Historically, evidence has shown that producer crop insurance decisions may be at least partially budget-driven, with per-acre premium expenses often falling within a pre-determined range on a dollar-per-acre basis. The budget approach to insurance decisions may be even more likely to impact insurance choices in a year like 2024, where margins are expected to be very tight due to lower prices and continued higher production costs.

Lower prices have also resulted in lower projected crop insurance prices and projected guarantees for insurance products. Producers may be interested in insurance coverage options that manage premium expenses without giving up significant risk reduction through lower guarantees.

The supplemental area insurance plans, SCO and ECO, can be combined with an underlying plan of insurance (RP, RP-HPE, or YP) to increase coverage. Premium expenses can be managed through individual coverage level adjustments or unit structure choices. However, using supplemental plans while also keeping total premium costs within the target range of $23 to $35 involves tradeoffs between farm-level and county-based coverage as well as potential gaps in coverage. Producers need to consider and evaluate these tradeoffs to determine if they make sense for their operation.

Read more on supplemental insurance and coverage options during low-margin years here or talk to your ProAg crop insurance today.

Paulson, N., G. Schnitkey and C. Zulauf. “Budget-Driven Crop Insurance Coverage Options for 2024.” farmdoc daily (14):45, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, March 5, 2024.Permalink