More hail insurance?
Hail has already hit areas of the Corn Belt and, if you don't yet have coverage that supplements your federal crop insurance, an industry consultant, Steve Griffin, says now might be a good time to buy. Companies seem to be using low rates as a loss leader to get your business. Here's more info that Griffin has passed along to us:
Crop insurance companies are providing crop-hail insurance at statistical bargains this season. “It couldn’t come at a better time for farmers,” says Steve Griffin, a West Des Moines-based crop insurance consultant. Not only is the value of the crop at record highs, but many farmers opted for enterprise unit discounts on their multiple peril crop insurance (MPCI). Even with higher coverage levels, the selection of enterprise units pools the deductible (retained uninsured risk) that was spread over several basic or optional units into one amount such that a single tract can be totally destroyed without an MPCI indemnity.
“We have already experienced a series of violent thunderstorms across the nation’s heartland. It remains to be seen if this trend continues as this year’s crop emerges and becomes vulnerable,” says Griffin. “The good news is that, according to Department of Insurance filings, crop insurance companies are providing crop-hail coverage at less than one-half the rate to recovery losses and expenses in an average year.” Griffin thinks these rates are being provided as insurers compete for farmer’s entire crop insurance needs, particularly MPCI. Some insurers will only provide crop-hail insurance to customers who have their MPCI policy with them or sign a transfer for the next crop year.
Crop insurers are offering a number of crop-hail options to cover the exposure above the MPCI production and revenue guarantees. These include “companion plans” that provide top-down, spot hail coverage, with an accelerated payout per percentage of loss to cover the value of the crop above the MPCI coverage. Another variant is the so-called “production plan” that uses the MPCI units of insurance and APH yield to determine payouts. Production plan crop-hail may pay-out less than companion plans if the unit production exceeds the estimated crop loss (due to, for example, favorable recovery weather) and the risk pooling effect of MPCI units. “Farmers should consult with a knowledgeable crop insurance agent to get the best risk management option and value for their farming operation,” advised Griffin. He also cautions, “Most crop-hail insurance has a 24-hour waiting period for coverage to be effective, so farmers should not wait until they see the thunderhead appear on the horizon or on weather radar to seek coverage.”
Steve Griffin is a crop insurance expert (not an agent) who consults with crop insurers, farmers, and the Risk Management Agency. He can be contacted at www.aggiexpert.com.