What Is Crop-Hail Insurance?

Crop-hail insurance is a type of insurance that provides co🎀verage for damage and destruction by hail and fire. Purchased by farmers, crop-hail insurance protects agricultural products while they are still in the field and have yet to be harvested.

Crop-hail insurance protects the livelihood of farmers, who are often at ꧒the mercy of sudden ๊weather events. Hail is singled out because it has the unique ability to totally destroy a significant part of a planted field while leaving the rest undamaged.

How Crop-Hail Insurance Works

A crop-hail policy goes beyond simply protecting against the physical damage of hail. It also routinely covers fire. Depending on the crop and the region of the country, a crop-hail policy may also cover losses caused by lightning, wind, vandalism, and malicious mischief. However, these policies will never cover other weather-related risks such as sudden frost, drought, or excess moisture. Nor does crop-hail insurance cover the risk of changes in the prices of crops.

When purchasing a crop-hail policy, select a dollar amount of coverage and then choose the options with different deductibles to partially self-insure for lower premium costs. The deductible is the amount you must pay out of pocket for a claim. Typically, the higher the deductible, the lower your 澳洲幸运5官方开奖结果体彩网:monthly premium.

Since hail can destroy a portion of crops while leaving the rest of the property unaffected, crop-hail coverage is provided on an acre-by-acre basis. In other words, farmers can receive a claim payment for damage that only occurs on part of their land.

Since policies are sold on an acre-by-acre basis, a farmer does not have to purchase a policy for an entire farm, helping to con💯centrate on at-risk areas. However, because the policy is purchased for specific acres, its coverage cannot be extended or transferred to another area once finalized.

The policy insures up to the expected value of the crop covered under the policy, provided that tꦗhe covered events damaged the crops. The expected value is calculated on a dollar-per-acre basis, with this value chosen by the farmer before completing the policy purchase.

Crop-Hail Insurance vs. Crop Insurance

Crop-hail insurance may appear similar to crop insurance, but there are distinct differꦺences between the two policies.

In the United States, farmers can purchase crop insurance from the Federal Crop Insurance Corporation (FCIC), a government program. This type of policy, officially known as multiple peril crop insurance (MPCI), generally covers losses due to other natural causes, including drought and disease. It can also cover changes in the price of farm commodities. Although private insurers underwrite and administer the policies, the FCIC sets the rates and subsidizes the premiums.

In contrast, crop-hail insurance is a type of private insurance and not part of a federal insurance program. This type of policy covers a loss caused by a specific event, such as hail or fire. A crop-hail policy is similar to flood insurance, which only protects against flood damage. Farmers can ha🔴ve both MPCI and crop-hail insurance policies, as they cover different types of losses.

Special Considerations for Crop-Hail Insurance

Farmers operating in areas prone to hailstorms often face other weather-related risks, such as wind or sudden frosts. Protection from these events may often be purchased as crop-hail policy add-ons if the farmer doesn't wish to purchase MPCI. Some policies may also allow farmers to buy theft coverage.

If you have an outstanding 澳洲幸运5官方开奖结果体彩网:mortgage loan used to purchase the farm, also called a farm ownership loan, your mortgage lender may require you to buy farmer's insurance. Farmer's insurance is similar to a homeowners insurance policy but provides more extensive coverage, including the harvest and commercial equipment.

Frequently Asked Questions (FAQs)

The Bottom Line

Crop-hail insurance covers agricultural products destroyed or damaged by hail and fire. Private insurance companies offer crop-hail insurance on an acre-by-acre basis. Crop-hail insurance compensates farmers for the value of crops lost in the field. Crop-hail insurance can supplement federally backed multiple peril crop insurance (MPCI), which provides broader coverage against disease, natural disasters, and changes in commodity prices.