Coverages
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Indexed Income Protection Coverage - corn and soybeans
This program provides comprehensive protection for crops by establishing a dollar guarantee based on 100% of the CBOT early futures price. Coverage levels are available from 50-75% of the Indexed yield. The Indexed yield is determined by comparing the insured's Actual Production History (APH) to the county average yield. Catastrophic (CAT) coverage is also available at 27.5% of the APH and 100% of the price. The perils covered are weather related, low price, and certain other unavoidable causes of loss. IIP provides prevented planting and replanting protection for corn and soybeans. This is an alternative coverage to the MPCI yield guarantee program and is federally subsidized.
Dollar Guarantee
The dollar guarantee for the insurance unit is the Indexed yield, times the early futures price for the harvest time contract, times the level of coverage, times the insured acreage, times the ownership share. Growers have the flexibility to vary the dollar protection from 50/100 to 75/100 (or CAT).
Value of Production
Multiply the harvested production, plus any appraisals, by the near harvest futures price by the ownership share to determine the value of production. The price at which the crop is sold does not affect the amount of indemnity.
Loss Payment
To calculate whether a loss is payable, subtract the value of production from the dollar guarantee.
Units
County crop enterprise units are used for calculating claims. Enterprise units consist of all insurable acreage of the insured crop in the county, regardless of interest or persons sharing.
How It Works (corn illustration)
2002
Expected County Yield |
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| YEAR | 1997 | 1998 | 1999 | 2000 | 2001 | 5-yr.
Avg |
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 |
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| County Yield (bu.) | 95 | 90 | 85 | 100 | 90
|
92.0 |
100.0 |
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| Producer Yield (bu.) | 100 | 95 | 90 | 110 | 100 | -99.0 | - (7.0) | |
| Difference (7.0) | Indexed Yield 107.0 | |||||||
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| 1 | ||
| "Harvest Price" is lower than the "Projected Price"— | ||
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|
Base Price |
| Dollar Guarantee | 107 Bu./A. × 75% 100A. | @
$2.35/Bu. = $18,859 |
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| Value of Production | 25 Bu./A. × 100A. | @
$2.00/Bu. = $5,000 |
|
|
|
| Loss Payment (indemnity) | Assume 100% ownership | = $13,859 |
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| 2 | ||
| "Harvest Price" is higher than the "Projected Price"— | ||
|
|
Harvest Price |
| Dollar Guarantee | 107 Bu./A. × 75% 100A. | -------------
= $18,859 |
|
|
|
| Value of Production | 25 Bu./A. × 100A. | @
$3.00/Bu. = $ 7,500 |
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| Loss Payment (indemnity) | Assume 100% ownership | = $11,359 |
Benefits
- Loss payments more closely track economic results of the crop.
- May be viewed more favorably as loan collateral.
- U.S.D.A. shares in the premium costs.
Availability and Prices
| CROP | STATE | COUNTY | PROJECTED PRICE | HARVEST PRICE |
| Corn | MD | All counties where MPCI is available | Feb. avg. for Dec. contract (CBOT) |
Nov. avg. for Dec. contract (CBOT) |
| NC | All counties where MPCI is available | |||
| NY | All counties except: Bronx, Hamilton,
Kings, Nassau, New York, Putnam, Queens, Richmond, Rockland, and Westchester |
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| PA | All counties except: Philadelphia | |||
| Soybeans | MD | All counties except: Garrett. | Feb.
avg. for Nov. contract (CBOT) |
October
average for November (CBOT) |
| NC | All counties except: Alleghany, Ashe, Clay, Graham, Haywood, Jackson, Macon, Madison, Mitchell, Swain, and Yancey | |||
This institution is an equal opportunity provider and employer.
03/12/03
Note: This summary is for general illustration only. See policy for program details.
