Table of Contents:
- 2010 Crop Insurance Considerations
- <strong>Enterprise Units or Optional Units</strong>
- <strong>Insurance Coverage for Grain-Quality Problems</strong>
- <strong>Calculating Potential Crop Insurance Payments</strong>
- Some producers chose optional units, while others chose enterprise units for 2010
- Corn and soybean producers have the option of selecting crop insurance policies ranging from 60% to 85% coverage levels
- Grain-quality losses could potentially be a covered loss for crop insurance policies
In 2009, the USDA Risk Management Agency (RMA) increased the federal subsidy for purchasing APH, CRC or RA insurance coverage under enterprise units, which combines all acres of a crop in a given county into one crop insurance unit. As a result, 2009 and 2010 crop insurance premium levels for policies with enterprise units were much more favorable than for policies utilizing optional units. Prior to 2009, most producers used optional units, which allows producers to insure corn or soybeans separately in each township section.
Producers who have 2010 crop losses on individual farms, and have crop insurance coverage with optional units, may be able to collect crop insurance indemnity payments on their 2010 corn or soybean crop on some farm units, while not on others. Meanwhile, producers with crop insurance policies with enterprise units in 2010, are much less likely to qualify for 2010 crop insurance indemnity payments, due to the crop loss threshold being required on all crop acres in a county.
Many producers saw some significant savings in crop insurance premium costs for 2010 by switching to enterprise units, which work quite well when a producer incurs general yield reductions due to drought or poor growing conditions, or when the harvest price drops lower than the initial base price. However, in situations such as 2010 – when most crop losses were from severe storms and heavy rains that damaged some farms and not others, or damaged parts of farms – optional units are far superior to enterprise units, as far as potential for crop insurance indemnity payments.
Producers with enterprise unitswho purchased supplemental hail insurance coverage as part of their overall risk-management plan in 2010 may have qualified for some indemnity payments on farms with crop losses from hail storms during the growing season. Producers should contact their crop insurance agent to better understand insurance coverage with enterprise units for the 2011 crop year.