Crop insurance is vital to those working in agriculture, but not everyone is familiar with how it works and why we get it in the first place. Let’s take a closer look at what crop insurance really is and how you could benefit from it.
What Is Crop Insurance?
Crop insurance is a type of insurance that protects farmers from natural disasters, poor harvests, and other unforeseen circumstances.
Not only does crop insurance protects farmers from damage done to their crops by natural disasters, but it also protects against poor yields, crop loss, and other issues that farmers may face.
Is It Necessary?
Even with the possibility of crop insurance, some farmers still face devastating losses.
Studies show that 20% of farmers file bankruptcy each year. So while crop insurance is a great way to protect yourself, it is certainly not a cure-all.
Furthermore, insurance companies will only cover one crop at a time. This can be a hindrance to farmers who work with multiple crops.
Thankfully, there are farmers who are able to get insurance for multiple crops with the same company. However, this is an uncommon practice.
Different Types of Crop Insurance
A crop insurance policy often comes in different types.
Some policies may only cover one crop, while other policies will cover multiple crops. You can also get policies that cover losses from specific events or even cover losses from specific events in specific areas.
In addition to the differences in policies, the pricing of these policies will likely vary as well. You will want to compare prices to see which type of policy gives you the best coverage for the price you are willing to pay.
How Does It Work?
The most common type of crop insurance is what is known as a revenue policy.
A revenue policy pays out based on the amount of revenue that you lose because of a certain event. This is done by calculating how much money you would have earned if you did not face the loss of your crops.
How Much Will It Cost?
The first step in getting a crop insurance policy is to contact your agent, who will take information about your farm and help you figure out how much you are going to need to cover your losses by using what is known as a “loss ratio.”
There will be a lot of information that you need to provide to your agent, such as:
- Your farm’s overall value
- The value of your crops
- The average yield for all of your crops
- The average price for all of your crops
- A list of all of your farm’s machinery and livestock
Besides needing to provide all of this information, you should also be prepared to pay a large sum of money in order to get the coverage that you need.
Each crop and area will have a different pricing structure which means that you can expect to pay a different amount.
Where to Buy Crop Insurance
When you are looking around at some of the different crop insurance policies, you are going to want to keep an eye out for companies that have an A.M. Best rating of A or higher.
Crop Insurance Services is one of the best providers of central crop insurance to help secure any of your produce. Keep your crops secured with our services. Get in touch with us today to learn how.