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Understanding the Benefits of Crop Insurance

Farm insurance is a set of comprehensive policies that are designed to cater to the needs of farmers for both professional and commercial farming purposes. In context to the crop insurance policy, farmers can get risk-management insurance from public or private sector crop insurance agencies.

Crop insurance is an effective strategy in farming where farmers can collaborate with insurance agencies to get various yield and financial benefits. This page will help you explore the fringe benefits of crop insurance in the farming industry, along with an in-depth understanding of the multiple terminologies used in the context of crop insurance.

Crop Insurance

Crop insurance refers to the paradigm in which farmers are provided with financial protection against losses of their crops due to any adverse event or disaster. Yields may be harmed due to various risk factors, including drought, fire, disease, price fluctuation, or any unexpected or uncontrolled event like these.

Crop insurance has been recognized as a crucial risk management tool that protects ranchers from crop damages through financial aid. The FCIP Program (Federal Crop Insurance Program) launched in the U.S. provides excellent crop insurance coverage to agriculture producers so that they may take risk-free initiatives to protect their crops from adverse conditions.

Multiple Peril Crop Insurance (MPCI)

Multiple Peril Crop Insurance is a traditional form of the FCIP program launched by the U.S. government. The prime objective of the MPCI campaign is to provide crop coverage to the farmers to help them prevent the losses of agricultural yields against disasters or financial losses. MCPI chiefly caters to the needs of the crop insurance regime through the following categories.

Revenue Protection (RP)

Revenue Protection is an important aspect of a crop insurance policy. RP provides potential financial coverage to farmers against crop damage or losses due to:

  • Natural Disasters: drought, excessive moisture, hail, wind, frost, or disease.
  • Revenue Losses: low yields, low prices, or sometimes both.

Area Risk Protection (ARP)

Area Risk Protection, or ARP, is associated with crop insurance that insures farmers against large-scale yield loss at the country level. The farmers enrolled in ARP crop insurance must ensure the following:

  • Deliver data sources regarding establishing yields.
  • Provide production reports to the agency.

Yield Protection (YP)

Yield Protection (YP) policy is an exclusive crop insurance coverage that provides financial protection to the farmers against a yield production below the predetermined amount. It is best for tackling with unavoidable yield losses triggered by:

  • Earthquakes, droughts, tornados, lightning, floods, etc.
  • Wildlife damage, plant disease, insect infestation, and imbalanced environmental conditions.

Crop Hail Insurance

Crop Hail Insurance is a sort of crop insurance policy that is mostly provided to the farmers staying at the mercy of sudden or instant weather changes/events. However, it insures the crops until they are set in the farm/ not-harvested yet. It covers:

  • Physical damage of crops due to hail.
  • Loss of yield due to other weather-related risks, i.e., drought, frost, wind, excessive moisture and vandalism.

Crop Hail / Companion Hail Insurance

Companion Hail Insurance has an edge over mere Crop Hail coverage in terms of providing flexible insurance for yield loss. It includes crop damage coverage to the farmers at the stage where the MPCI policy fails to support the yield/revenue compensation. It is flexible, too:

  • Execute additional coverage to crop damage due to hail.
  • Insure crop damage recovery with premium companion hail insurance plans.

Crop Revenue Insurance

Crop Revenue Insurance is an easy defense for the farmers to prevent their revenue loss caused by fluctuating market prices. CRI offers harvest price options to crop revenue insurance seekers to help them replace their lost revenue with elected insurance coverage. CRI is valid where:

  • Farmers face yield loss due to decreased market prices of crops at the time of harvesting.
  • Agriculture producers go through yield reduction due to any sudden disastrous event or damage.

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Ellerhorst Russell Insurance Agency will work with you closely to understand your needs and make sure you’re properly protected.

Important Definitions / Terminologies Related to Crop Insurance

Crop insurance is an important aspect of your farming needs. Before cheering ideal crop insurance, you must interpret and understand the crucial terminologies to experience a risk-free crop insurance deal. The important terms related to crop insurance are as follows.

Actual Production History (APH)

Actual Production History refers to the record of farmer’s yields over the years. APH is taken into consideration by the FCIC (Federal Crop Insurance Corporation) for determining the producer’s level of crop production.

Base Price

The basic or actual price of any product or service without adding any incentive/bonus/extra amount is called the Base Price. For example, the actual cost spent on seeding and growing soybeans is its base price.

Harvest Price

The prices offered to or received by the farmers at the time of harvesting the crops refer to the harvest price. Harvest price is usually provided after about two months from the time of harvesting.

Calculated Revenue (CR)

Calculated Revenue, or CR, is defined as the number of total units sold multiplied by the average selling cost. In farming, CR is calculated by multiplying the crop units with the average selling price.

Final Guarantee

The final guarantee refers to the closing or last valuation time for deal settlement. It integrates all the set parameters, including in the deal, as an insurance or concrete promise.

Harvest Guarantees

Harvest Guarantees refer to covering the production or manufacturing defects caused by any adverse change before or at the time of harvesting. It supports the producers to harvest risk-free production.

Base Guarantee

A base Guarantee can be defined as a compensation promise in which the procedure or manufacturer can invest risk-free cost with the corporation or client to get back its inventory cost without any financial hassle.

Sales Closing Date

The sales closing date means the particular date at which a certain sale is committed to be completed with sale transaction and clearance. It is the sale or deal closing time with no extension.

Final Planting Date

The final planning date or deadline is associated with the latest date put forward by the risk management agencies for insured crops. These may vary from crop to produce based on their particular requirements, including area, weather effect, etc.

Acreage Reporting Date

The acreage reporting date is designed to meet the fundamental crop insurance information. It might include the average areas, planted time, acreage coverage, producer’s share, and crop-free space.

Date to File a Notice of Crop Damage

The date to file a notice of crop damage is the closing or final date to report the yield or revenue loss issue to receive the insured amount from the agency. Not meeting this deadline will disqualify you from getting any committed compensation.

End of the Insurance Period

The insurance period follows a strict time frame during which the insurance agency is committed to paying for your losses based on your contract. The end of the insurance period means the ending of the insurance commitment.

Payment Due Date

The payment deadline or due date is the final date to submit the owed payment to the agent without any penalty. Exceeding the payment due date can cause you to suffer from financial obligation with penalty.

Cancellation Date

The cancellation date refers to the expiry date of withdrawing a submitted notice commitment or deal. It is the final date to get your deposited funds or amount back, after which the whole financial loss lies on your shoulders.

Production Reporting Date

The term production reporting date is associated with the deadline to submit the crop production record or actual production history yield. It usually comes after the policy cancellation date.

Debt Termination Date

The debt termination date is the deadline by which all financial liabilities and contracts terminate on behalf of the committed parties. In the meantime, to clear the outstanding dues and payment clearance.

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Ellerhorst Russell Insurance agency will work with you closely to understand your needs and make sure you’re properly protected.​

Final Interpretation

It has been observed from ancient times that crops are often subject to massive loss when they come into contact with any contagious disease, sudden environmental change, or natural disaster. Farm insurance policies are designed to help farmers insure crop production through risk management.

Farm insurance plans have served an enormous number of farmers with crop insurance plans. Once you adopt a certain crop insurance plan, you can get benefits from the premium deals. Crop insurance helps you to achieve your targeted leads despite suffering from sudden crop damage or imbalanced market prices.

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