Understanding the Fine Print of Your Crop Insurance Policy

Understanding your Multi-Peril Crop Insurance (MPCI) policy can make all the difference between a great season and a tough loss. But let’s be honest—insurance jargon can be overwhelming! We’ll break down the key terms and conditions you need to know about your MPCI policy, giving you the clarity and confidence to better manage your farm’s risks.

Coverage Levels
Understanding your coverage level is important—it tells you how much your average yield or expected revenue is protected. Farmers can choose coverage between 50% and 95%, depending on how much risk they’re comfortable with. For example, if you usually get 100 bushels per acre and go for 75% coverage, you’re insured for 75 bushels per acre. Higher coverage gives you more protection, but it also means higher premiums. So, take a good look at your past yields, marketing position, and financial situation to make the best choice.

Catastrophic Coverage
Catastrophic (CAT) coverage is the most basic and affordable form of MPCI, protecting against extreme loss. It covers 50% of your average yield at 55% of the market price. While inexpensive, it provides limited protection. Consider if this level of coverage sufficiently shields against the specific risks your operation faces before deciding if CAT suits your needs.

Unit Structures
Choosing the right unit structure can impact both your coverage and costs. The units can be grouped together into Enterprise Units, Basic Units, or Whole Farm Units to reduce premium cost, or they can be broken out individually with an Optional Unit structure. As the name implies, basic unit structures will work for any setup, while you must qualify for Option, Enterprise, and Whole Farm unit structures. Different unit structures will provide discounts based on acreage planted, but more than the price tag needs to be evaluated, as it will change how indemnity will be calculated. Review your farm’s layout and risk exposure with an experienced agent to find the best unit structure to balance cost and protection.

Loss Adjustment
In the event of a claim, the loss adjustment process assesses damage and determines your payout. Familiarize yourself with the required steps and documentation, such as production records and notices of loss. Efficient and accurate loss adjustment ensures swift compensation. Keeping meticulous records and promptly reporting losses can streamline this process.

Replant Provisions
If you need to replant due to tough conditions, your policy’s replant provisions can help you with compensation. It’s a good idea to understand the specific situations where these provisions kick in and what documentation you’ll need to file a claim. Being prepared can save you time and stress during what can already be a tricky situation.

By grasping these important details of your MPCI policy, you’ll be better positioned to make choices that protect your livelihood. To ensure you have the coverage you need, work with an experienced crop insurance agent who can customize your policy to fit your unique needs. Don’t wait for a crisis—take proactive steps today to secure your farm’s future!

Dates are Important
There are several important dates to keep in mind for crop insurance. You’ll want to pay attention to when projected and harvest prices are set, along with key action dates like sales closing, acreage reporting, billing, payment deadlines, loss notice deadlines, and production reporting. With all these dates to track, staying in close contact with your agent is a good idea.

Yield and Options
Just like the Ag Industry, crop insurance is always evolving. New yield and protection options appear every few years in the plans to match the fast-paced production trends. For instance, Trend Adjustment (TA) and Yield Exclusion (YE) are two options that can impact your approved yield. While they can improve your coverage, they might also raise your premium costs. It’s important to get a good grasp of how these options affect your coverage and your overall financial situation.

To learn more or get a second opinion on your risk management plan, contact Momentum Ag at momentum.ag or 866-878-7133.