Wind damage: Is it covered?
Straight line winds of over 100 miles per hour ripped through central Iowa during the early morning hours of July 11th. Power poles, farm buildings and empty grain bins were no match for the winds as a path up to 15 miles wide and over 100 miles long was impacted. There was no loss of life, but the yield loss to the maturing corn crop may be the large.
Iowa’s corn crop was at a critical stage, just entering tasseling phase of pollination. When corn is blown down at this stage it tends to lodge. Most likely a significant yield loss will result from poor pollination and seed fill, but the actual yield loss will be difficult to determine until the crop is harvested this fall.
Wind is a peril covered by multiple-peril crop insurance policies. Primary farm-level products for 2011 are Revenue Protection (RP) and Yield Protection (YP). If a wind loss occurs, an indemnity payment is not triggered until the loss exceeds the deductible under that policy. For YP policies, the potential loss is measured in bushels, only. For RP policies losses are measured in terms of gross revenue, so the price of corn in October will also impact the indemnity payments.
Some farmers might have added private wind or green snap coverage to their existing multiple-peril coverage. These farmers will likely benefit the most from potential crop insurance indemnity payments, as coverage levels of 90 percent or more of potential yield are common. Since wind damage and multiple-peril policies are two separate coverages, insured farmers could receive payments under both. However, the actual loss in the affected fields will not likely be known until harvest.
Enterprise Unit Coverage
Many Iowa farmers elected to use enterprise units for multiple-peril coverage in 2011. The decision to choose enterprise units was popular, because it cut farmer paid premiums by as much as 50% compared to basic or optional units. Prior to this premium discount for enterprise units, many farmers insured each of their farms separately. This increased the chances of collecting an indemnity payment from an isolated hail or wind storm.
However, electing enterprise units for corn potentially exposes individual farms to a peril such as a wind. That’s because all fields planted to that crop are combined at the county level to determine losses. While one or two fields may incur severe losses due to wind, the rest of the fields in the unit may not suffer loss. Production on all farms will be required in determining if an indemnity payment is made. A farmer should not expect to collect this payment until after all the corn is harvested, production evidence is submitted and for a revenue policy, futures prices are known for the month of October.