Two Common Types of Crop Insurance and Why They’re Important
Just like in any industry, the field of agriculture also faces many challenges. It’s not uncommon for farmers, ranchers, and other agricultural producers to undergo setbacks due to their crops yielding to drought, flooding, and other climate-related disasters. Many growers also struggle to gain revenue because of the unfortunate price decrease of their produce on the market.
The good news is that farmers can now rely on crop insurance to have a stable income or face minimal debts if they suffer losses. Here are two of the most common crop insurance types:
Yield Protection (YP) Insurance
Yield Protection is categorized as a yield-based policy. It was designed to aid farmers who lost their crops to natural causes such as pest invasion, excessive rainfall, fire, and frost. For instance, if a farmer loses more than 50% of his crops to natural disasters, they could receive a payout amounting to approximately 50% of the crop’s average bushels.
Revenue Protection (RP) Insurance
Revenue Protection focuses on helping farmers maintain a stable income despite a sudden fluctuation of the prices of the crops in the market. The payout that the farmers will receive from their insurer will be based on their actual revenue minus the expected revenue.
The great thing about Revenue Protection is that it doesn’t matter what caused the sudden price drop of the crops. As long as a farmer’s revenue is lower than expected, the insurer will still provide them with the appropriate compensation. Crop revenue coverage can be purchased alongside multiple peril crop insurance.
Turn to Farmers Union Insurance
Your search for a reliable crop insurance policy ends with Farmers Union insurance. Our company is dedicated to helping farmers keep their livelihood. Reach out to one of our agents if you want to learn more about different crop insurance types.
