Organic Broadcaster

Hail insurance provides protection, peace of mind

By Matt Oppriecht, Badgerland Financial

Hail can cause significant crop damage and economic loss. Hail insurance can help farmers face severe weather with fewer worries.

In a season marked by unusual weather, crop hail insurance protects farmers’ investment and offers peace of mind. A crop hail insurance policy provides coverage by the acre and allows farmers to insure up to 100 percent of the value of their crops against hail, fire, wind and vandalism, as well as providing coverage as grain is transported to its first place of storage. In other words, it covers more than just hail and more than your multi-peril crop insurance policy.

Most farmers don’t realize that hail coverage is inexpensive and very customizable, allowing them to choose exactly the coverage per acre they would like for each individual crop. Unlike multi-peril crop insurance, which annually has a March 15 sign-up deadline, most crop hail coverage can be secured online up to just a few hours before a storm hits. This helps give farmers peace of mind as they watch the storm roll in.

Rather than waiting for severe weather, though, most farmers purchase hail insurance from mid-April to mid-June, prior to crop emergence. However, crops can be insured any time up to the specified harvest date. Crop hail premiums are set per acre and due October 1, with a cash rate discount for premiums if paid by August 1.

I prefer to review the different hail insurance options with farmers in my area during the early spring months. This provides additional peace of mind knowing that their investment is protected prior to the hectic planting season. Plus, there is no premium difference if the product is purchased in March or in July.

A hail policy with no deductible pays losses at the first percent of loss, though crop hail insurance can be purchased with zero to 10 percent deductibles. This differs from a multi-peril policy which has at least a 15 percent deductible. An added feature of hail policies will provide replant coverage if you have an early hail storm at the time of emergence. Additional endorsements can also be elected for many hail policies to protect against things like wind damage, green snap, loss of corn fodder for bedding, replant, and extra harvest expense for harvesting a crop due to prior wind damage.

For those farmers who already have multi-peril crop insurance, a companion hail plan protects the uncovered portion of crops covered by multi-peril or crop revenue coverage. Hail insurance also protects against spotty hail damage that may not reduce yield or revenue enough to trigger a multi-peril crop insurance loss. Hail policies and multi-peril policies can also both be paid out—so if you get 100 percent loss, you can get 100 percent payout on your hail policy and up to 85 percent payout on your multi-peril policy. Losses are usually paid within 30 days of final adjustment.

If adverse weather events have been historically common in your area, or if damaging storms have been getting a little too close for comfort, you may want to discuss a hail insurance policy with a knowledgeable crop insurance specialist near you.

Matt Oppriecht is a Senior Crop Insurance Specialist at Badgerland Financial, a member-owned Farm Credit System institution in southern Wisconsin.

Crop Insurance Scenarios

These are real-life examples to illustrate how hail insurance can work. Rates may vary based on county, yield, provider and more factors. Sometimes organic farmers want higher coverage than company limits—since coverage is relative to the premium, sometimes these additional limits need to be requested and approved.

Multi-peril policy, premium example:

La Crosse County Corn
Farmer chooses to insure his corn at 75% revenue protection and has 60 acres of corn.
$14.73/acre premium x 60 acres = $884 premium

Assuming 85 APH (Actual Production History) and 75% revenue protection with a spring price of $7.81/bushel for organic corn, farmer would be covered for $498/acre.

Hail insurance policy, premium example:

Hail insurance is a private product, not subsidized by government and can vary by county.
La Crosse County Corn
($1/acre per $100 of coverage)

If a farmer wants $1,000 per acre coverage, premium is $10/acre.

Farmer chooses to insure for $10/acre and has 60 acres of corn.
$10/acre premium x 60 acres = $600 premium

Hail loss insurance payment example:

Insured has a hail storm come through, damaging the crop. The crop adjuster, an unbiased third party, assesses the damage at 10 percent loss on 20 acres of the crop. Loss percentages can vary per acre and for multiple events.

10% loss x $1,000 coverage/acre = $100 loss/acre

$100 loss x 20 acres damaged = $2,000 hail insurance payment

From the July | August 2015 Issue

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