Enhanced Coverage Option (ECO)
The Enhanced Coverage Option (ECO) is a new crop insurance option that provides additional area-based coverage for a portion of your underlying crop insurance policy deductible. It must be purchased as an endorsement to the Yield Protection, Revenue Protection, Revenue Protection with the Harvest Price Exclusion, Actual Production History or Yield Based Dollar Amount of Insurance policy. ECO offers producers a choice of 90 or 95 percent trigger levels. Trigger means the percentage of expected yield or revenue at which a loss becomes payable.
ECO follows the coverage of your underlying policy. If you choose Yield Protection or a yield-based policy, then ECO covers yield loss. If you choose a Revenue Protection policy, then ECO covers revenue losses.
The amount of ECO coverage depends on the liability of your underlying policy. However, ECO differs from the underlying policy in how a loss payment is triggered. The underlying policy pays a loss on an individual basis and an indemnity is triggered when you have an individual loss in yield or revenue. ECO pays a loss on an area basis, and an indemnity is triggered when there is a decrease in the county level yield or revenue. ECO has two trigger levels: 90 and 95 percent. ECO provides a band of coverage between the elected trigger level and 86 percent. If the county yield or revenue is reduced beyond the trigger level, you will receive an ECO indemnity. If the reduction in yield or revenue exceeds the 86 percent threshold, you will receive an indemnity equal to the full insured liability.
ECO provides coverage on a portion of your deductible where losses are more frequent, so your premium will reflect that higher risk. The premium cost is shared between you and the government, where the government pays 51 percent or 44 percent of the premium for yield and revenue policies, respectively.
The exact premium cost will depend on the crop, county, coverage level selected, and type of coverage selected such as Yield Protection versus Revenue Protection. Additional variables, including the projected price and even the volatility of the applicable commodity market can also affect the amount of your premium. You should consult your crop insurance agent for detailed price quotes.
ECO cannot be elected if you have a Margin Protection or an Area Risk Protection Insurance policy. The underlying policy for ECO cannot have the Hurricane Insurance Protection – Wind Index Endorsement. ECO coverage cannot attach to any acres that are insured by a Stacked Income Protection Plan (STAX). Acres not insured under STAX may be insured under ECO. You can select SCO on all acres covered by ECO, but you are not required to elect SCO to purchase ECO.
Supplemental Coverage Option (SCO)
The Supplemental Coverage Option (SCO) is a crop insurance option that provides additional coverage for a portion of your underlying crop insurance policy deductible. You must buy it as an endorsement to the Yield Protection, Revenue Protection, or Revenue Protection with the Harvest Price Exclusion policy or to the Actual Production History policy for crops that don’t have revenue protection available. The Federal Government pays 65 percent of the premium cost for SCO.
You choose SCO as an endorsement to the underlying policy. You must make this choice by the sales closing date for your underlying policy, and with the same insurance company. Any crop on a farm that you elected to participate in the Agriculture Risk Coverage (ARC) program (a program started in the 2014 Farm Bill, administered by the Farm Service Agency) is not eligible for SCO coverage.
The exact premium cost depends on the crop, county, coverage level you choose for the underlying policy, SCO coverage level percent you choose, and the type of coverage you choose, such as Yield Protection or Revenue Protection. The Federal Government pays 65 percent of the premium. You should talk to your crop insurance agent for more information.
If you elect SCO and ARC for the same crop on a farm, your SCO coverage for that crop on that farm will be cancelled. You must report the crop on that farm as covered by ARC on your acreage report or you will forfeit 20 percent of your SCO premium on that crop and farm to cover administrative expenses. However, your underlying policy will still be in effect.
Margin Protection (MP)
The Margin Protection (MP) plan of insurance is a privately developed product that was submitted to the FCIC Board under Section 508(h) of the Federal Crop Insurance Act. Margin Protection is offered as an area based plan that can be purchased as a stand-alone policy or purchased in conjunction with a Yield Protection or Revenue Protection policy. The plan provides producers with coverage against an unexpected decrease in their operating margin.
Starting in the 2016 crop year, the new Margin Protection (MP) plan will be available in addition to underlying crop insurance policies in select counties starting for corn, rice, soybeans, and spring wheat.
The plan provides coverage that is based on an expected margin, which is the expected area revenue minus the expected area operating costs, for each applicable crop, type and practice. Margin protection is area-based coverage and may not necessarily reflect a producer’s individual experience. The margin protection plan can be purchased by itself, or in conjunction with Yield Protection or Revenue Protection policy.
Margin protection will be available for rice in select Arkansas, California, Louisiana, Mississippi, Missouri and Texas counties. Coverage is available for spring wheat in select Minnesota, Montana, North Dakota and South Dakota counties. Corn and soybeans in all Iowa counties will be eligible for margin protection insurance.
