Strong winds from a severe thunderstorm caused damage all over southern Wisconsin on Monday, July 11th. Power lines were down, roofs were ripped off and crops were destroyed. Recent climate change has brought unexpected weather conditions and, in turn, greater risks in the past decade.

Crop insurance is essential to farmers' livelihood throughout the country and has never been more important than now. Crop insurance has taken off in the past 25 years for good reason – today’s farmers must turn out more products and achieve higher yields than ever before to stay in business. Therefore, there are several reasons to carefully consider investing in crop insurance, or if you already have it, re-evaluating your current coverage.

Staying in Business

Obviously, the biggest reason to invest in crop insurance coverage is to make sure you turn a profit every year. What makes crops an especially difficult to insure is that their survival depends on a completely unpredictable factor: the weather. In any given year, you never know what perils your crops will face. What’s more, the statistics are of little help. In 2007, cold, frost and freezing temperatures caused only 4 percent of all crop loss in the country. In 2008, it was responsible for more than a third of all recorded losses and was one of the largest issues farmers faced that year.

The question to ask is whether your farm would be able to survive if crops were completely wiped out by frost, disease, drought, excess moisture, hail, insects or other natural disasters. Just purchasing a policy is not enough – you must evaluate your risks and accurately determine whether the protection will adequately cover severe loss.

Coverage Options

American farmers have two options when it comes to insuring their crops: multiple peril crop insurance (MPCI) and crop-hail insurance. While all weather conditions present risk, hail is unusual because it can completely obliterate part of a field while leaving the rest virtually untouched, it is difficult to predict and it occurs suddenly. This piece will focus on crop-hail coverage because of these unique risks.

More than Hail

Hail usually accounts for about 8 percent of all crop losses in any given year and experts estimate that hail is responsible for $1.3 billion in crop damage annually across the country. But a crop-hail policy goes beyond simply protecting against the physical damages of hail. Depending on the crop and the region of the country, this type of policy may also provide coverage for loss caused by fire, lightning, wind, vandalism and malicious mischief. However, no matter what kind of crop is being insured, these policies will never cover other weather-related risks like frost, drought or excess moisture, and it will not cover price risk.

Crop-Hail vs. MPCI

Crop-hail insurance is different than MPCI because it is not part of the federal crop insurance program. Instead, private crop insurance companies sell these policies, and the premiums are not subsidized.

Another key difference between the two types of coverage is that, unlike MPCI, farmers may purchase a crop-hail policy at any time during the growing season. Also, while MPCI policies tend to have high deductibles to cover catastrophic loss of huge yields, crop-hail allows for a smaller deductible to cover spot losses.

Many MPCI policies already include some coverage for hail damage, so crop-hail is intended to offset that deductible and provide protection on an acre-by-acre basis. That way, if there is damage to only part of the farmland, which is not an uncommon pattern for hailstorms, you may still be eligible for payment.

Crop insurance is a difficult, complicated matter to navigate alone. Contact us at 608-238-2686 to learn more about your options when it comes to insuring your crops, land and livestock.

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