Insurance Awareness Day: What is Crop Insurance?

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Insurance Awareness Day: What is Crop Insurance?

Crop insurance is an insurance policy purchased by farmers and ranchers to protect their crops against bad weather, and sometimes other risks.  The U.S. government has partnered with private crop insurance companies like AgriSompo North America to administer the program.

What is Crop Insurance?

Imagine a farmer purchases a policy from an agent to protect her corn. If there is a drought, that farmer can receive a payment for the loss.  Losses are often calculated based off the farmer or rancher’s previous history.  This can vary by plan.

Why crop insurance

Crop insurance is popular within the agriculture industry because it’s fast. In the past, a disaster (flood, drought, etc.) would occur and farmers and ranchers would have to plead their case in Washington D.C. for assistance. Sometimes that assistance would take years to arrive. At that point, some farms may not have survived.

How is crop insurance a better option?

Currently, farmers and ranchers pay to participate in crop insurance, making it more cost effective for all. In the event of a disaster, farmers can receive payments within days of signing their claims. 


How does Crop Insurance Work?

Follow along below as we guide you though each step in the yearly Crop Insurance Cycle.

Step 1: Actuarial Release or Change Options

The Risk Management Agency (RMA) releases the insurance offerings for the upcoming sales closing dates.

Step 2: Policy Renewal

Most crop insurance policies are continuous, meaning they automatically roll over and apply to the next crop year.

Step 3: Sales Closing Date

Ranchers and farmers sign applications with their local agents prior to a crop’s sales closing date.  Crops have differing sales closing dates and some even have multiple sales closing dates.  To find a specific crop’s information use the RMA’s Actuarial Information Browser.

Step 4: Policy Confirmation

The agent submits the application to AgriSompo North America. The policy is reviewed for accuracy and compliance, and then accepted. Policyholders may not cancel their policies for the initial crop year.

Step 5: Production Reporting

Insureds report their production from the previous crop year or year(s).  Reporting production helps to establish an Approved Production History (APH) and that allows AgriSompo North America to determine an insured’s policy coverage.

Step 6: Acreage Reporting

Insurance attaches as soon as planting begins within a unit (similar to a line of insurance).  Acreage reporting is when the policyholder reports the number of acres planted, the date the acreage was planted, and farming practices.  In some cases, more information may be required.

Step 7: Schedule of Insurance

Insureds receive a Schedule of Insurance or summary of coverage from AgriSompo North America.  These documents list the reported acreage that is insured and/or not insured.  Policyholders are strongly encouraged to review these documents for accuracy. 

Step 8: Notice of Loss

If a flood, drought, or other unavoidable peril occurs after insurance attaches and prior to harvest, insureds are required to report a Notice of Loss or claim within 72 hours. 

Step 9: Claim Inspection

AgriSompo North America’s claim adjusters strive to contact an insured within 24 hours after receiving a claim to set up a Claim Inspection.  The adjuster visits the insured, perform inspections, and gathers production information to determine the insured’s loss. The insured and adjuster sign the loss documentation, which is then submitted to the office for review.

Step 10: Indemnity Check

Once the claim has been reviewed and processed, an indemnity check is sent to the insured. The average AgriSompo North America payment only takes days to arrive if all the paperwork is in order.

Step 11: Premium Billing

The final step within the crop insurance cycle is premium billing.  Insureds receive a bill for any remaining premium due that was not previously covered by an indemnity. 


Finally, it’s called the crop insurance cycle because, each year, we start all over again at step 1.


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