A producer may choose coverage from 70 percent to 95 percent of their expected margin. A higher level of coverage will have a higher premium rate. The catastrophic (CAT) level of coverage is not available under this policy.
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Yield Protection (YP)
YP provides protection against a loss in yield due to unavoidable, naturally occurring events. For most crops, that includes adverse weather, fire, insects, plant disease, wildlife, earthquake, volcanic eruption, and failure of the irrigation water supply due to a naturally occurring event. Like the APH (Actual Production History) plan of insurance, YP guarantees a production yield based on the individual producer’s APH. Unlike the APH plan of insurance, a price for YP is established according to the crop’s applicable commodity board of trade/exchange as defined in the Commodity Exchange Price Provisions (CEPP). The projected price is used to determine the yield protection guarantee, premium, any replant payment or prevented planting payment, and to value the production to count. The coverage and exclusions of YP are similar to those for the APH plan of insurance. An indemnity is due when the value of the production to count is less than the yield protection guarantee. The main crops covered under this plan include barley (includes malting type), canola/rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat.
Revenue Protection (RP)
Revenue protection provides protection against a loss of revenue caused by price increase or decrease, low yields or a combination of both (for corn silage and rapeseed, protection is only provided for production losses). This coverage guarantees an amount based on the individual producer’s APH and the greater of the projected price or harvest price. Both the projected price and harvest price are established according to the crop’s applicable commodity board of trade/exchange as defined in the Commodity Exchange Price Provisions (CEPP). While the revenue protection guarantee may increase, the premium will not. The projected price is used to calculate the premium and replant payment or prevented planting payment. An indemnity is due when the calculated revenue (production to count x harvest price) is less than the revenue protection guarantee for the crop acreage. Crops covered under this plan include barley (includes malting type), canola/rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat.
Revenue Protection – Harvest Price Exclusion (RP-HPE)
RP-HPE is similar to RP, however RP-HPE coverage provides protection against loss of revenue caused by price decrease, low yields or a combination of both. Unlike RP, the revenue protection guarantee for RP-HPE is based on the projected price only and it does not increase based on a harvest price. Crops covered under this plan include barley (includes malting type), canola/rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat.
Area Yield Protection (AYP)
AYP coverage is based on the experience of the county rather than individual farms. Maintaining the insured’s actual production history is now mandatory and may be used by RMA as a data source to establish and maintain the area programs. AYP indemnities the insured in the event the final county yield falls below the insured’s trigger yield. The Federal Crop Insurance Corporation (FCIC) will issue the final county yield in the calendar year following the crop year insured. Since this plan is based on county yields and not individual yields, the insured may have a low yield on their farm and not receive payment under AYP.
Area Risk Protection Insurance (ARPI)
Like the other area plans, ARPI is based on the experience of the county rather than individual farms. Coverage is provided against loss of revenue due to a county level production loss, a price decline, or a combination of both. Upside harvest price protection is included which increases the policy protection at the end of the insurance period if the harvest price is greater than the projected price and if there is a production loss. ARPI will pay a loss when the final county revenue is less than the trigger revenue which is calculated using the higher of the projected price or harvest price.
Area Risk Protection Insurance – Harvest Revenue Exclusion (ARPI-HRE)
Like AYP, ARPI-HPE is based on the experience of the county rather than individual farms. Maintaining the insured’s actual production history is now mandatory and may be used by RMA as a data source to establish and maintain the area programs. An ARPI-HPE policy provides protection against loss of revenue due to a county level production loss, price decline, or a combination of both. This plan only uses the projected price and does not provide upside harvest price protection. An indemnity is due under ARP-HPE when the final county revenues published by FCIC are less than the trigger revenue. Since this plan is based on county revenue and not individual revenue, the insured may have a loss in revenue on their farm and not receive payment under ARPI-HPE.
Actual Production History (APH)
APH is the oldest insurance product listed on this comparison. The APH plan of insurance provides protection against a loss in yield due to nearly all natural disasters. For most crops, that includes drought, excess moisture, cold and frost, wind, flood and unavoidable damage from insects and disease. Like YP, the APH plan of insurance guarantees a yield based on the individual producer’s actual production history. Unlike YP, the available price elections are established by the Risk Management Agency. An indemnity is due when the value of the production to count is less than the liability. Of the small grain crops, only oats, rye, flax, and buckwheat remain covered under the APH plan of insurance for the current crop year.
Nursery Crop Insurance
Safeguards your nursery operation and your financial well-being. By planning for unlikely events such as adverse weather, fire, or even wildfire destruction of your inventory, you can rest assured that your bottom line will be protected.
Crop Hail Insurance
Flexible deductibles allow you to tailor the cost of your Crop Hail policy to meet your budget. Your Crop Hail policy may provide optional coverage for perils other than hail. In many areas, basic hail coverage may be enhanced by – fire and lighting, transit, reimbursement of replanting costs, wind, vandalism, and stored grain coverage.
