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​Crop Insurance Basics

 
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What is Crop Insurance?

According to the USDA, the definition of Crop Insurance is:

Management of yield or price risk through the purchase of crop insurance transfers risk from you to others for a price which is stated as an insurance premium. Crop insurance is an example of a risk management tool that not only protects against losses but also offers the opportunity for more consistent gains. When used with a sound marketing program, crop insurance can stabilize revenues and potentially increase average annual profits.

Crop Insurance is an essential element for lowering production risk as part of your agricultural risk management strategy. When it comes to selecting crop insurance, there are a vast number of programs offering various protection and coverage levels, are not applicable to all product, and vary from state-to-state.


Types of Federal Crop Insurance

Revenue Protection (RP) 

  • Provides protection against a loss of revenue caused by a price increase/decrease, low yields or a combination of both 
  • Protects revenue amount based on your Actual Production History (APH), and the greater of the projected price or the harvest price. 
  • Both projected price and harvest price are determined in accordance with the Commodity Exchange Price Provisions (CEPP).

Revenue Protection with Harvest Price Exclusion (RP-HPE) 

  • Provides protection against a loss of revenue caused by a price decrease, low yields or a 
    combination of both.
  • Protects revenue amount based on your Actual Production History (APH) and the projected price. 
  • Projected price is determined in accordance with the Commodity Exchange Price Provisions 
    (CEPP).

Yield Protection (YP) 

  • Provides protection against a loss in yield due to unavoidable, naturally occurring events. 
  • Guarantees a production yield based on your Actual Production History (APH).
  • Projected price is determined in accordance with the Commodity Exchange Price Provisions (CEPP).

Area Revenue Protection (ARP) 

  • Provides protection against loss of revenue due to a county level production loss, price decline, or combination of both.
  • Expected county yields are multiplied by the greater of the Base Price (spring) or the Harvest Price (fall). 
  • It is intended to be used by those who wish to insure the combination of yield and price.
  • This plan includes upside harvest price protection.

Area Revenue Protection with Harvest Price Exclusion (ARP-HPE) 

  • Provides protection against loss of revenue due to a county level production loss, price decline, or combination of both. 
  • You only receive a loss payment When the county revenue falls below your selected trigger revenue. 
  • It is intended to be used by those who wish to insure the combination of yield and price. 
  • This plan does not include upside harvest price protection.

Area Yield Protection (AYP) 

  • Designed to insure against widespread loss of yield due to a county level production loss. 
  • AYP provides a dollar amount of protection for which a loss payment occurs when the county yield falls below the selected trigger yield.
  • Insurance is based on the expected county yield, rather than your individual yields, 
  • You only receive a loss payment when they average county yield is LESS than your trigger yield. It does not provide protection against a loss of revenue. 

Country Insurance--partners in ag management with AgriVisor

country insuranceWhen you work with an AgriVisor Ag Specialist, you work with a professional who will provide a custom review of your business, and discuss crop insurance including both public and private options. AgriVisor partners with Country Insurance to provide you with the best solution for your specific needs. 

In addition to crop insurance, consider additional farm insurance programs to protect against natural and man-made disasters ranging from hail and tornados to vehicle incidents and illness or death. Learn more about other farm insurance programs.

As a farm owner you want to concentrate on the business of production, while not losing sight of the other important aspects of your business—such as Risk Management. 

Learn more about crop insurance by visiting the Country Insurance website, or contact an AgriVisor specialist.