Maryland Department of Agriculture

The federally sponsored crop insurance program is more likely to be rated "performs up to the my expectations" by producers who select the higher levels of coverage. Two data sets are used to support this conclusion.

First, the 1998-2002 Maryland data indicates the loss payments to producers with the higher levels of coverage averaged just over $30 per acre of loss payment for those who insured at 70-85% of their average yield history, compared to about $18 per acre for those insuring at 50-65%.

A more recent evaluation focused on the 2003 crop year corn and soybean data. This data indicates that about $8.0 of the $8.6 million of losses paid went to producers who selected 70-85% levels of coverage. Furthermore, its estimated that if these same producer had selected 65% instead of the 70-85% levels, the $8.0 million of loss payments would have dropped to about $258,000 (see back of this page).

Therefore, it is suggested that producers thoroughly consider all of the options when choosing what level of coverage to purchase as this choice directly effects how the insurance program will perform. Where premium cost limits the level of coverage that a producer determines to be affordable, its suggested that consideration be given to selecting a higher level of coverage at a reduced indemnity price. This can result in keeping the premium cost within the budget while selecting a higher loss trigger point that could determine whether a producer receives a loss payment when shallow losses occur. Remember that lower levels of coverage reduces the annual premium cost and can drastically reduce the loss payment following a disaster.

Contact a crop insurance agent for details of the various protection options.