I recently had a question about who pays for the crop insurance payments that farmers receive. So in order to put it into words that would be easy for everyone to understand, I looked to the Risk Management Agency (RMA) website and the Crop Insurance Keeps America Growing website for help. I hope this helps! If you have any other questions, please let me know!
Q: Do farmers really need crop insurance?
A: Buying a crop insurance policy is one risk management option. Producers (aka farmers) should always carefully consider how a policy will work in conjunction with their other risk management strategies to insure the best possible outcome each crop year. Crop insurance agents and other agri-business specialists in the private and public sectors can assist farmers in developing a good management plan.
Q: Does crop insurance cover crops in the event of natural disasters?
A: Producers who purchased crop insurance are covered for all natural causes of loss listed in their policies.
Q: How does the Federal crop insurance program work, and how does a Producer/Farmer apply for coverage?
A: Federal Crop Insurance Corporation (FCIC) programs are administered by the Risk Management Agency (RMA), which underwrites crop insurance policies for hundreds of crops and livestock in the United States. Crop insurance policies are sold and serviced by sixteen private insurance companies.
Producers deal with local agents that sell the insurance for the private insurance companies. (I work for The Home Agency which my family owns and operates out of Nebraska. We are a local agency that sells for a few of the private crop insurance companies. The Producers/Farmers can buy their crop insurance directly from us at The Home Agency.
Q: What types of crop insurance are available for Producers/Farmers?
A: Two types of crop insurance are available to farmers in the United States: Crop-Hail and multiple peril crop insurance (MPCI).
MPCI policies must be purchased prior to planting and cover loss of crop yields from all types of natural causes including drought, excessive moisture, freeze, and disease. Newer coverage options combine yield protection and price protection to protect farmers against potential loss in revenue, whether due to low yields or changes in market price.
Crop-Hail policies are not part of the Federal crop insurance program and are provided directly to farmers by private insurers. Many farmers purchase Crop-Hail coverage because hail has the unique ability to totally destroy a significant part of a planted field while leaving the rest undamaged. In areas of the country where hail is a frequent event, farmers often purchase a Crop-Hail policy to protect high-yielding crops. Unlike MPCI, a crop-hail policy can be purchased at any time during the growing season.