Multi-Peril Coverage Types
Yield Based Coverage
Yield Protection policies insure producers in the same manner as Actual Production History (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 producer selects the percent of the projected price he or she wants to insure, between 55 and 100 percent.
Catastrophic Coverage (CAT) – Provides the minimum coverage amount on a MPCI policy. For a $655 fee per crop, producers can buy a minimum insurance coverage based on 50% of the producing operation’s average yield at 55% of the FCIC established prices.
Revenue Insurance Plans
Revenue Protection policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects and disease, as well as revenue losses caused by a change in the harvest price from the projected price.
Crop Revenue Coverage (CRC) – Provides farmers with a revenue guarantee based on their approved yield and current market price. Protects against losses resulting from a decrease in market price, a loss of production or combination of these. While CRC provides several advantages over traditional crop insurance policies, the real benefit comes when it is incorporated as an integral part of the producer’s marketing plan.
CRC can be an effective risk management tool by providing farmers with an established revenue guarantee per acre. Farmers may more proactively market through the growing season when prices are usually higher, knowing that CRC provides the revenue guarantee to cover bushels committed in forward pricing their crop or when using other market options.
Income Protection (IP) – The Income Protection (IP) program is designed to insure against reductions in gross income from below average yields and low harvest prices. Since the goal of the program is to protect revenue at the enterprise unit level, the insured unit is based on a county index of all acres of the crop in the county. This program is offered for select crops in a limited number of states.
Group Risk Income Protection (GRIP) – is designed as a risk management tool to insure against widespread loss of revenue from the insured crop in a county. GRIP policies use a county revenue index as the basis for determining a loss by using the estimated county yield for the insured crop, as determined by National Agricultural Statistics Service (NASS), multiplied by the harvest price.
Whole Farm Revenue Protection
Whole-Farm Revenue Protection (WFRP) provides a risk management safety net for all commodities on the farm under one insurance policy. This insurance plan is tailored for any farm with up to $8.5 million in insured revenue, including farms with specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets.
Dairy Revenue Protection: Dairy Revenue Protection (Dairy-RP) is designed to insure against unexpected declines in the quarterly revenue from milk sales relative to a guaranteed coverage level. The expected revenue is based on futures prices for milk and dairy commodities, and the amount of covered milk production elected by the dairy producer. The covered milk production is indexed to the state or region where the dairy producer is located.
Actual Revenue History: This policy protects growers against losses from low yields, low prices, low quality, or any combination of these events. This pilot program is structured as an endorsement to the Common Crop Insurance Policy Basic Provisions. Each crop insured under ARH has unique crop provisions.
Revenue Protection with or without the Harvest Price Election: 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 producer 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 producer is paid an indemnity based on the difference. Available for Rice in California.
Margin Protection with or without the Harvest Price Exclusion: MP is an area-based insurance plan that provides coverage against an unexpected decrease in operating margin (revenue less input costs), caused by reduced county yields, reduced commodity prices, increased prices of certain inputs, or any combination of these perils. Because MP is area-based (average for a county), an individual farm may have a decrease in its margin but not receive an indemnity or vice-versa. Available for Rice in California.