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Crop insurance deadline looms

For most farmers in the U.S., March 15 is a deadline day that rivals tax due dates like March 1 and April 15 for wage earners.

It's the day when, at midnight local time, your crop insurance has to be signed and dated by your agent or your 2006 crops won't be covered.

You've probably been anticipating this date for months. If not, don't panic. You may not have to do a thing if you insured crops last year.

"It's a continuous policy, so unless you cancel or make changes, it just rolls forward as is," says Dan Delano, with the Great Plains Division of Rain and Hail, LLC, one of the nation's largest crop insurance businesses.

"It never hurts to check with your agent to see if there's anything new that's stirring around that you're not aware of," Delano adds.

At Kent Kirstein's office at Clarion, Iowa, that's exactly what farmers have been doing.

"My door is basically open all the time. The 15th is a mad rush, and we stay open as long as it takes," says Kirstein, who is vice president of AGRO Insurance and an agent for Sumners Insurance. Usually his customers have decided on the type of policy and level of insurance they're willing to buy by about 7 or 8 p.m., he says.

Like everything in farming, crop insurance has gotten more complicated. Newer types of insurance, either Crop Revenue Coverage (CRC) or Revenue Assurance with the Harvest Price Option allow you to insure a level of revenue from a crop, and the policies will pay if either yields or prices fall enough to trigger an indemnity.

But producers don't know until the end of February the guaranteed price election that USDA's Risk Management Agency will put on corn or soybeans, for example. That's because it's based on the February average of new crop futures prices. Then it's a few days more, Kirstein says, before RMA releases its volatility factors that determine the premiums for revenue coverage.

With CRC or the Harvest Price Option version of Revenue Assurance, RMA also assigns a value to the crop at harvest, based on October prices for soybeans. For corn, RMA uses November prices for Revenue Assurance with the HPO and October prices for CRC.

Kirstein says that some of his customers will try to outguess next fall's harvest prices before deciding whether or not to pay a higher premium for a harvest price option. They may just buy Revenue Assurance based on February's prices at a higher level of coverage.

Delano says there aren't a lot of big changes in how you can insure your crops this year. The USDA has expanded the number of counties in Nebraska and Kansas where you can buy either Group Risk Plan (GRP) or Group Risk Income Protection. Unlike other crop insurance products, these are based on county average yields in the case of GRP or county average yields and a price component in the case of GRIP.

Group insurance coverage is cheaper. "You might see up to a $4 an acre difference," says Delano. But it doesn't provide the same protection against risks as revenue products or the traditional MPCI (Multiple Peril Crop Insurance) products. So it probably works best for less leveraged farms, Delano says.

There is a new form of discounted coverage offered by several companies this year.

"You won't know the discount, if there is a discount, until after all the accounting is done," Delano says. That's likely to be sometime in 2007 for 2006 crops and might be as late as early 2008, he says.

Delano says that companies offering possible discounts have been advertising, as required by RMA.

Crop1 Insurance, now owned by Farm Bureau Mutual Insurance Company, is the only company that has offered coverage that was discounted up front. It has been advertising its historical savings but can't guarantee them any longer under new RMA rules that require discounts to be paid after RMA has reviewed a company's year-end financial status.

Kirstein says he hasn't had a lot of inquiries about discounted coverage.

"I'd say the number one thing a guy needs to know is how many dollars a guy wants to cover and how much he wants to spend to get it," Kirstein says.

Most companies and agents have computer programs that will allow you to compare the coverage you'll get from different types of insurance, Delano says.

If you don't have an insurance agent, or want to change agents or companies, you can find agents at the Risk Management Agency website.

Many insurance company websites (also listed at RMA's site) will help you locate agents, Delano says.

And if you want to compare premium prices, a calculator for many farming areas is available from this University of Illinois website.

For most farmers in the U.S., March 15 is a deadline day that rivals tax due dates like March 1 and April 15 for wage earners.

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