Crop Insurance, Added Price Option

Doran Post and Associates has been offering crop insurance since 1982. Our continued success stems from offering our clients coverage that is tailored to their specific needs. Our agents have built relationships on this philosophy. We offer Multi-Peril Crop Insurance, Crop Hail, Wind Coverage and Other Named Peril Insurance from top companies like Rural Community Insurance Services, Farmers Mutual Hail Insurance, and NAU. We write coverage in Colorado, Kansas, Iowa, Nebraska and South Dakota. Call our office at 308-324-6992 and ask to speak with an agent today.

Added Price Option:  With production costs rising and corn sale prices declining many producers asked us how they could insure their crop for the max.  So when disaster strikes they can be assured income to cover their inputs and get through the year.  That is where APO from RCIS, comes into play.  Added price option is an additional insurance product that increases the price paid at loss time given a yield loss.  This allows you to buy up your base price of corn and soybeans by a fixed dollar amount.  This additional product is not additional revenue protection, it is a yield loss only.  For example, if you have a 200 bushel APH and insure at the 75% level you have a 150 bushel guarantee.  Assuming a base price of $4.00 you could buy an additional $1.50 of yield protection.  If you sustain an insured loss below 150 bushel per acre you will be paid $5.50 per bushel.  The other great thing about APO is that it is paid on an optional unit basis regardless of the underlying unit basis, tack it on to enterprise units and get some extra coverage.

Hail Production Plans with Wind:  Hail production plans continue to be extremely popular for producers in Nebraska.  Rates continue to be competitive considering company loss ratios.  Companies continue to enhance these plans to attract and retain customers.  2017 we have a new wind endorsement that is even better than before.

I wanted to share a few idea’s for that we are proposing for the 2017 crop insurance season.  I have attached an example of how we are helping growers reach around $800 of coverage on corn in that low $30 premium range.  RCIS filed some competitive rates for 2017 and probably the most competitive wind endorsement, capped at $3.00/$100 in Dawson County.  The examples are based on 9N – 22W, Dawson County and are estimates only.

First goal is pretty straight forward by maximizing the affordability of MPCI with revenue protection, this number seems to be around 70% where hail becomes less expensive and 75% where hail with wind endorsement becomes less expensive.

Second, adding hail coverage or hail with wind endorsement (expires October 31).  Our clients have typically stayed conservative when it comes to hail, staying between $100 and $200 of coverage.  Hail and wind continues to be the most probable claim we have with valley irrigated ground.

Third, we are making up the deficit between how much coverage we really need, and the premium we have budgeted with either APO or Added Revenue Price Option coverage.  With APO you can purchase additional all risk yield only coverage, up to 110% of the original value of the crop based on the MPCI spring price and APH.  You can even choose to only apply this to irrigated practices only.  Or if you are insisting on enterprise units, this product can stand as an optional unit basis while the MPCI is EU.

In this example we have a 205 Bushel APH x $3.94 estimated price of corn x 110% = $889 Value of the crop.  $889 – $606 (Value of the MPCI 205APH x .75% x $3.94 = $606) = $283 available of APO.  75% MPCI = 153.75 bushels insured.  $283/154 bushels = $1.84 of additional coverage per bushel of corn.  It’s affordable, and it’s all risk.  It’s not a total substitute for wind and hail, but if you still find yourself short on coverage it’s a great product for a great price and complements the other well.

Added Revenue Price Option coverage is caped at an additional $0.40/bushel of coverage.  In the event of a MPCI revenue decrease ARPO coverage will increase the odds of paying.  This product does not increase the payout in an increasing price environment.

 

Call 308-324-6992 and ask for Dan Keller or Kayle Weichel before it’s too late.

Jared Ehrke

Realtor

308-325-3712

Nancy Hundley-Aden

Realtor

308-324-6992