Nearly 90% of the corn and soybean acres in Iowa are covered by multiple peril crop insurance. Drought damage is an insurable loss under these policies. Producers should consult with their crop insurance agents before harvesting or destroying any drought-damaged crops, says William Edwards, an Iowa State University Extension economist.
"The agent will notify a certified crop adjustor to appraise the insured crops," Edwards says. "Keep in mind that when damage is widespread, adjustors cannot be everywhere at once. The adjustor may declare the crop a complete loss. If it has significant yield potential, it can be left and harvested in the fall. If the producer elects to harvest it early, as silage, check strips can be left to verify the actual yield achieved. In any case, the acres must be released by the insurance company before the crop can be harvested early or destroyed."
Insurance indemnity payments will be made based on actual harvested production
Any insurance indemnity payments will be settled based on actual harvested production over the entire insurance unit, he adds. Fields declared a complete loss will be combined with any harvested acres in the same insurance unit to calculate the final yield. Yield losses are equal to the farm's historical yield times the level of guarantee purchased, minus the actual yield.
Of the insured acres in Iowa, 90% are covered by Revenue Protection insurance policies in 2012. Yield losses will be paid at a rate equal to the average CME futures market price during the month of October, if it exceeds the average February price of $5.68 for corn (December contract) or $12.55 for soybeans (November contract).