Crop insurance basics

A rainstorm strikes a field

 

Crop insurance is a critical component of agriculture today, impacting not only farmers who directly participate in the program, but also local communities, businesses and lenders. Many Farm Credit System associations offer crop insurance, and according to National Crop Insurance Services, “More than 86% of insurable farmland in the United States is now protected through the Federal Crop Insurance Program.”

The Federal Crop Insurance Program

The Federal Crop Insurance Program offers risk management tools to America’s agricultural producers. Today, more than 100 commodities can be insured to protect against a multitude of perils like disease, catastrophic weather or other crop or livestock issues. With the advancement of the program, producers have many choices when it comes to purchasing insurance depending on their operation’s needs.

Federal crop insurance is administered by Approved Insurance Providers (AIPs). These AIPs contract directly with licensed agents, who work directly with the farmers to offer the products and provide the policy servicing, including the annual reporting of acres and production. Claims are submitted by the agents, but they are worked exclusively by the AIP’s adjuster team.

The Importance of the Sales Closing Date

The Sales Closing Date (SCD) is the final date that a crop insurance application can be filed, and the last date that an insured can make coverage changes to an existing policy, including adding new crops or counties. Typically, this date falls in advance of planting the crop, so that decisions are made for the year before the first seeds ever go into the ground. You can find the SCD in the Special Provisions of Insurance in your policy for each crop.

March 15th Sales Closing Deadline – What You Need to Know

March 15 is the next SCD for a large portion of the U.S., so producers should be talking with their agents now about their 2017 coverage. You should never let an SCD pass without discussing all portions of your application with your agent. The smallest detail, such as a change in the marital status of a landlord, can have detrimental impacts on coverage at claims time if not corrected.

This year also marks the introduction of many new private product offerings. These products range in type and structure depending on the insurance provider, so it is crucial to discuss these options with your agent before the SCD.

Critical policy considerations to discuss with your agent at each SCD:

  • Is the “Named Insured” on the policy correct?
  • For the “Named Insured” on the policy, is the entity correctly identified?
  • Is your previous coverage level adequate today with lower prices, and in some situations, lower APHs?
  • Is the state and county correct for all crops insured under the policy?
  • Is the Tax ID number correct for the insured entity?
  • Has there been a change in marital status for the insured? Any landlords?
  • Are all persons with a Substantial Beneficial Interest (>10%) in the insured entity listed on the policy? Does someone need to be added/deleted?
  • Is the spelling of all names correct for insureds, spouse & SBIs?
  • Is all contact information for the insured still correct? (phone, address)
  • Have you added any land since last year? Any new counties? New crops?
  • Are you farming any land that came out of CRP recently? Will you farm some that is about to be released?
  • Are you breaking any land out of native pasture, or do you have land that has not been farmed in one of the last three years?

Regardless of your experience with crop insurance, from seasoned user to first time farmer, talk to your agent before the March 15 deadline. It could make a major difference if you do suffer a significant loss.