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2010 General Policies and Provisions from the Risk Management Agency (RMA)
Crop Revenue Coverage (CRC)
Crop Revenue Coverage (CRC) provides revenue protection based on price and yield expectations by paying for losses below the guarantee at the higher of an early-season price or the harvest price.
Revenue Assurance (RA)
Revenue Assurance (RA) provides dollar-denominated coverage by the producer selecting a dollar amount of target revenue from a range defined by 65-75 percent of expected revenue. To determine coverage, see the policy provisions.
95% of all policies written through Crop Insurance Services is revenue based coverage, either CRC or RA!
Being able to take advantage of marketing opportunities may be the biggest reason to carry revenue insurance coverage.
Click here for CRC/RA Highlights PDF.
Actual Production History (APH)
Actual Production History (APH) Formerly known as Multiple Peril Crop Insurance, or MPCI, policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease. The farmer selects the amount of average yield he or she wishes to insure; from 50-85 percent (in some areas only to 75 percent). The farmer also selects the percent of the predicted price he or she wants to insure; between 55 and 100 percent of the crop price established annually by RMA. If the harvest is less than the yield insured, the farmer is paid an indemnity based on the difference. Indemnities are calculated by multiplying this difference by the insured percentage of the established price selected when crop insurance was purchased.
Less than 5% of all policies written through Crop Insurance Services is APH/MPCI coverage.
Catastrophic Coverage (CAT)
Catastrophic Coverage (CAT), The lowest level of APH available, pays 55 percent of the established price of the commodity on crop losses in excess of 50 percent. The premium on CAT coverage is paid by the Federal Government; however, producers must pay a $300 administrative fee (as of the 2008 Farm Bill) for each crop insured in each county. Limited-resource farmers may have this fee waived. CAT coverage is not available on all types of policies.
Less than ½% of all policies written through Crop Insurance Services is CAT.
Crop Hail (Not an RMA product)
Even though government reinsured policies (CRC and RA) have become the "norm", depending on the crops grown, your yield history, level of coverage, unit structure, or even field locations...you may want some additional protection. A crop hail policy protects primarily against just damage due to hail, but some private policies or endorsements offer additional protection as well. Below are the general concepts of this category, but specifics of a policy vary by company.
- Companion Production Plan Hail: becoming a very popular policy, a yield-based hail policy protecting up to 130% of your APH. Commonly carried in addition to CRC/RA and/or with Enterprise Units.
- "Straight" Hail: deductibles from 0% to 30%, pays per acre
- Companion Hail: meant to piggy-back your CRC/RA/APH policy, protects the "top-end" (deductible portion) of CRC/RA/APH, can pay by the acre.
- Sugar Beets Tonnage coverage
- Coverage for peas, beans, sweet corn when rejected for canning purposed. Don't buy hail coverage on these crops without this protection!
- Windstorm, Green Snap, and Lodging coverage. Definitions vary, but generally provides coverage when unable to recover ear of corn by normal harvest machinery.
- Hybird Seed Corn Endorsement
- Prevented Planting and Replanting Endorsement, commonly used with area plans of coverage like GRIP.
- Sugar Beet Wind, Freeze, and Soil Crusting
- Fire and lightning, transit, vandalism, stored grain, and carry-over coverage is commonly included in hail policies.
- Premium modification plans or volume discounts are available for higher liability policies. Can usually "combine" together policies of others you farm with or are related to in order to obtain this discount.
Dollar Plan
Dollar Plan (generally for Forage Seeding or Hybrid Seed Corn) provides protection against declining value due to damage that causes a yield shortfall. Amount of insurance is based on the cost of growing a crop in a specific area. A loss occurs when the annual crop value is less than the amount of insurance. The maximum dollar amount of insurance is stated on the actuarial document. The insured may select a percent of the maximum dollar amount equal to CAT (catastrophic level of coverage), or additional coverage levels.
Adjusted Gross Revenue-Lite (AGR-Lite)
Adjusted Gross Revenue-Lite (AGR-Lite) insures revenue of the entire farm rather than an individual crop by guaranteeing a percentage of average gross farm revenue, including a small amount of livestock revenue. The plan uses information from a producer's Schedule F tax forms, and current year expected farm revenue, to calculate policy revenue guarantee.
Group Risk Income Protection (GRIP)
Group Risk Income Protection (GRIP) makes indemnity payments only when the average county revenue for the insured crop falls below the revenue chosen by the farmer.
Group Risk Plan (GRP)
Group Risk Plan (GRP) policies use a county index as the basis for determining a loss. When the county yield for the insured crop, as determined by National Agricultural Statistics Service (NASS), falls below the trigger level chosen by the farmer, an indemnity is paid. Payments are not based on the individual farmer's loss records. Yield levels are available for up to 90 percent of the expected county yield. GRP protection involves less paperwork and costs less than the farm-level coverage described above. However, individual crop losses may not be covered if the county yield does not suffer a similar level of loss. This insurance is most often selected by farmers whose crop losses typically follow the county pattern.
Income Protection (IP)
Income Protection (IP) protects producers against reductions in gross income when either a crop's price or yield declines from early-season expectations. To determine coverage, see the policy provisions.
Rainfall Index (RI)
Rainfall Index (RI) is based on weather data collected and maintained by NOAA’s Climate Prediction Center. The index reflects how much precipitation is received relative to the long-term average for a specified area and timeframe. The program divides the country into six regions due to different weather patterns, with pilots available in select counties.
Vegetation Index (VI)
Vegetation Index (VI) is based on the U.S. Geological Survey's Earth Resources Observation and Science (EROS) normalized difference vegetation index (NDVI) data derived from satellites observing long-term changes in greenness of vegetation of the earth since 1989. The program divides the country into six regions due to different weather patterns, with pilots available in select counties.
You may also find useful information about crop insurance by visiting our links page.
Glossary of Crop Insurance Terminology This link takes you to a glossary of terms related to Crop Insurance. We'll help you learn the lingo so you can talk the talk.
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