Policies

The following descriptions are provided by The Risk Management Agency of the USDA.

Actual Production History (APH)

APH policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease. The producer selects the amount of average yield to insure; from 50-75 percent (in some areas to 85 percent). The producer also selects the percent of the predicted price to insure; between 55 and 100 percent of the crop price established annually by RMA. If the harvested plus any appraised production is less than the yield insured, the producer is paid an indemnity based on the difference. Indemnities are calculated by multiplying this difference by the insured percentage of the price selected when crop insurance was purchased and by the insured share.

Group Risk Plan (GRP)

GRP is designed as a risk management tool to insure against widespread loss of production of the insured crop in a county. GRP policies use a county yield index as the basis for determining a loss. When the estimated county yield for the insured crop, as determined by National Agricultural Statistics Service (NASS), falls below the trigger yield level chosen by the producer, an indemnity is paid. Payments are not based on an individual producer's crop yields. Coverage levels are available for up to 90 percent of the expected county yield. GRP involves less paperwork and costs less than plans of insurance against individual loss, as described above. Under GRP, insured acreage for an individual producer's crop may have low yields and not receive a payment if the county does not suffer a similar level of yield loss. This insurance is primarily intended for producers whose crop yields typically follow the average county yield.

Group Risk Income Protection (GRIP)

GRIP is designed as a risk management tool to insure against widespread loss of revenue from the insured crop in a county. GRIP policies use a county revenue index as the basis for determining a loss by using the estimated county yield for the insured crop, as determined by National Agricultural Statistics Service (NASS), multiplied by the harvest price. If the county revenue falls below the trigger revenue level chosen by the producer, an indemnity is paid. Unlike GRP, it is not necessary to have a decline in yield to be indemnified, as long as the combination of price and yield results in a county revenue that is less than the trigger revenue. Payments are not based on individual producer’s crop yields and revenues. Coverage levels are available for up to 90 percent of the expected county revenue. GRIP involves less paperwork and costs less than plans of insurance against individual loss as described above. Under GRIP, an individual producer’s crop may receive reduced revenue from the insured acreage and not receive a payment under this plan if the county does not suffer a similar level of revenue loss. This insurance is primarily intended for producers whose crop yields typically follow the average county yield and wish to insure that the combination of yield and price result in a particular level of revenue.

Group Risk Income Protection - Harvest Revenue Option (GRIP-HRO)

GRIP-HRO is a supplemental endorsement to the GRIP Basic Provisions. The Harvest Revenue Option changes the trigger revenue to be the result of multiplying the expected county yield by the greater of the expected price or the harvest price and by the producer chosen coverage level percentage. If the county revenue for the insured crop, type, and practice falls below the GRIP-HRO trigger revenue, an indemnity is paid.

Revenue Protection

Revenue Protection policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease, and revenue losses caused by a change in the harvest price from the projected price. The producer selects the amount of average yield he or she wishes to insure; from 50-75 percent (in some areas to 85 percent). The projected price and the harvest price are 100 percent of the amounts determined in accordance with the Commodity Exchange Price Provisions and are based on daily settlement prices for certain futures contracts. The amount of insurance protection is based on the greater of the projected price or the harvest price. If the harvested plus any appraised production multiplied by the harvest price is less than the amount of insurance protection, the producer is paid an indemnity based on the difference.

Revenue Protection With Harvest Price Exclusion

Revenue Protection with Harvest Price exlusion policies insure producers in the same manner as Revenue Protection polices, except the amount of insurance protection is based on the projected price only (the amount of insurance protection is not increased if the harvest price is greater than the projected price). If the harvested plus any appraised production multiplied by harvest price is less than the amount of insurance protection, the producer is paid an indemnity based on the difference.

Yield Protection

Yield Protection policies insure producers in the same manner as APH polices, except a projected price is used to determine insurance coverage. The projected price is determined in accordance with the Commodity Exchange Price Provisions and is based on daily settlement prices for certain futures contracts. The producer selects the percent of the projected price he or she wants to insure, between 55 and 100 percent