crop insurance agent
for terms specific to your farm.
Contact: Product Administration and Standards Division, 816-926-7730.