Weather Insurance: Financial Relief from Mother Nature
Weather is the unwelcome wild card in agricultural production that farmers have to contend with every year. Whether it is drought, too much rain, a killing freeze or excessive heat, weather is the number one factor that affects yields - and it is completely out of a farmer’s control. The federal government offers farmers some peace of mind and financial security through federal crop insurance. But federal crop insurance can be difficult to work with and the amount of coverage available is often far less than what is really needed to secure the seed, fertilizer, equipment maintenance, leases and manpower needed for the next season. There is now a new solution for farmers that provides higher levels of coverage and pays out automatically when bad weather hurts crop yield.
WeatherBill, the pioneer in weather insurance and risk management, has developed Total Weather Insurance to protect a grower’s profit from weather-related losses that are not covered or under-covered by federal crop insurance. Total Weather Insurance is designed to complement a farmer’s federal crop insurance and allow the farmer to lock in profits by providing a higher level of coverage than is available through Multi Peril Crop Insurance (MPCI). This unique coverage raises the yield floor at which a grower can expect to receive payments, and supplements the coverage that is available from the government. This extra coverage protects farmers against financial losses they may experience when particular bad weather events lead to yield losses. Federal Crop Insurance kicks in when growers experience very large yield losses, but even small yield losses that are uncovered by the federal program can mean the difference between losing and making money during a given year. Total Weather Insurance plans are automatically customized to reflect farmers’ individual circumstances and specific weather-related risks, including:
• Drought throughout the growing season;
• Excessive rainfall during key planting dates;
• Cold weather throughout the season;
• Heat stress during pollination;
• Killing freeze before harvest; and
• Frequent rains that can delay harvest.
Farmers can now get their own free online Weather Risk Report at www.weatherbill.com. The report quickly identifies a grower’s expected profit-per-acre for the season and the key perils that they face based on their specific crop, location, yields, input costs, and federal crop insurance levels. The tool also illustrates for the grower the amount of profit exposure they face when relying on federal crop insurance alone, and how Total Weather Insurance can minimize that exposure.
Unlike federal crop insurance, which requires reporting and verification of crop production, acreage reporting and inspections prior to any loss payments, Total Weather Insurance requires none of those steps. WeatherBill automatically sends payment to the farmer when the specified weather conditions occur.
Total Weather Insurance also works with farmer’s delayed cash-flow: premiums aren’t due until the end of the 2011 crop year. And about 25% to 35% of the time, depending on the level of coverage, growers will owe less than full premium or no premium whatsoever.