Sources within the crop insurance industry agree on one point- if you suffered an insured loss in '07 and collected on it through federal crop insurance, that doesn't mean your premiums to insure your '08 crops will go up. It doesn't work like car insurance, which isn't federally backed, and where some companies may choose to raise premiums on those who have had as few as one claim due to an accident.
"This doesn't work like auto policies at all, which are sometimes based on experiences encountered with each insured," says Jim Rink, director of farm and crop insurance for Indiana Farm Bureau Insurance. Instead, he notes, losses are reviewed on the whole by federal crop insurance program managers.
However, to say that collecting on federal crop insurance in '07 will have no effect on your crop insurance program in '08 and subsequent years is a bit of a misnomer. While rates won't go up due to a loss for a specific farmer, it could affect those who elect to prove yield history by keeping history on what yields of each crop they produce. There can be an advantage to doing that vs. just basing coverage on whatever the county yield turns out to be in any one season.
"If you're keeping track of yields and you collected last year because your yields were lower, then that lower yield will factor into your APH (actual production history)," Rink says. The net result may be that it may affect the guaranteed number of bushels that you can collect on in future years.
"Your premiums won't go up because they will be the same for everyone (in your category)," says Jan Eliassen, a crop insurance consultant. "But if you had a loss, your actual (yield) history will go down."
Jack Wagster, who writes federally backed crop insurance in Indiana through Top Land Risk Management, Seymour, acknowledges that what the other two experts say is correct. While his company is based in Seymour, he and his staff write federally-backed crop insurance over a wide area.
"Your premiums don't go up," he emphasizes. "That has nothing to do with it. But, yes, your APH yield history could go down somewhat."
That assumes you collected because you suffered lower yields, not just lower total income because crop prices dropped. Some of the guaranteed revenue policies could kick in and provide payments if prices dropped substantially, even if your yields didn't sag low enough to qualify under certain other crop insurance programs.
This series is independently produced by Indiana Prairie Farmer and brought to you through the support of Indiana Farm Bureau Insurance.