Multi-peril crop insurance is government subsidized risk protection that is provided to farmers and ranchers by the Federal Crop Insurance Corporation. Multi-peril is purchased by producers to protect against loss of crops due to natural causes, or loss of revenue due to price changes in the commodities markets. Two of the most common types of multi-peril are Revenue Protection and Yield Protection. ASA agents analyze and present several options in our ‘Crop Coverage Portfolio’. We know that every operation is unique and there is not a “one size fits all” coverage option.
Revenue Protection
A Revenue Protection (RP) policy insures producers against loss of revenue caused by market volatility, decrease in production, or a combination of both. The level of insurance can be selected between 50 and 85% of your APH in increments of 5%. This policy is normally combined with a hail policy for a full risk management tool. RP utilizes a projected price to establish coverage or a revenue guarantee. This policy will provide protection against harvest price fluctuations by utilizing the higher of the base or fall harvest price to determine revenue guarantees in the event of a production loss.
The RP policy is an excellent tool for farmers to utilize with their marketing strategies. Operations are able to forward contract a portion of their production before harvest with an assurance they have revenue protection up to their liability listed on their policy. If 100% of the crop is lost, the farmer would have sufficient funds to settle the forward contract. It is extremely important to understand your dollars of coverage when forward contracting. We emphasize “dollars” not “bushels” of coverage.
Yield Protection
Yield Protection (YP) is protection of crops through a production guarantee. YP covers a producer when their actual production is below their production guarantee. YP does not cover fluctuations in market prices. The level of insurance can be selected between 50% and 85% of your APH in increments of 5%. The spring (base) price is utilized to establish the revenue guarantee for the policy and crop. The fall (harvest) price is not utilized in this policy.
To have a claim with this policy, production must be less than your bushel/acre guarantee due to a covered peril.
Claims
When insuring against mother nature and market fluctuations, there is always a risk of damage or loss. When losses occur, you want to make sure everything is completed smoothly. ASA agents work with the adjuster and the producer to accurately report losses and production to ensure that claims are worked in a timely manner.