As I mentioned a while back, we are changing crop insurance underwriters this year. As it turns out, our agent suggested we part ways, so we are "interviewing" agents. The addition of many private products and riders hasn't made choices any easier.
Let's start with the basics: the premiums for federal crop insurance are the same no matter where you chose to purchase it. One agent this week gave the stat that the producer (farmer) pays on average 38% of the premium, the balance is subsidized by the government. The subsidized portion goes down as a producer elects higher coverage levels.
'Private' products are one of the differentiating factors between agencies. In the past five years many companies have launched programs to supplement the federal programs. Not that the goal of the federal coverage is to make payouts, but the goal behind the private programs is definitely to make money, just like your home/auto/business, etc.
It is important to search out the caveats of these policies. Probably the most common private product is hail insurance. Rates vary company to company; so do the termination dates (you may want to check that this date takes you through harvest). Some policies include wind and green snap while others do not.
The catch in the highly advertised Price Flex and Higher Price Options is that if the fall discovery price is higher than the spring discovery price (even though it may be lower than the rider policy price), the private policy does not make a payment. The key to the Enterprise Plus seems to be grouping the fields together into the right combinations; this has to be done by the sales closing date of March 15.
I know this is Greek to many of you, but bear with me, it is important for those considering crop insurance to have this information.
So what else is left? The agents themselves are the final and deciding factor. With the unforgiving nature of crop insurance, the agent must be knowledgeable. Often, the buck stops at the producer - he is the one that has to pay the bill, and yet he is the one that feels the pinch if the coverage isn't what he thought.
There have been several rules we have learned over the years. It's never good when the agent is learning along with you. I want guidance before the issues arise. The agent also has to listen to our needs, not be on the constant sales pitch. A good agent will be prompt, and get the paperwork right. With two entities in multiple counties, I could have up to five different coverage elections, one in each county for each entity. The agent must also be patient to work through each policy.
Bottom line, what I want from crop insurance coverage is the opportunity to move forward in the event of a catastrophe. I'm not trying to make a living from crop insurance. I'm not buying a lotto ticket. We use crop insurance to cover risk, and the company collected a premium against the risk. The hope is you never need the insurance, but at the same time you shouldn't feel bad in the event you have a claim to submit.