Last Minute Crop Insurance Questions And Answers

If you want to make a change in crop insurance coverage, notify your agent now.

Published on: Mar 9, 2009

Monday March 16 is the deadline to sign up for crop insurance for 2009. If you don't notify your crop insurance provider that you want to make changes in your coverage for 2009, you'll end up with the same product, level of coverage and the same unit structure you had last year.

Following are a few of the many questions Steve Johnson, Iowa State University Extension farm management specialist, received this past week at meetings across the state. Here are his answers.

Q: Will crop insurance premiums be lower in 2009 than in 2008?
Your premium will probably be lower for 2009 than it was for 2008. I've talked to insurance providers and premiums are lower this year because corn and soybean prices are lower. There are several important changes in crop insurance products and rules this year. Here's what we are seeing across the state as farmers are signing up for crop insurance:

Many farmers are moving to higher levels of coverage this year. That's because there is more risk in 2009. Crop input costs have gone up roughly 25% to 35% and now we're seeing much lower market prices for corn and soybeans. The spring base price for crop insurance revenue products is $4.04 per bushel for corn and $8.80 per bushel for soybeans. These prices were determined in the month of February and reflect the average daily settlement prices for December corn and November soybean futures prices.

Comparing spring 2008 to spring 2009 crop prices, corn prices have fallen 25% and soybean prices have fallen 34%. Thus, farmers are generally using higher levels of crop insurance coverage this year to bolster their risk management strategy.

* Another change in crop insurance is that CRC products will typically have cheaper premiums than RA-HP. That is, Crop Revenue Coverage will be selected rather than Revenue Assurance with the harvest price option--primarily based on cost savings.

* Another significant savings in insurance cost for 2009 is possible for many farmers if they can use Enterprise Units or EUs. That is, if you are interested in taking a little more risk by moving from an optional or basic unit which is typically designated by ownership in a section of land. Selecting EUs combines all your corn acres together from your farms in that county into one unit.

Putting all of a farm's corn acres together as one enterprise unit or soybean acres together as one enterprise unit will not work for everyone. But if you can do it, that's where there are some big savings per acre in coverage costs this year as the federal government has increased the subsidy on premiums for EUs.

Q: Does it make any difference what company you buy crop insurance from, regarding the premium?
No, all the federal crop policies are pretty much the same and the premiums are identical. The companions that you can add, and often we think of a companion hail or maybe some sort of crop hail policy, the premiums for those can differ. But all the federal crop insurance products are the same cost regardless of who you are buying them from.

Q: How do you figure group risk crop insurance or a GRIP policy and how would it tie in with the new SURE program in the USDA farm bill?
SURE is the new Supplemental Revenue Assurance—the new crop disaster program from USDA. To file a claim for SURE, if there is a disaster such as a drought this year, you need to have crop insurance for 2009.

Coverage must be in place for all your crops, on all your farms and in all counties where you farm. So you will likely need to buy private crop insurance if you want to get the 15% extra coverage that SURE would provide, should a disaster occur. The regulations haven't all been written by USDA's Farm Service Agency yet, regarding SURE claims with these Group and GRIP policies. So you will have to be patient.

The issue is that SURE has a maximum coverage level of 90% and a lot of farmers use these GRIP products at that level of coverage. So we don't know what the interaction will be for the SURE—Supplemental Revenue coverage—for these Group and Grip crop insurance policies. And I doubt if we'll know that before the March 16 deadline.

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