Crop Insurance Changes and Concerns

Crop Insurance

Insurance Plans

What makes a good crop insurance plan? This can vary from farm to farm, but there is one thing that is always true - the insurance agent, the AIP (Approved Insurance Provider), and the farmer need to work together. The agent needs to understand farming and insurance, the AIP needs to provide good support and the farmer needs to be actively involved in the process of selecting an insurance plan. Everybody needs to have good open communication. Ask questions. If you do not understand something, ask and we will do our best to find the answer. Do not let an insurance agent make the decision for you.                                                                                                                                                                                                                                                                                      

Our AIPs

The three AIPs that we work with (ARMtech, Crop Risk Services, and AMtrust Ag) are stable and provide high quality service. All of these AIP’s have been growing without merging or buying other AIPs. They all provide excellent underwriting services to us as agents.  The adjuster for these companies have been fair to our insureds.

Changes and Reminders

Prevent Plant

In the past, the RMA offered two buyup plans for prevent plant. A 5% buyup and a 10% buyup. In the future only the 5% option will be offered. We have a few policies with the 10% option. They will automatically be changed to the 5% option. If you have any questions, please be sure to ask.

Yield Cups

You have probably received a letter about yield cups from the AIP. In the past, this option was automatically added to policies. In the future, we will have to add this to the policy, by sales closing. YC limits the amount that your APH could be dropped in one year to 10%. This primarily affects fields that have been newly added and only have four years in the database. If one of those years have a catastrophic yield, the APH would drop by a large percentage. If YC is on your policy, it would only affect the fields that have a catastrophic yield loss. In our agency, we have a very limited number of fields that have had catastrophic yield losses.                                                  

Irrigated and Dryland Enterprise Units

For the past few years, we have been able separate enterprise units by practice. This year they have expanded this option. You will now be able to have enterprise units on one practice and optional or basic units on another practice. That means that you could have enterprise on irrigated and optional units on dryland or the reverse. Enterprise units can be split into irrigated and dryland units. You can select different coverage levels for irrigated and dryland. The irrigated and dryland units have to each qualify (two sections) at acreage reporting time. A break will need to be established between the irrigated and dryland units.

Third Party Damage

The RMA has added the UUF yield descriptor for yields. That means that yield losses due to the action of a third party will not affect your APH. Examples would be a fire or herbicide drift from a third party. The third party could be a commercial applicator or neighbor. You still would not be compensated by MPCI insurance.                                                                                                                                                                                                                                                                                      

Conservation Compliance

I’m sure that most of you have signed your 1026 form. The penalties for not having one signed is severe.

Congress has tied conservation compliance to the crop insurance program. Make sure your AD-1026 is up to date at the FSA office. Although the failure to be in compliance can be corrected, the penalties are severe. If you are noncompliant, you will be able to buy crop insurance, however the government will not subsidize the cost. That would increase the cost of your insurance by 200% to 400%.

It is important that compliance is maintained. NEW BREAKING needs to be approved by NRCS before starting to break up the ground. Unapproved tiling on one farm could mean that any farm operation in the country that are linked to that farm would be ineligible for crop insurance subsidies. If a farm falls out of compliance, the farmer will have to pay the full cost of insurance until they are back in compliance.

Replant

Make sure that you have called in a Notice of Loss and have the OK from the adjuster before you start to replant. If you replant before the adjuster gives the OK replant payments will be denied. The RMA is very strict on replant issues. Adjusters will call you back even on weekends.                   

Beginning Farmers

Beginning Farmers will qualify for a 10% discount along with other benefits this year. A beginning farmer can use these benefits for five years. Years start counting when they have an interest in a farming operation after the age of eighteen. Years that they attend higher education (full time) or are in the military are excluded. Several of our clients will probably qualify. 

Breaking Native Sod

If you intend to break more than 5 acres (per county) of native sod, we need to have a discussion before you start. The RMA is very serious about not having crop insurance encourage breaking of native sod.

Feeding Records

The RMA is issuing new guidelines for determining production when the production is used as livestock feed. This is a big improvement. The guideline states, “AIPS should encourage insureds who feed all or a portion of the harvested production to have the total amount of production determined by the AIP prior to beginning feeding. Contemporaneous livestock feeding records will not be required if all production is determined by the AIP prior to insured beginning to feed Production.”

Make sure you have us measure your bins before you start feeding the grain.

Cover Crops

If you have planted cover crops, make sure that you have complied with the proper date to terminate the cover crop. For most of the area that we cover, that would mean at planting for dryland and before emergence for irrigated. For Holt Co., dryland needs to be terminated 15 days prior to planting.