All farmers are familiar with multi-peril crop insurance or MPCI – the basic crop insurance provided by the USDA’s Risk Management Agency. MPCI covers low crop yields from all types of natural causes including drought, excessive moisture, freeze and disease. Typically, MPCI provides up to 85% coverage. But for farmers coming off of a tough year, looking to expand or just wanting more protection, how do they bridge that extra 15% coverage gap?
That’s where a variety of additional insurance options, most from private companies, come into play and help provide additional coverage. Let’s explore some of those.
- ARCH products are offered through Diversified Crop Insurance Services. These products allow farmers to purchase additional, un-subsidized bands of coverage up to 95% of trend Annual Production History (APH) and Optional Unit (OU), even if the underlying policy is Enterprise Unit (EU).
- Revenue Accelerator Max Protection (RAMP), available through Farmers Mutual Hail, gives the insured the opportunity to boost revenues at specific risk levels within their risk management plans, up to 95%. RAMP supplements MPCI coverage and is designed to help provide additional coverage when production and/or revenue losses are just above or below the insureds’ MPCI guarantee.
- Enhanced Coverage Option (ECO) is a crop insurance endorsement product that is new for 2021. It’s a government-subsidized supplemental product, available through any insurance agency authorized to provide MPCI. It provides additional county-based coverage for a portion of the underlying crop insurance policy deductible. ECO offers the insured farmer a choice of 90% or 95% trigger levels. Trigger means the percentage of expected county-based yield or revenue at which a loss becomes payable. Find out more about ECO here. To get estimates on what ECO premiums might be for your farming operation, use the Risk Management Association’s Agency Cost calculator, located online at https://ewebapp.rma.usda.gov/apps/costestimator/Estimates/QuickEstimate.aspx
The differences between these various supplemental products vary widely, according to crop insurance experts. Consult with your Ag Resource Management agent to find out which products could offer the most economical, effective supplemental coverage for your farming operation.
“ECO is an area-based plan,” explains Mike Carey, ARM area manager, based in Morris, Illinois. “it’s based on results at the county level. It has some level of government subsidy, so it might be cheaper than ARCH products, but you won’t get the granular supplemental coverage you’ll get with ARCH. That’s why it’s important to sit down with us, go over your numbers, your APH and break-even numbers, to see what’s the right fit and formula for your farm.”
It’s important to work with partners who understand both the crop insurance side of the farm operation and the loan and finance side.
“Crop insurance and farm loans work hand in hand,” explains Donna Swanson, ARM area manager in Iowa Falls, Iowa. “The money we are able to lend out is directly correlated to the type and amount of crop insurance a farmer has, in combination with crop prices and other factors. At ARM, that’s our specialty – custom-crafting risk management plans folding in both crop insurance and ag lending to ensure our customers keep farming.”
All of the Ag Resource Management insurance experts are able to provide additional information and advice about these supplemental products and how they can benefit your risk management plan.