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Adding hail coverage?
The volatile spring weather pattern is unfolding into what many forecasters say could be similar conditions this summer. So, do you have enough insurance to survive a potential weather wipeout?
Hail, in particular, has hit parts of corn and soybean country already this summer. So, should you add a hail policy to your current crop insurance measures? There are pros and cons, but big reasons to at least consider doing so, says Iowa State University Extension Farm Management specialist Steve Johnson.
Adding Hail Insurance Coverage
Watch the latest For the Farm Manager featuring ISU Extension Farm Management Specialist Steve Johnson.
Talk: Hail coverage: Who's buying? Who's not?
"Net returns to a harvested crop are at extremely high levels in 2011. With profit margins 2 to 3 times above normal, it could be devastating to a farm’s long term future to lose a large portion of this year’s corn crop," Johnson says. "In all cases, 2011 may very well be the year to add crop hail insurance to your risk management plan. Consider consulting a knowledgeable insurance agent to determine the best option and risk management value for you. Remember most crop-hail policies require a 24-hour waiting period before coverage begins. "
One thing to think about is a "production hail coverage" policy. "A 'production hail coverage' policy, as is often referred, more precisely ties to cover the MPCI deductible. Tying to MPCI units (versus per acre coverage) may provide less payout if the unit production exceeds the estimated hail losses," Johnson says. "Some companies allow coverage for crops expected to produce yields greater than the unit’s actual production history (APH) by 10% to 20%. Deductibles and qualifying losses also vary by insurance company, but premiums appear quite competitive when compared to companion hail."