In fact, farmers say crop insurance is their most important risk management tool.If you’re like most farmers, you insured your crops under the federal crop insurance program authorized by the U.S. Department of Agriculture’s Federal Crop Insurance Corporation.
Revenue Protection policies comprise more than 75 percent of the federal crop insurance policies sold. These policies are designed to protect against loss of revenue caused by low prices, low yields or a combination of both.
“Federal crop insurance can cover 75 to 85 percent of projected revenue, depending on the level of coverage the individual selects,” says Rod Nelson, RCIS field service manager.
However, relying solely on federal crop insurance leaves anywhere from 15 to 25 percent of a farmer’s operation at risk. That’s when some farmers turn to private coverage products to protect more of their bottom line.
Brothers Brian and Jeff Borgmeier are fifth-generation farmers who grow corn and soybeans near Kasota, Minn. As RCIS clients, the brothers insure 85 percent of projected revenue through federal crop insurance.
“Revenue protection is the federal crop insurance product that we use,” says Jeff. “We also have a replant policy or rider on top of the federal crop insurance. Then we have an additional hail coverage product with a wind endorsement.”
The Borgmeiers see quite a bit of hail in their area, so the hail protection product is important for their operation.
Jeff says, “If you’ve lived through a hail storm a week before soybean harvest, that's a scary thing—to get that close and then in a few seconds lose the whole crop. That is a big reason why we like to have hail insurance on soybeans.”
Private products allow customization
Nelson explains that producers use private insurance products to meet the needs of their specific operations.
For some farmers, private coverage products are used to help cover the deductible of the federal crop insurance.
“For example, if you had a 200-bushel corn crop and it was at $4 a bushel, you get $800 of value,” Nelson says. “Your federal crop insurance is going to be maybe 80 percent of that, or $640, so you're looking to cover that $160 an acre.”
Other growers depend on private coverage products to support an operating loan. “I think it’s important for lenders to know that the grain is insured,” says Brian Borgmeier. “They feel a little more comfortable making a loan knowing that there's insurance involved that will guarantee our ability to repay those loans.”
Another reason some farmers obtain private coverage policies is to better align the coverage with marketing strategies for their operation.
“Our hail coverage product is a big part of our marketing program,” says Jeff. “We like to forward sell before we harvest. If we would have a drought event or a hail event where we wouldn't get enough bushels to fill those contracts, we can rely on our insurance helping to take care of those commitments. With the hail insurance, we're more confident forward selling.”
“Once we get to March first, that price is set and we know our yield history, so we pretty much can nail down a dollar per acre number that we're guaranteed,” says Brian.
“It's just easier to plan,” he adds. “And it makes it easier to sleep at night when the weather isn’t cooperating.”
Producers typically work closely with their crop insurance agents to select private coverage products. It’s customized, Nelson explains, because some farmers are interested in coverage for all their acres, for instance, and others may be interested in covering particular fields.
“Farmers choose private coverage products based on how their budgets are put together,” Nelson says. “It depends upon their own individual financial situation and how much risk they're willing to take themselves. That’s something that crop insurance agents can help them determine.”
RCIS offers a full suite of private coverage products developed to meet producers’ needs, including Added Price Option, Added Revenue Price Option, Revenue Protection Policy and RPowerD™, a new product with a higher level of revenue protection and added flexibility.
Excellent claims handling is key
One consideration for farmers selecting private coverage products is the claims handling process offered by the insurance company.
The Borgmeiers have found RCIS to be extremely responsive.
“Our agent is our first phone call, and she puts in the claim,” says Brian. “Then the adjusters contact us directly and we set up a time we can meet to look at the fields.”
Jeff says, “A lot of times we'll hear from the adjuster within 24 hours of our call to our agent. And most of the adjusters are local people.”
“Then we’ll go with the adjuster to assess the damage,” he says. “In a lot of cases they have to defer it because they need to see how it acts throughout the season before they can finalize it.”
The Borgmeiers say the process is quick and painless. “They take very good care of us. They've always been very fair. It's been a real good process,” says Brian.
They appreciate the service they receive from RCIS. “When we’ve had losses, I think they've been real prompt on payment,” says Jeff. “We've never had an issue where payments were held up, and that’s good.”
The brothers also like the fact that RCIS is one of the nation’s leading crop insurance companies. “We’ve heard stories over the years of smaller companies not being able to pay in a large event,” says Brian.
“It could be an issue because a smaller insurance company just wouldn't have the funds. So we like the idea of being with a big enough company, like RCIS, where that's not going to be an issue,” he says.
To learn more about RCIS, visit rcis.com or talk to your crop insurance agent.
Some products not available in all states or counties. This is intended as a general description of certain types of insurance and services available to qualified customers provided solely for informational purposes. Coverage is underwritten in all states by Rural Community Insurance Company, Anoka, MN except in Montana where hail coverage is underwritten by Tri-County Farmers Mutual Insurance Company, Malta, MT. Nothing herein should be construed as a solicitation, offer, advice, recommendation, or any other service with regard to any type of insurance product or services. Your policy is the contract that specifically and fully describes your coverage, terms and conditions. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Coverage may vary by state. Coverages and rates are subject to individual insured meeting our underwriting qualifications and product availability in applicable states. RCIS is a registered trademark of Rural Community Insurance Company. RCIC is an equal opportunity provider. © 2018 Rural Community Insurance Company. All rights reserved.