Debunking Six Crop Insurance Myths

It doesn’t pay … It costs too much … My crops aren’t covered … I need a total loss … I have to use the county average … There’s too much paperwork …

These six common myths stop many producers from taking advantage of a safe, sound and low-cost program. Do any of these myths apply to you? Let’s finally set the record straight on each with some important facts.

Myth: It doesn’t pay.
Fact: Northeast producers have received more than $553 million in crop loss payments from the Federal Crop Insurance Program while paying just about $187 million in premiums. If these growers had self-insured, Northeast agriculture would have suffered a loss of more than $366 million in equity.

Myth: It costs too much.
Fact: Actually, the cost of crop insurance is well below the cost of commercial private insurance and ranges from just 2-to-7 percent of the liability. In addition, the government subsidizes from 55 percent to 100 percent of the liability. And, based on the numbers mentioned above, the cost/risk of self insurance is far greater. So the cost of crop insurance coverage is really minimal.

Myth: My crops aren’t covered.
Fact: All crops are not insured in every county. That’s true. But if you grow a crop that is insurable somewhere in the United States (and it’s not under a pilot program), your crop insurance agent can request rates that offer the same program and protection as insurable crops. If no program is available in the United States, the NAP program (Non-Insured Assistance Program) is available from the Farm Service Agency.

Myth: I have to have a total loss to qualify.
Fact: Qualified losses range from 35-to-50 percent, based on your coverage level election. If you maintain production records by farm serial numbers, crop type, practice or noncontiguous land, you may be able to break your farm into separate insurable units. A crop loss on just one parcel, for example, may qualify for an indemnity payment. Talk to your agent about crop provisions for optional unit requirement and eligibility.

Myth: I have to use the county average yield in setting up the production history.
Fact: Your production records, not the county average, are used to determine the production history. Only when your lack proper records is the county average used.

Myth: There’s too much paperwork.
Fact: All you need to supply is your planted acreage records and production report. Perennial crop producers supply a pre-acceptance worksheet with information, such as insurable and uninsurable acres and crop age. That’s it!

The bottom line

If you’re still not convinced that crop insurance is for you, talk to your crop insurance agent. He or she will take the time to answer your questions and address your concerns in plain English. Plus with a sound crop insurance program in place, you’ll have a little more control over the weather and you’ll probably be able to sleep more soundly at night. And that’s no myth!