Understanding Crop Insurance: Key Terms You Need to Know

Crop Insurance has a lot of acronyms and options. Your agent (who works with this policy everyday) might say an acronym and move on so fast your head is spinning. I’m here to help break all those down. These options usually cost pennies on the dollar and add tremendous value to your policy. Not all these options are available for each commodity in each county so make sure to ask your agent to confirm. The examples below are all available for grain corn in Oneida County, New York.

Industry Specific:

Multi-Peril Crop Insurance (MPCI)

The most popular type of crop insurance policy. Your policy is covered for all mother nature throws at you. You can have multiple perils (i.e. drought, wildlife damage, and disease) and its all covered. Or you could have just a terrible wet spring and your crop drowns. All or one resulting in a loss are covered.

Approved Yield (APH)

A minimum of 4 years, a maximum of 10-year yield history. We can personalize the policy to your operation by using YOUR yields, not the county’s yields. After 10 years, that 11th year drops off.

Revenue Protection (RP)

Type of MPCI policy that provides protection against revenue loss by combining production shortfall due to insect, disease and weather-related events and market decline. You don’t necessarily have to have yield loss if the Chicago Market price falls from base to harvest price.

Yield Protection (YP)

Type of MPCI policy that provides protection against production shortfall due to insect, disease and weather-related events. Yield Protection policies respond when crop yields fall below the yield guaranteed by the policy.

Policy Options:

Yield Adjustment (YA)

If your actual yield falls below 60% of your county T-yield (the county’s average yield), the county T-yield x 60% is what is put into your APH history. This helps keep your approved yield high. Must be added to the policy during sales closing time and will automatically apply to your policy if your yield drops below 60% of the county T-yield.

Yield Exclusion (YE)

RMA determines exceptionally poor production years and excludes those years from your APH history. This helps keep your APH high. Must be added to the policy during sales closing time and will automatically apply to your policy. Crop years are only determined eligible to be excluded when the per planted acre yield for the county is at least 50 percent below the simple average of the per planted acre yield for the crop in the county for the previous 10 consecutive crop years.

Prevent Plant +5% (PF/PP)

A standard MPCI policy has a 55% per acre dollar guarantee prevented planting indemnity on qualifying acres. The PF option brings that up to 60% per acre dollar guarantee. To qualify for prevent plant, you need to have 20 acres or 20% of your planted acres unable to plant due to mother nature (i.e. too wet). The option must be added to your sales closing document to receive the extra 5%.

Quality Loss (QL)

This option first became available in 2021 and is more common for wheat, barley, and oats here in the Northeast. Quality Loss allows exclusion of quality loss from an APH database in circumstances where a quality loss occurs. When elected, the QL will replace post-quality adjusted production with the pre-QA production for any year the insured filed a Notice of Loss.

All of these acronyms are thrown around so fast, never be afraid to ask your agent to slow down. Even if you have had the policy for years, it never hurts to go back to the basics and really dive in on policy specifics.

If you are a producer who would like to explore your insurance options, reach out to the Crop Growers team. Click here to contact a local agent today.