Risk management for crop production is a critical component of a modern ag operation. While many operators use crop insurance, few understand even the basics of how it functions when things go sideways. Understanding this federally regulated program is important to the modern farm operator. It has come a long way since 1936 and is currently a booming industry of 13 companies insuring 120 different crop types to the tune of about 1.2 billion dollars of premiums being written.
While I am as a rule, dismissive of federal politicians, this one has a good sound bite a staffer no doubt put together for him:
“Through the crop insurance program, insurers can extend coverage to crops of all kind, providing farmers with the protections they need to do what they do best: grow food. It is a success story, and even if you are not a farmer, you have benefited from its existence. It has helped you receive more affordable food and helped American maintain its agricultural preeminence.”
-U.S. Representative Luke Messer.
The types of crop insurance are worth taking a peek at. Catastrophic coverage covers 50% of yield at 55% of the price and has a flat premium. Buy up coverage can be yield or revenue based and are calculated off historical proven yields or futures prices at planting and harvest calculated against a revenue calculated price.
Producers have to follow strict deadlines for reporting and sign up with no room to give for any circumstances. In the end, most crop insurance is traced back to the same source, federal government. These type of crop insurances are directly controlled by federal rules and not state or local rules.
Crop insurance for hail coverage is another critter all together. These are private products reinsured by companies that are backed by the feds but are regulated by state level government agencies.
When you disagree with the crop insurance adjuster’s determination, it is time to lawyer up. Attempting to work your way through federal regulations and rules by yourself is an invitation to disaster. The burden of proof is often on the operator and not the agency. The agency can find a myriad of reasons to deny a claim, to include lack of good farming practices. That term is not readily defined. You must make a claim within one year of being denied, no excuses and you must go to arbitration, not state court to resolve your claims. These are just a few examples of the deep morass that issue the world of disputed crop insurance claims.