Types of Crop Insurance Policies
Multiple Peril Crop Insurance (MPCI):

Multiple Peril Crop Insurance Policies are designed to cover loss of Crop Yield due to most natural causes.  They do not cover risk due to manmade causes ,beyond your control, such a vandalism, improper spraying, inability to harvest, inability to market etc.

MPCI policies generally insure producers against natural risks such as:
  • Drought 
  • Insect Damage
  • Hurricanes
  • Hail
  • Excess Moisture
  • Floods
  • Wildlife 
  • Fire​
  • Cold/Frost
  • Wind
  • Plant Disease
  • Earthquakes
There may also be coverage available for Prevented Planting and Replanting with these policies. 
Actual Production History (APH)

APH plans are based on the Actual Production History of your operation.  Each year, Production and Planted Acreage data is submitted by the grower.  This actual farm-based data is used to calculate the average production and yield information on which the policy is based.  The Producer picks one of the available coverage levels which is then used to determine a Production Guarantee.  Losses are based on the difference between your Production Guarantee and your Actual Production to Count

Example: If a farm averaged 100 bu/Acre of insured crop and  that crop was insured at the 70% Coverage level than the Production Guarantee for that farm would be 70 bu/acre.   An insured loss may occur if the harvested/appraised production (Production to Count) drops below the Production Guarantee (In this case below 70 bu /acre).   A value for each Crop (the Price Election) is set by the Risk Management Agency (RMA) before sales closing each year.  The Price election dollars per bushel is multiplied by your Insured loss to calculate an Indemnity payment.

Example:
Yield Protection (YP)

Yield protection works just like APH protection except the  Price election is based on a formula using a commodity exchange price such as found on the Chicago board of Trade.​
Revenue Protection (RP)

Like APH and YP plans, Revenue Protection uses your farm’s historic production to determine an average yield for your farm.  Unlike these plans which are based on a Production Guarantee, Revenue Protection is based on a Revenue Guarantee.  Revenue Protection calculates a Revenue Guarantee based on your chosen coverage level, planted acres, historic production average and  the “higher of” harvest price or projected price.  A Projected Price is calculated by RMA before the Sales Closing Date.  A Harvest Price is calculated near harvest time using Commodity Exchange Price Provisions.  Losses are based on the difference between your Revenue Guarantee and your Revenue to Count at harvest time.  
 
Losses from Revenue Protection Policies can occur due to low yield, low harvest price or a combination of the two.

Example:
Area Based Policies:

Pasture Rangeland Forage (PRF)
Pasture Rangeland Forage is a single peril Area Policy.  It provides protection  ONLY for  Lack of Precipitation (the single Peril).  It references a predetermined grid area which your acreage falls within.  The grid area is determined as ¼ degree longitude by ¼ degree latitude.  This translates to about 17 miles North/South by 12 ½ miles East/West in central New England.  The Policy uses National Oceanic and Atmospheric Administration (NOAA) long term precipitation data to establish an historic average precipitation for each grid.  Insureds choose specific bi-monthly periods of insurance. Losses occur when NOAA’s Actual Precipitation Average within the grid falls below the insureds chosen coverage level for the Bi-monthly Insurance period.

Example: The insured choses 80% coverage on the May/June interval.  When the NOAA Precipitation data for the Insureds Grid Area over the May/ June interval falls below 80% of NOAA’s Historic Average for that Grid Area then an Insured loss occurs.  Payment is based on Acreage values set by Risk Management Agency (County Base Values). 
 
