What Does Crop Insurance Cover?
When you run a farm, buying crop insurance can provide you with peace of mind against losing part of your crops to a disaster. Most farms rely heavily on each crop and missing part of one could be devastating to business. If you are in this situation, you may want to find out exactly what crop insurance covers and whether you need to buy it.
Other People Are Reading
-
Weather
-
One of the areas that is most commonly covered by crop insurance is damage as a result of weather. For example, if the area is exposed to an unusually early or late freeze, it could kill many of the crops on a farm. A large tornado or hurricane could also negatively affect a farm's crop. If the temperatures are too high during pollination times, it could hurt the overall crop yield. Another common issue that leads to damaged crops is drought. If the season does not produce enough rain, it can seriously hurt farmers.
Other Factors
-
Besides weather events, many other natural factors could damage your crops. Many of these occurrences are covered by crop insurance policies. For example, if a large number of insects damage your crops, this could be covered by your policy. If a disease outbreak takes over your crops and destroys them, this could also be covered by your insurance policy. If a fire starts in a particularly dry time of year, your policy could provide you with financial benefits as well.
-
Production History vs Revenue History
-
When your crops are destroyed, the type of policy that you have determines how much you receive in financial compensation. One type of crop insurance policy that you could have is an average production history policy. This looks at the average amount of crops produced over a period of several years to determine how much you should be compensated. Another type of policy looks at the average revenue that was generated by your farm over a certain number of years to determine the financial benefits to be paid.
Group Plans
-
In some areas, you may be able to gain protection through a group farm insurance plan. For example, in counties that are heavily involved in agriculture, the entire county may be covered by an insurance plan. If the total yield for the county goes below a certain index, every farmer who participates in the program receives financial compensation to make up for the shortfall. This can help lower your risk as an individual farm by working together with the other farms in your immediate area.
-
