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Crop Insurance Risk Management

No matter where you live in the Midwest, you’ve likely dealt with the impacts of hail and Nebraska Extension is a trusted source for information on crop production and hail damage. Even though hail events are a common occurrence in Nebraska and other Midwestern states, the impacts can be personally devastating. Crop insurance is one of the most important risk management tools you can have.

Hail coverage may provide a sense of security from extreme weather. It’s important to understand your crop’s hail risk. Weather data and experience might confirm that choosing a crop insurance policy is best for you.

Understanding hail risk is a very difficult thing to do. One of the primary problems is it’s a rare event and as we know, it financially can be very costly. So, a couple ways you can do this to understand your hail risk is to inspect the region that you’re in and understand what other people are going through if hail is impacting them. The second way is to go back many, many, many years in time, not just a couple years, but many years to identify what has happened in the past for hail.

The third way, and this is the most important way, is to look at your crop insurance premium. The higher your crop insurance premiums, well that is annoying in the sense that you have to pay more. It also tells you something very important about the risk you face.

The higher the premium, the higher the risk you face. And if you think those premiums are too high, I would ask that you go back and use that information to re-evaluate how much risk you actually face because the premium-generating method is very robust to be accurate. You need to consider the various policies and coverage levels. There are plenty of options available so scheduling a meeting with your crop insurance agent will help you. Your crop insurance provides you the opportunity to select from many different types of contracts which allows you then to choose the one that meets your goals and objectives. The first primary choice would be your coverage level. Your second choice would be your unit type.

Third choice would be that policy type. The fourth choice, which sometimes goes a little unknown, is that one on endorsements. That would be your yield exclusion, trend adjustment, YA option, all those little things floating around that can impact your bottom line. Each year when you go back to talk to your agent, ask them, “Hey, what’s new for this upcoming year,” that may be beneficial to your operation that you wanna consider. And one of those places can be, “What’s your perception of it going forward this upcoming year?”

One of those choices would be if you think there’s a better chance of a bad event occurring, then select a higher coverage level. Following the storm, contact your insurance agent. Let him or her know that your crops were affected. If a crop adjuster is scheduled to visit your fields, know what guidelines you need to follow. In the event of a storm that you think may have potentially damaged any of your yields, please immediately contact your crop insurance agent to let them know that damage may have occurred.

Your crop insurance agent then will turn around and submit a loss that will then trigger an adjuster to contact you. If it’s during the growing season, the adjuster then will wanna come out and inspect those fields. And then in the case that there is a potential loss after the adjuster has seen it, there’s a number of laws that the RMA has put in place that will help the adjuster and you identify what that loss is.

Please follow all those rules that the RMA has and note that those rules are constantly changing so what may have applied last year may not apply for this upcoming year. In the case of hail, then it’s likely that you’ll have to leave some strips to figure out what that yield account was. Continually evaluate your insurance coverage to minimize your financial risk from hail damage. For more information on hail events and damage from Nebraska Extension, contact your local Extension educator or visit us online.