How is a loss calculated? Edwards notes, “Fields declared a complete loss will be combined with any harvested acres in the same insurance unit to calculate the final yield. Yield losses are equal to the farm’s historical yield times the level of guarantee purchased, minus the actual yield. Yield losses will be paid at a rate equal to the average CME futures price during the month of October, if it exceeds the average February price of $5.68 for corn (December contract) or $12.55 for soybeans (November contract), if you have Revenue Protection.”

If your corn is cut for silage, a second crop could be planted, but University of Missouri economist Ray Massey says work with your insurance agent. “If a second spring crop, such as beans are planted, it will affect the crop insurance on the corn harvested as silage," he says. In such a situation, the farmer would receive 35% of the indemnity payment on the corn until the second insured crop is harvested. If there is no loss on the second crop, the remaining 65% of the corn indemnity will be paid. If there is a loss on the second crop, you will choose to receive the remaining 65% of the corn indemnity or the indemnity on the loss of the second crop.”

With tens of thousands of farmers seeking crop insurance claims on millions of acres, will crop insurance companies run out of money to pay claims? No, says crop insurance authority Ken Harrison.

“Each company holds an agreement (pdf) with USDA that is unique in their reinsurance agreement because they ‘escrow’ the loss payments from USDA to each company," he says.. So each company’s claim check is almost immediately ‘covered’ at the bank where the check is drawn by USDA.”

Harrison says there is an extreme workload and that is an issue for management of crop insurance companies to resolve, but farmers should not worry about not getting a claim paid.


USDA has approved a series of changes to its requirements that will allow a speedier processing of applications for benefits sought by farmers suffering crop losses from the drought. However, crop insurance will cover most of the USDA’s safety net support for agriculture. Farmers are being urged to work with crop insurance agents before destroying any initial crops to plant a second crop or harvest corn for silage, if it had been insured as a grain crop. Before any action is taken, check your insurance policy provisions.


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