What is crop insurance?
What is crop insurance?
The largest source of financial protection to farmers is crop insurance. This coverage is becoming more popular as more and more farmers are discovering about crop insurance.
There are two kinds of crop insurance: multiple perils, which is an all-risk coverage underwritten by the federal government and serviced by the private sector and the other one is crop-hail insurance, which is provided by the private sector.
Loss of crop value as an effect of various types of natural disasters, including drought is covered under all-risk crop insurance. Crop-hail insurance only insures against loss of the value of a crop due to damage by hail only. Since all-risk crop insurance offers coverage for all types of damages, it is considered to be more expensive than just crop-hail insurance.
In recent years, there have been sudden changes in the federal multiple peril crop insurance program. According to the House Subcommittee on Agriculture $3.3 billion requested in appropriations for full year 2006.
A loss due to hail and also fire, which is generally characterized by the same randomness as hail, is covered in a basic crop-hail policy. Damage caused by transit after harvest to store and lightning is generally covered by the policy as well.
When the destroyed crop is replanted compensation for the reduction in expected yield due to the later planting gate is received by the farmer. This policy can be bought during any stage of the growing season.
Multiple crop insurance policy covers low yield and crop quality losses due to adverse weather and unavoidable damage from disease and insects. A number of coverage choices are provided for the owner of this policy. This policy generally provides more coverage than a crop-hail policy.
With a crop-hail policy, farmers can choose levels of coverage by acre, whereas, with multiple peril insurance, farmers must choose their coverage levels by unit. Another difference is the accessibility to purchase these policies any time of the year.
Crop-hail insurance can be purchased during any time of the year whereas multiple peril policy can be purchased only during certain dates. According to the country and the crop the purchasing dates will differ.
Purchasing crop insurance has innumerable advantages. If you think that a crop insurance policy will do good to you, shop around and hunt for a policy that will suit you best. Discuss the policy terms and don't hesitate to contact the companies that interest you and do ask questions if any.
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