11 key crop insurance questions & answers
With the hot and dry conditions this summer, maintaining crop insurance coverage and understanding the claims process will be crucial for many farmers. Drought damage is an insurable loss under multiple peril crop insurance policies. Since the losses will be widespread, expect crop insurance representatives to be very busy in meeting the needs of thousands insured farms. Consider these Frequently Asked Questions (FAQs) as a means to become better informed as to how crop insurance policies covering the 2012 losses work.
Question #1: How many of Iowa’s corn and soybean acres are covered by crop insurance?
Iowa farmers planted 23.5 million acres to corn and soybeans in 2012. Approximately 90% of all these acres are covered by some form of multiple peril crop insurance. About 90% of the insured acres feature Revenue Protection (RP) policies which guarantee 65% to 85% of the farm’s average yield times the higher of the projected price (average futures price in the month of February) or the harvest price (average futures price in the month of October) for the December ’12 corn futures and November ’12 soybeans futures contracts. The projected prices (February futures) in 2012 were $5.68/bu for corn and $12.55/bu for soybeans.
About 7% of the state’s acres are covered by Yield Protection (YP) policies, which also insure yield losses, but the priced used to determine the indemnity payment for these policies is limited to the projected price, that is the February futures prices.
The balance of the state’s insured acres are county-based Group Risk Protection (GRP) and Group Risk Income Protection (GRIP) policies. Loss claims for these policies will not be made until late in the winter of 2012-13 when the final county yields are determined.
Question #2: What should an insured farmer do once they realize they have a crop loss?
a. Notify their agent within 72 hours of the discovery of damage. A notice of loss can be made by phone, in writing or in person. Although drought loss is not immediate, farmers should contact their agent as soon as they feel a loss is present.
b. Continue to care for the crop using “good farming practices: and protect it from further damage, if possible.
c. Get permission from the crop insurance company also referred to as your Approved Insurance Provider (AIP) before destroying or putting any of the crop to an alternative use.