Many producers like to buy a hail insurance policy in addition to a multi-peril policy on their crops. Hail insurance policies vary considerably in the way that the payout in the event of a loss is made. Typically, they pay a percent of the stated dollar amount of coverage per acre purchased. In recent years a new type of policy has been introduced that works as a companion with your multi-peril policy to provide excess coverage in the event of a hail loss.
Take a look at a Production Companion Hail policy as a companion to your Multi Peril (MPCI), Crop Revenue Coverage (CRC), or Revenue Assurance (RA) policy.
The purpose of a Production Companion Crop-Hail Insurance Plan is to cover, on a Multiple Peril Crop Insurance (MPCI), Crop Revenue Coverage (CRC), or Revenue Assurance (RA) policy (Unit) basis, the portion of the crop not insured under your MPCI, CRC, or RA policy, identified as the difference between the approved Actual Production History (APH) average yield and the selected MPCI, CRC, or RA level of coverage yield guarantee and to provide coverage for loss against the perils of Hail, fire and lightening, and transit coverage up to the insured limit selected .
The Limit of Insurance shall be based on a 105%, 110%, 115% or 120% (varies by state) production guarantee equivalent to your approved APH yield, less the MPCI, CRC, or RA production guarantee for the Unit (Level of Coverage multiplied by your APH yield), multiplied by the Unit acreage, multiplied by the Price Election and your share in the crop(s).
Highlights of the Production Companion Hail policy are:
Insuring bushels on entire unit, not acres like typical hail policy
Coverage begins above your limit for your MPCI, CRC, or RA policy
Insurance limit choices of 105%, 110%, 115% or 120% of your APH
Bushels insured at Established Spring Base Price for your MPCI, CRC, or RA policy
Loss adjustment is deferred to harvest and is based on actual harvested production from the unit
Does not cover loss until loss equals a minimum of 5% , then payments begin from zero
Must insure all units within a county on same plan (exception for non-irrigated & irrigated acres).
Rates based on the Township the crop is grown in
Cost effective protection
Benefits
A Production Companion Hail policy will insure you for more bushels than your historical Actual Production History (APH) and thus can add significant protection against loss for the perils of Hail, fire and lightening, and transit.
The cost is typically less than purchasing similar levels of coverage using a typical hail policy.
In addition, the payout is typically quicker than most crop hail policies.
Thus, it has merit for consideration if you normally buy additional hail coverage on your crop or desire to protect more bushels against a hail loss.
Cons
Must insure all units within a county on same plan, thus you can't pick and choose a field to insure and leave another uninsured.
Must have same insurance plan/limits on all crops grown in the same county (exception for non-irrigated & irrigated acres.
