Insurance Types-F & L CROP SERVICES, INC.
There are two main types of crop insurance available to farmers in the United States: Private Products (such as Crop Hail) and Multiple Peril Crop Insurance (MPCI).
Crop-Hail policies are not part of the Federal Crop Insurance Program and are provided directly to farmers by private insurers. Many farmers purchase Crop Hail coverage because hail has the unique ability to totally destroy a significant part of a planted field while leaving the rest undamaged. In areas of the country where hail is a frequent event, farmers often purchase a Crop Hail policy to protect high-yielding crops. Unlike MPCI, a Crop-Hail policy can be purchased at any time during the growing season. Each company offers several different coverages of Crop hail - different deductibles, added endorsements, combination coverages, etc.
MPCI Endorsements
The private companies can get approval from RMA to write endorsements to the base MPCI policy. There are many different endorsements available from the different private companies. They include, but not limited to, crop price endorsements and additional levels of coverage.
Under the Federal Crop Insurance Program’s unique public-private partnership, there are currently 15 private companies authorized by the United States Department of Agriculture Risk Management Agency (USDA RMA) to write MPCI policies. The service delivery side of the program — writing and reinsuring the policies, marketing, adjusting and processing claims, training and record-keeping, etc. — is handled by each private company. The program is overseen and regulated by the Risk Management Agency (RMA). The RMA sets the rates that can be charged and determines which crops can be insured in different parts of the country. The private companies are obligated to sell insurance to every eligible farmer who requests it and retains a large portion of the risk on over 80 percent of the policies written.
The federal government also subsidizes the farmer-paid premiums to reduce the cost to farmers. In addition, it provides reimbursement to the private insurance companies to offset operating and administrative costs that would otherwise be paid by farmers as part of their premium. Through this federal support, crop insurance remains affordable to a majority of America’s farmers and ranchers.
By combining the regulatory authority and financial support of the federal government with the efficiencies of the private sector, the crop insurance program has succeeded in meeting and even surpassing the goals set forth by Congress for broad participation, diversity and inclusion. By using the private sector, risk is shared among the private companies as well as the government.
Livestock
Besides MPCI plans for crops, the farmer may also insure Livestock. These coverages all insure for price. Coverages available are Hogs, Sheep and Cattle.
Pasture, Rangeland, Forage (PRF)
PRF is also a federally subsidized coverage for growers to purchase. It uses a rainfall index to guarantee a chosen amount of rain during a specified time frame.