Frequently Asked Questions About Crop Insurance
When should I purchase crop insurance?
Crop insurance should be purchased before the planting season begins and is based on the type of crop planted.
What types of coverage are available for crop insurance?
There are two main types of crop insurance: hail and multi-peril insurance. Hail insurance only provides coverage for losses due to hail damage. Multi-peril insurance provides coverage for certain types of covered losses including losses caused by drought, flood, or other perils. In some cases, these policies also cover losses due to a significant drop in price.
How does coverage work under a multi-peril policy?
The farmer pays an insurance premium for a specific crop on specific acreage on their property. Similar to a deductible, most policies require farmers to self-insure a portion of the risk. Experts indicate that most farmers purchase policies that cover between 65%-75% of their losses. If the farmer has losses exceeding their self-insured portion, the insurance company will pay up to the percentage insured. For example, if a farmer were to lose 50% of their crop and had 75% coverage, the insurance company would pay up to 25% of the total insured amount.
How do insurance companies calculate a farmer's loss?
It depends on the type of policy the farmer has purchased. Farmers may purchase policies that are based on the income generated from the crop or for the production of the farm.
In the case of income-based policies, the insurance policy will base the loss on 5-10 years of income data and based on the price of the crop (i.e., corn, beans, soybeans, etc.) at the beginning of the season.
Production-based policies will look at the farm's production for the previous 5-10 years.
Is all crop insurance coverage written through private companies?
No. Some crop insurance may be purchased through the Federal Crop Insurance Corporation (FCIC) rather than through a private company. Farmers wishing to file a claim should still contact their local crop insurance agent.
If a farmer believes s/he is facing a loss, what should s/he do?
First, contact the insurance agent who sold the policy. The agent will be able to explain any policy limitations and the type of coverage purchased. The agent will then contact an adjuster who will work with the farmer to determine the next steps.
Just like claims with other kinds of insurance, it is important to keep documentation of your loss. Make sure to keep pictures and samples that will help establish the loss. Do not destroy the crops or re-plant until you have talked with the adjuster and received confirmation in writing that it is alright to do so.
What federal agency administers crop insurance?
The United States Department of Agriculture's Risk Management Agency (RMA) administers the Federal Crop Insurance Program. Questions and concerns about their administration can be directed to the regional office in St. Paul, Minnesota. The RMA phone number is 651-290-3304.
Is there any coverage for farmers who have not purchased crop insurance coverage?
In most cases the answer is no. However, the federal government runs the Noninsured Crop Disaster Assistance Program (NAP) and Supplemental Revenue Assistance Payments (SURE) Program both of which provide coverage in certain specific circumstances. For more information, see their fact sheets:
How can I contact the Office of the Commissioner of Insurance?
You may contact us at:
- Toll-free 800-236-8517