Crop insurance is designed to safeguard your farm in the event of unexpected changes. Keep your farm insured and safe with Malhotra and Assoc Insurance.
How does crop insurance work?
Crop insurance is designed to cover losses in crops due to a natural disaster or in the event that there are revenue losses due to a decline in prices for the crop you produce. Purchasing crop insurance will ensure that your farm keeps growing in uncertain times and safeguard you against natural and economic factors that are not within your control. Typically, a claim consists of filing a notice or loss of production within 72 hours of discovering the loss in production or value. Once the claim is filed, an adjuster will come to inspect your claim and if the claim is found to be valid, a check will be issued to you to cover the losses. In general, crop insurance is a great way to manage risk and uncertainty.
There are 2 types of crop insurance
There are two types of crop insurance policies that are offered: multiple peril crop insurance and crop-hail insurance. MPCI is a government subsidized program that safeguards crops in the event of natural or economic disasters. Crop hail insurance is a private insurance that safeguards your crops in the event of hail, fire or other elements.
Crop-hail
Crop-hail insurance coverage is a private insurance benefit that safeguards your crops against damages due to hail or fire. Crop-hail insurance is typically sold by the acre and typically pays the affected farmer for any losses of their crop (by acre) due to hail or fire. Although the name implies that this policy only covers losses due to hail, there are other events that are covered too such as lightning and vandalism. Given that crop-hail insurance can be purchased by the acre, farmers can focus on areas that are at a higher risk for these events instead of purchasing this coverage for their entire farm. Payouts are typically calculated by the value of the crop (by acre), and the expected value/acre will be provided in the insurance policy as well. Some things to consider when purchasing crop-hail insurance includes consideration of the area that your farm is in.In the case of an area that is highly susceptible to hail storms, a farmer could benefit from purchasing crop-hail insurance. Another example would be the purchasing of crop-hail insurance for areas that are more prone to wildfires. In general, you may be able to purchase crop-hail policy add ons that protect your investment against the after effects of a hail storm or fire (drought, frost or wind). There are a lot of add ons to consider and several benefits to purchasing crop-hail insurance to protect your farm against the unexpected.
Multiple Peril Crop Insurance (MPCI)
Multiple peril crop insurance is a government backed benefit that protects your farm against naturally occurring perils that are outside of your control. These can include natural disasters such as drought, fire and hail. These will insulate your farm against unexpected losses in crop yield. This can also include economic changes such as a decline in agricultural crop commodity prices and other events that might cause a loss in revenue due to the sales of your crop. MCPI is sold in different unit types, and each unit type is sold by the acre. The unit types designate the area of the farm that is insured, and the four unit types are: optional, basic, enterprise and whole farm. Each unit type has a different cost per acre and will create a variation in the indemnity payments. It is important to understand which unit type best fits your farm and crops and our team of agents can help you choose which options best fits your needs.
You can add crop revenue insurance to your policy
Crop revenue insurance protects your investment by insulating your farm against losses due to declines in prices for your crops. Before you start growing, the crop you harvest has a future value that’s determined by the futures market. This is typically determined in the Spring, prior to the beginning of your growth. Once you begin harvesting your crops, the harvest price is the price that you’d receive when you sell your crops to the market. If there is a difference between the future price and the harvest price, the indemnity payment will pay out the difference between the two to ensure that the revenue you expected to receive from the sales of your crops remains the same. Revenue Protection acts as a hedge when the harvest price falls below the projected value. That hedge also depends on the coverage level and the yield you’re planning to sell too.
Crop insurance is an important risk management tool for farmers
In reality, crop insurance provides a key tool in the farmer’s work belt and allows your farm to stay protected in the event of natural disasters or economic fluctuations in pricing. This will allow for your losses to be covered in events that are truly out of your control. In reality, there are several risk-management strategies to employ such as enterprise diversification, financial leveraging, vertical integration, contracting and income stream management to ensure your farm continues to grow during adverse events and unprecedented times. You can read more about risk management strategies from the USDA
What does farm insurance cover?
Farm insurance is designed to be flexible to meet your individual needs across a broad range of perils. You can opt for broader coverage forms, which will include much of the same expanded coverage options you see in homeowner’s insurance, such as, weight of ice, snow, and sleet, bursting of water pipes, falling objects, power surges, and more. Farm insurance can also cover farm property, such as livestock, farm machinery and equipment, and other farm products, such as animal feed, fertilizer, pesticides, and more. If you have employees, you’ll also need to buy protection for them in your farming operation.
What’s the difference between crop and farm insurance?
Crop insurance simply protects your crops against natural disasters or economic fluctuations to protect what you produce against disasters that are out of your control. Farm insurance helps to protect what you use to grow your crops and adds protection toward your commercial interests. Protect your farm and crops in Ohio, Indiana, Maryland or West Virginia today
