There are a number of people who may need Crop Insurance today. Nearly any agricultural producer should have active crop insurance to cover any kind of crops that they rely on for income. Farmers, ranchers, and a number of others who work in the world of agriculture will qualify for a crop coverage policy. The main purpose of such a policy is protection against things that simply can’t be planned for.
Most crop coverage will include protection against natural disasters. This usually includes hail storms, wind storms, periods of drought, and flooding. In some cases, a crop policy will also provide coverage for declining revenue due to a plummet in the price of agricultural commodities. These two basic types of crop coverage are known as crop yield coverage and crop revenue coverage.
Crop Yield Coverage
Crop yield coverage is usually issued by private insurance companies. Not every area of the country will actually provide hail coverage because it only happens in a fairly narrow portion of the country. However, things like excess rain, drought, and flooding could potentially happen virtually anywhere in the country, so these perils are usually included in any crop yield coverage. The exact premium is normally calculated according to how high the risk of each peril may be. For example, in the hottest areas of the country, the drought coverage component of the crop yield policy may be more costly since drought is a fairly frequent occurrence there.
Crop Revenue Coverage
Crop revenue coverage is meant to compensate agricultural producers for negative deviations in their income. The crop yield is multiplied by the crop prices to get the basic crop revenue number. When commodities fall sharply, the policy holder won’t suffer the loss of their farm thanks to the crop revenue coverage. These prices can be generated even prior to the planting of the crops because the insurance company can use the futures market to generate the numbers needed to create a policy. This coverage is done on a season by season basis. Declines within a growing season are eligible for insurance compensation, but declines from one season to the next growing season are not.
If you need help creating the right Crop Insurance policy for your needs, consider contacting the team at Heritage Insurance Services. You can find their website at Domain online!
