Crop insurance options for prevented planting and replanting

With the late planting season onset of heavy rainfall,  many farmers found that planting or replanting corn and soybeans was just not a feasible option. Farmers unable to plant or replant will want to start exploring their crop insurance options, said George Patrick, Purdue University agricultural economist.

“In some instances, farmers may not have been able to plant their original crop and in other instances farmers may have lost crops due to flooding,” Patrick said. “If producers have followed good farming practices, they may be eligible for different crop insurance benefits — depending on individual circumstances and the type of insurance they have.”

Farmer-based multiple peril crop insurance plans include Actual Production History (APH), Crop Revenue Coverage (CRC), Revenue Assurance (RA) and Income Protection (IP). If planting was prevented because of the weather, an insured producer could choose not to plant a crop and take a payment of 60% of the original yield guarantee level.

The prevented planting payment can cover part of an insurance unit. For example, a farmer has an insurance unit of 400 acres with 250 acres of corn planted and 150 acres unplanted. Once the final planting date of June 5 for corn and June 25 for soybeans is reached, the prevented planting payment can be taken on 150 acres. The timely planted 250 acres would be treated as an insurance unit, Patrick said.

County-based crop insurances — Group Risk Plan (GRP) and Group Risk Income Plan (GRIP) — do not have prevented planting coverage, Patrick said.

Farmers who have planted on time but have suffered flood-related crop damage can leave the crop as-is and may receive an indemnity payment.

“If the crop is left ‘as is’ the yield, or revenue, for the insurance unit would be compared to the insurance guarantee,” Patrick said. “If the yield was below the guarantee level, an indemnity would be paid.”

Many farmers insure at or below the 75% level, so a substantial portion of the insurance unit could have a zero yield before the producer would receive an insurance indemnity.

For example, if a producer had an APH yield of 160 bushels per acre insured at the 75 percent level, he would have a yield guarantee level of 120 bushels. The farmer could suffer a complete loss on one-quarter of the insurance unit with no insurance indemnity if the rest of the unit had the 160-bushel yield.

For county-based, or group insurances, an indemnity would be paid only if the county yield was below the trigger yield specified on the insurance policy. Thus, individual producers could suffer major losses without insurance indemnities if county yields were not reduced to below the trigger levels.

Because claims procedures and documentation need to be followed carefully, Patrick encouraged producers facing crop losses to work closely with their crop insurance agents.

“Failure to comply with procedures could result in insurance claims being reduced or denied,” he said.