With the hot and dry conditions that have persisted across the Corn Belt this summer, maintaining crop insurance coverage and understanding the claims process will be crucial for many farmers. Drought damage is an insurable loss under multiple peril crop insurance policies. Since the losses will be widespread, you should expect crop insurance representatives to be very busy in meeting the needs of thousands of insured farms. Consider these Frequently Asked Questions (FAQs) which are discussed in this article as a way to become better informed as to how crop insurance policies covering the 2012 losses work.
NOTE: USDA announced August 1 that crop insurance companies have agreed to give producers who have struggled financially because of drought extra time to pay their premiums before they are hit with a penalty. While crop insurers have extended the deadline once to September 30, the deadline will be extended until November 1 for crops planted in the spring of 2012.
The following questions and answers were prepared by Steve Johnson, an Iowa State University Extension farm management specialist in central Iowa.
Question #1: How many of Iowa's corn and soybean acres are covered by crop insurance?|
Answer: Iowa farmers planted 23.5 million acres to corn and soybeans in 2012. Approximately 90% of all these acres are covered by some form of multiple peril crop insurance. About 90% of the insured acres feature Revenue Protection policies which guarantee 65% to 85% of the farm's average yield times the higher of the projected price (average futures price in the month of February) or the harvest price (average futures price in the month of October) for the December 2012 corn futures and November 2012 soybeans futures contracts. The projected prices (February futures) in 2012 were $5.68 per bushel for corn and $12.55 per bushel for soybeans.
About 7% of the state's acres are covered by Yield Protection policies, which also insure yield losses, but the priced used to determine the indemnity payment for these policies is limited to the projected price, that is the February futures prices.