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10 questions you should ask your crop insurance agent

10 questions you should ask your crop insurance agent
With harvest here, make sure you understand the ins and outs of crop insurance rules.

Most of the talk is about good yields this fall. It’s also about low crop prices. Not everyone will participate in the yield bonanza, but low cash prices will apply across the board.

If you have federal crop insurance, especially revenue-based insurance, you could be asking yourself questions right now. Danny Greene of Greene Crop Consulting Inc. says the best option is to contact your crop insurance agent if you don’t completely understand how your policy might trigger payment, or if you anticipate a claim.

WILL YOU HAVE A CLAIM? Do you know what to do if you have a claim, or think you may have one? Check your policy and consult your agent.

Greene’s firm offers federally backed crop insurance through Diversified Services Inc. Here are answers to 10 questions you might want to ask your crop insurance agent. Greene provided the answers, fact-checked by Diversified Services.

1. I have a revenue protection policy. What can trigger a loss?

You will have a claim if your revenue, figured by actual yield times harvest price, is below the revenue guarantee indicated on your schedule of insurance. You chose the level of revenue protection when you signed up for the policy. The maximum amount you could select was 85%. The premium is higher for 85% than if you had selected a lower level of coverage.

2. If I have one bad field, will that qualify me for payment?

If you have optional units, divided by shares and sections, it might. If you have enterprise units (all of that crop in the county) or basic units (divided by share interests), it might not. It also depends on how your fields produced vs. your guarantees. The details can get complicated. You may want to review how your coverage is set up across your operation with your agent.

3. To keep things simple, suppose I am a part-time farmer with a single 100-acre cornfield. How low would my yield need to be to trigger a claim?

That depends upon your actual production history, or APH, and how the fall harvest price changes relative to the spring base price. Let’s suppose your APH is 158 bushels per acre for corn. Suppose you’re enrolled in 85% revenue protection. On the yield side, you’re guaranteed 85% of your APH. So 158 times 85% equals 134.3 bushels per acre. If the spring base price is $3.86 per bushel, then your payment guarantee is $518 per acre. If actual yield times fall harvest price is below $518 per acre, you will have a claim.

4. Suppose I’m in an area hit by storms, and I suspect my yield could be below the guarantee. What do I do today?

Contact your crop insurance agent within 72 hours of the damage or loss of production to enter a "notification of probable loss" form on your behalf. The adjustor will likely want to visit the field before harvest.

5. Suppose I’m not sure if I will have a claim, so I don’t contact my agent in advance. Then my yield is below the guarantee. Am I still covered?

Don’t risk it. Always contact your agent if there is a possibility of damage or loss. It’s better to withdraw a claim than not get paid.

If you sold the grain to the elevator, scale tickets can verify production. If you stored it in a bin, you will need to get a measurement. Start the fall with a clean bin or get a bin measured before comingling grain over seasons. Ask your agent about how to get a measurement acceptable for this purpose.

6. Suppose I’m in a good area. My neighbor cut silage. He had a crop adjustor inspect corn still standing next to where he chopped. It was 200-bushel-per-acre corn. It was obviously above the guarantee. Why did the adjustor come out?

The adjustor checks silage fields before harvest even if no loss is expected. The purpose is to arrive at a "determined yield," which will be applied to your neighbor’s yield history and future APH and guaranteed levels.

7. Let’s go back to the 100-acre example with 85% revenue protection. When you put actual numbers to the example, when would an indemnity occur?

It kicks in if your revenue is less than 85% of your guarantee. Suppose your yield is 150 bushels per acre. Your revenue guarantee was figured on your APH of 134.3 bushels per acre times the guaranteed price. The guaranteed spring price this year set before the final policy sign-up date was $3.86 per bushel. That was based on the Chicago Board of Trade December corn futures price averaged across February. So 100 times 134.3 bushels per acre equals 13,430 bushels. Note that the 85% factor is already built in since we used 85% of your APH. Your guaranteed revenue in an 85% revenue policy is $51,840.

8. So if I sell my corn at the elevator in November and I get $2.60 per bushel after moisture discount, and it made 150 bushels per acre, my check from the elevator is $39,000. I would get the difference between my guaranteed revenue and my check, right?     

No! The actual selling price doesn’t matter. The guaranteed harvest price is determined using the fall CBOT December futures average price for the month of October. Suppose that turns out to be $3.30 per bushel. Your guarantee would be: 15,000 bushels times $3.30 equals $49,500. It’s below your guarantee, so you would be eligible for an indemnity payment. It would be: $51,840 (guaranteed income) minus $49,500 (calculated income), which equals $2,340.

9. Suppose I wasn’t sure I would have a revenue claim and didn’t notify my agent before harvest. Am I still eligible?

Yes. The rule says you have to submit your claim on a revenue loss within 45 days of the price discovery period. For corn and soybeans, that means you must submit it before Dec. 15.

10. What if I get docked for diplodia ear rot at the elevator? Is that covered in my policy?

Discounts for certain damage factors may be included. Communication between you and your agent needs to happen. If you suspect a problem like this before harvest, contact your agent immediately.

Diplodia does not produce mycotoxins. If the mold in your field does, then the situation is handled differently. An adjustor must obtain a sample of the grain and run it through a designated lab to determine mycotoxin levels to determine a potential claim.

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