An advantage of this policy is that there is no producer record keeping involved and a producer may insure part or all of their insurable acreage.  A disadvantage is that policy is not based on your farm's actual precipitation.
Apiculture

The Apiculture Policy is also a Single Peril Area Policy. It provides coverage only for lack of precipitation. It works in the same way as PRF except that the Insured Crop is counted in Bee Colonies instead of Acres of hay or forageland.​
Livestock Gross Margin (LGM)

The Livestock Gross Margin Insurance Plan for Dairy Cattle (LGM-Dairy) provides protection when feed costs rise and/or milk prices drop. The Gross margin is the market value of milk minus feed costs. LGM-Dairy uses “Futures Prices” for corn, soybean meal, and milk to determine the expected gross margin and the actual gross margin.  The LGM Policy is similar to PRF in that it is based on information sources outside of your farm.  Prices for LGM-Dairy are based on simple averages of Chicago Mercantile Exchange Group futures contract daily settlement prices, and are not based on the prices you receive in your local market
Dairy Revenue Protection (DRP)

Dairy Revenue Protection is an area-based Revenue Policy that insures against unexpected declines in national quarterly averaged milk futures. Data from the Chicago Mercantile Exchange is used to calculate average milk futures values for three-month quarters.  “Actual” or final market values averaged for the quarters are calculated using actual national marketing data from the “Agricultural Marketing Service”.  When the “Actual” or final market data for the quarter reflects a drop from the expected Futures value of the quarter an indemnity can be payed depending on the insured coverage level.
 
Milk values for this policy can be customized to reflect milk class and milk component percents on the producer’s operation, but this policy does NOT consider the producer’s actual milk pricing at any time.
Whole Farm Revenue Product (WFRP)

The WFRP Pilot Policy insures against the loss of Farm Revenue that you earn or expect to earn from commodities you produce during the insurance period and commodities you buy for resale during the insurance period (there is a limit to the allowed percentage of purchase for resale). Timber,forest and forest products, animals for sport, show or pets are not covered.  The policy is used to cover multiple commodities and may be purchased on top of other Buy-up level Federal crop insurance Policies. The 80 % and 85 % levels are available with 3 or more eligible commodities.  Operations with one commodity receive a basic subsidy.  Operations with 2 or more commodities qualify for a Whole Farm Subsidy.  This policy has documentation requirements to prove values for commodities sold.  This Revenue Product may not fit all business entities.  Please talk to an agent to see if this policy would work for your operation.
Supplemental Coverage Option (SCO)

The Supplemental Coverage Option endorsement(SCO) provides additional coverage on top of existing YP, RP, RPHPE, APH and Yield Based Dollar Amount of Insurance plans. It is an Area Option. The Endorsement provides protection against widespread loss of yield or Revenue due to natural causes in the production area.  This production area is defined by the Risk Management Agency and may be made up of a single county or multiple counties.  SCO will provide coverage to fill the gap from your existing coverage level to the 86% coverage level.   Coverage provided is by Area Loss.  This means that coverage is based on Predicted Production Area Average Yields and Actual Production Area Average Yields.  This is an Area based product, the Yields which you experience on your operation are not used to calculate SCO indemnities.  In our area SCO is available in Selected Counties for Apples, Barley, Blueberries, Corn, Forage Production, Grapes, Oats, Peaches, Soybeans and Wheat.
Private Sector Policies
Crop Hail

Crop Hail policies are a private product unaffiliated with the Federal crop insurance program.  Crop hail policies are primarily  single peril policies that protect your crop against hail damage.  For some crops, the policy may protect against fire or wind damage associated with a hail storm.  Hail policies have specific rules by crop for when coverage will begin.  They can be purchased during the crop year and can cover all or part of your acreage. The insured can chose a dollar value of insurance per acre up to a maximum set by the Insurance Provider.  In the case of a loss, an adjuster will determine a percent of crop loss and claims are paid accordingly.  Crop hail has the advantage of being more flexible for sign up dates than the Federal Crop Insurance Program. Also, Insurance values may be adjusted during the year.  For example, coverage may be able to be raised during the year for a bumper crop that could produce unexpectedly high yields.  A disadvantage is that it protects only against a single peril, hail.
If you would like to discuss your risk management needs, then please consider choosing the Arthur Carroll Insurance Agency to serve you. If you would like us to discuss this program in more detail please call one of our convenient offices​:
Thomaston, CT 1-877-283-6540 or Farmington, ME 855-305-2010
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