Review Your Coverage to Maximize Guarantee
By Shane Albertson, FCS Financial Vice President & Team Leader – Crop Insurance
As we prepare to turn the calendar over I am reminded that the challenges that we faced in 2017 are likely to stick around for 2018. Another year of tight margins appears to be on the horizon and unless something changes in our grain markets, crop insurance guarantees may look very similar to 2017. That leads me to ask a question, are you maximizing the available guarantee of your crop insurance policy? Below are a few bullet points to review before you renew your Multi-Peril Crop Insurance (MPCI) coverage for the 2018 spring growing season.
- Approximately 80 percent of Missouri policyholders purchase the Revenue Protection (RP) product. RP provides protection for losses in production and / or revenue. Coverage levels are available from 50 percent to 85 percent. MPCI policies and levels are federally subsidized and often increasing coverage levels is the cheapest form of additional guarantees you can purchase.
- Unit structure can play an important part in the affordability of your crop insurance. Some of the lesser expensive unit structures may offer producers the opportunity to purchase higher coverage levels, thus increasing guarantees. While this may be a possible opportunity, be aware different unit structures do have an impact for how losses are calculated.
- Beginning Farmer Rancher Policy Provisions – Producers who meet the definition of a beginning farmer or rancher may qualify for additional program benefits. These include exemptions from administrative fees, additional 10 percent premium subsidy (for policies above a CAT level), and increases in yield adjustment percentages.
- Yield Adjustment Option – This option works in conjunction with a yield floor to be sure you are maximizing yield replacements for years of low yields. When a producer qualifies for the yield adjustment option the yield is replaced with 60 percent of the county T-Yield for that crop. A yield floor does not let the approved yield of the database fall below specific levels based upon your years of production and the county T-Yield. A yield floor cannot be applied when a trend adjustment option is being used on the policy.
- Trend Adjustment Option – This option allows past yields in the database to be increased based upon a factor developed by the Risk Management Agency (RMA). To be eligible you must have one yield in the four most recent crop years by database and you must be located in a county where the option is available.
- Yield Exclusion Option – This allows producers to exclude certain years form a database when the county yield is at least 50 percent below the average for the previous 10 years for your county or an adjoining county.
- Prevent Plant Plus – This option allows producers to add 5 percent to their prevent plant coverage guarantee available on their MPCI policy. This increase allows producers the ability to further protect their investment in years they are unable to plant.
All changes to policy products, unit structure, and options will need to be completed by March 15, 2018.
FCS Financial has dedicated staff to assist producers with their crop insurance policies. Contact our crop insurance specialists to review your insurance coverage.