10 May2023, US: Deciding on whether or not to purchase crop-hail insurance is an important decision for your operation. But knowing how much coverage you need and when to consider market price fluctuations aren’t always so clear. Here are some tips on helping you make the right choice.
How Much Hail Coverage Do I Need?
This answer differs from farmer to farmer. Everyone has a different perspective on coverage and appetite for risk. Different crops and crop values, as well as crop potential can also weigh into the decision of how much coverage is needed.
Insurance companies have set dollar per acre liability limits based on each crop, but will make considerations to increase these limits on an individual basis if the value of the crop can be shown to exceed the liability limit.
Cost of coverage can be a major consideration in the amount of coverage being purchased. In some areas, rates are exceptionally affordable due to the low probability of a hail event. In other areas, quite the opposite is true.
How Should I Consider Market Price Fluctuation When Making a Crop-Hail Purchase?
Cost is an important factor when purchasing most items, and crop insurance is no exception. However, it is important to reexamine the value of your crop as markets change, as you lock in a production contract, as you reflect on the coverage in place with your MPCI policy, etc..
Bottom line, when crop values increase into the growing season where hail risk is present, you may want to consider adding crop-hail coverage or increasing coverage per acre if you have already taken it pre-planting.
Another area of particular concern would be when your yield potential seems to be outpacing your approved yield. Since this is the benchmark yield used for most crop insurance policies, you can be effectively underinsured in this scenario.
Crop-Hail Coverage from FBN Insurance
Don’t think of mortality as a problem with crops until the wall cloud blows over and there is nothing but stubble left in your fields.
Work with your FBN Crop Insurance Agent to put a solid risk management plan in place that includes crop-hail insurance that could potentially cover what your multi-peril policy doesn’t.
The goal is to make sure your crop-hail insurance adequately covers what you have at risk, or stand to lose.
