Crop insurance is purchased by farmers, ranchers, and others to protect themselves against either the loss of their crops due to natural disasters or the loss of revenue due to declines in commodity prices.
Crop insurance is purchased by many agricultural producers, such as farmers and ranchers, to protect themselves against either the loss of their crops due to natural disasters, such as hail, drought, and floods, or the loss of revenue due to declines in the prices of agricultural commodities. There are two general categories of crop insurance: crop yield insurance and crop revenue insurance.
There are two main classes of crop-yield insurance:
Crop-revenue insurance is a combination of crop-yield insurance and price insurance. For example, RMA establishes crop-revenue insurance guarantees on corn by multiplying each farmer's corn-yield guarantee, which is based on the farmer's own production history, times the harvest-time futures price discovered at a commodity exchange before the policy is sold and the crop planted. There is a single guarantee for a certain number of dollars. The policy pays a return if the combination of the actual yield and the cash settlement price in the futures market is less than the guarantee.
Contact the knowledgeable and friendly professionals at Greteman & Associates today to learn more about crop insurance.