COLUMBUS – The federal government recently reported that insurance losses are expected to top $11 billion for 2011 following drought, floods and damaging weather. For many farmers, crop insurance is an important risk management tool. To better understand how crop insurance can provide an economic backstop to unforeseen agricultural losses, Ohio Lieutenant Governor and Department of Insurance Director Mary Taylor is encouraging Ohio farmers to keep several helpful tips in mind.
“Agriculture is a $98 billion industry in Ohio and one that represents a significant part of our state’s economy,” Taylor said. “I encourage all members of Ohio’s farming community to review their insurance needs to ensure they have adequate coverage.”
Crop insurance policies are issued by private insurance companies and sold by licensed agents. There are two types of crop insurance available to farmers: crop hail insurance and multi-peril crop insurance. Crop hail insurance is typically limited to losses due to hail and/or fire. Multi-peril crop insurance (MPCI) provides extensive coverage for losses from weather to pests and even loss of revenue. In many cases, multi-peril crop insurance policies are subsidized and backed by a federal reinsurance program.
Crop Hail Coverage
Crop hail coverage comes in several different forms. The extent of coverage depends on the type of crop insured. A crop hail policy provides coverage for loss caused by fire, lightning, wind (when accompanied by hail or when added as an endorsement to a policy), vandalism or malicious mischief. Coverage for loss or damage to the crops during transportation and storage may also be available. Crop hail coverage is sold by private insurers and regulated by state insurance departments.
The Federal Crop Insurance Program
There is also a federal program providing a variety of multi-peril crop insurance products. The Federal Crop Insurance program was created in 1938. Today the U.S. Department of Agriculture’s Risk Management Agency (RMA) administers the program, which provided policies for more than 255 million acres of land in 2010. Insurance companies selling MPCI coverage must be licensed by the RMA.
Unlike other types of insurance, crop insurance is dependent on established dates that apply to all policies. These dates are determined by the RMA ahead of the planting season and are published on its website at www.rma.usda.gov. Dates vary by crop and by county. There are important dates farmers should expect to meet:
- Sales Closing Date – All crop insurance applications for the designated county and crop are due by this date.
- Final Planting Date – Crop must be planted by this date; a penalty is placed on the amount of coverage for each day late.
- Acreage Reporting Date – Acreage report includes a list of crops planted, number of acres planted (each crop), and share of crop (if ownership is shared).
- End of Insurance Date – Crop is no longer covered after this date; losses must be reported before this date.
- Termination Date – This is when a policy premium must be paid.
Contact the Ohio Department of Insurance at 1-800-686-1526 for assistance in determining if the insurance company and/or insurance agent is licensed to write crop insurance in Ohio. You can also visit the Department’s website at www.insurance.ohio.gov to review the agent/agency locator. For more information about the options available for a crop insurance policy plus a list of definitions, coverages and specific policy dates, visit the RMA website at www.rma.usda.gov.