5 Crop Insurance Myths Busted
Ensuring your agricultural business is protected against unforeseen challenges is crucial. Crop insurance serves as a vital tool for farmers, safeguarding them from financial hardships due to natural disasters and other uncontrollable events. Despite its importance, several misconceptions about crop insurance persist. Let's address and debunk five common myths:
Myth #1: My Irrigated Land Is Sufficient Protection; I Don't Need Crop Insurance.
Fact: While irrigation helps manage water supply, it doesn't shield crops from all potential threats. Excessive rainfall can lead to delayed planting or harvesting, crop washouts, and increased susceptibility to plant diseases. Crop insurance provides coverage against various natural perils, including excessive moisture, drought, plant diseases, hail, and wildlife damage. Many policies also offer replanting and preventive planting coverage, which have been invaluable to farmers facing adverse conditions.
Myth #2: Crop Insurance Policies Are Too Complex and Inflexible.
Fact: The crop insurance landscape has evolved, offering customizable options to meet diverse farming needs. Farmers can now insure irrigated and non-irrigated crops at different coverage levels and unit structures. Options like the Trend Adjusted Yield and Yield Exclusion can enhance your Actual Production History (APH). Beyond traditional grain crops, policies are available for hay, pasture, nurseries, orchards, processing vegetables, and even grapes in select counties. Whole Farm Revenue Protection policies cover diverse operations, and written agreements can extend coverage to crops not typically insured in your county, pending approval from the Risk Management Agency (RMA).
Myth #3: I Must Use County Averages to Establish My Production History.
Fact: Whenever possible, your crop insurance agent will utilize your historical production records to establish your policy. If personal records aren't available, a percentage of the county yield is used temporarily to determine your APH until you can provide your own production data.
Myth #4: Crop Insurance Doesn't Provide Adequate Payouts.
Fact: Crop insurance is designed to offer financial relief when you experience significant losses. For instance, as of February 4, 2019, Maryland farmers collectively paid $10.6 million in premiums for 2018 crops and received over $16.5 million in claim payments, demonstrating the program's effectiveness in supporting farmers during challenging times.
Myth #5: Crop Insurance Premiums Are Prohibitively Expensive.
Fact: The federal government subsidizes crop insurance premiums to make them affordable for farmers. For example, a 70% coverage level policy is subsidized at 59%, significantly reducing out-of-pocket costs for comprehensive coverage.
Understanding the realities of crop insurance can help you make informed decisions to protect your farming operation. Our team of experts is ready to assist you in exploring policy options tailored to your needs. With over 25 years of experience in policy writing, we're committed to being a valuable resource and consultant for your agricultural business.
For more detailed information and personalized assistance, visit our Crop Insurance & Risk Management page or contact one of our knowledgeable agents today.