What Crop Insurance Does

Crop insurance protects your farm income when weather, pests, disease, or market prices damage or destroy your crops. Unlike homeowners or auto insurance, crop insurance is designed specifically for the risks farmers face — a late frost that kills your wheat, drought that stunts your corn, or a sudden price drop that makes harvest unprofitable.

The federal government runs the crop insurance program through the USDA Risk Management Agency (RMA), but you buy policies from private insurance companies. The government subsidizes part of your premium, which is why crop insurance costs less than it would if you paid the full price yourself. You pay your share, the government pays its share, and the insurance company handles the claims.

Crop insurance is voluntary, not required — but if you have a loan from a USDA lender or a conventional lender on a farm with a history of federal crop insurance, your lender may require you to carry it. Even if it is not required, most farmers use it because the financial hit from a total crop loss can end a farming operation.

Key Takeaways

  • Crop insurance is sold by private companies but backed by the federal government, which subsidizes your premium so you pay roughly 40 percent of the full cost.
  • Two main types exist: crop revenue insurance, which covers both yield loss and price drops, and crop yield insurance, which covers only the amount of crop you harvest.
  • You choose your coverage level — typically 50 to 85 percent of your expected yield or revenue — and pay a higher premium for higher protection.
  • You must buy your policy before the sales closing date for your crop, which varies by crop and region but is usually in the spring for summer crops.
  • When you file a claim, the insurance company sends an adjuster to measure your actual loss, then pays you the difference between what you were insured for and what you actually harvested or earned.

The Two Main Types of Crop Insurance

Crop revenue insurance (also called revenue insurance) protects your total farm income by covering both yield loss and price changes. If your corn is supposed to yield 150 bushels per acre and you only harvest 120, you are covered for the 30-bushel shortfall. But if the price of corn also drops from $5 per bushel to $4, you are covered for that price loss too. Revenue insurance is the broader protection and is what most farmers choose.

The most common revenue product is the Crop Revenue Coverage (CRC) or Revenue Assurance (RA) policy. Both work similarly: you declare your expected yield and the insurance company locks in a price based on futures markets. At harvest, the company compares what you actually harvested and what the market price actually was against those locked-in numbers. If either is lower, you get paid the difference.

Crop yield insurance (also called named-peril or multi-peril insurance) covers only the amount of crop you produce, not the price. If your corn yield drops from 150 to 120 bushels, you are covered for the 30-bushel loss. But if the price drops, that is your problem. Yield insurance is cheaper than revenue insurance because it covers fewer risks, and some farmers in stable markets or with price-hedging strategies use it.

Within each type, you also choose a coverage level — usually 50, 60, 70, or 80 percent of your expected yield or revenue. A 70 percent coverage level means the insurance company will pay you if your actual result falls below 70 percent of what you were insured for. Higher coverage costs more in premium but protects you more completely.

How Premiums and Subsidies Work

Your crop insurance premium is the price you pay for the policy, and it varies based on your crop, your location, your coverage level, and your expected yield or revenue. A farmer insuring corn in Iowa pays a different premium than a farmer insuring wheat in Kansas, because the risks are different.

The federal government subsidizes a portion of your premium through the USDA. The subsidy percentage depends on your coverage level — higher coverage levels receive lower subsidy percentages. For example, at 70 percent coverage, the government might pay 55 percent of the premium and you pay 45 percent. At 80 percent coverage, the government might pay 38 percent and you pay 62 percent. These percentages change year to year and vary by crop.

You pay your share of the premium to the insurance company before the sales closing date. If you do not pay by that date, your policy does not go into effect and you have no coverage. Many farmers pay their premium in the spring when they are planning their season, or they roll the cost into their operating loan.

When You Can Buy and What important date Matter

Each crop has a sales closing date — the last day you can buy or change your policy for that crop year. For corn and soybeans in most of the Corn Belt, the sales closing date is usually March 15. For spring wheat, it might be March 31. For winter wheat, it is often in the fall. If you miss the sales closing date, you cannot buy coverage for that crop year.

You also need to provide your acreage report by a specific date, usually 15 days after planting or by a set calendar date — whichever comes first. This report tells the insurance company how many acres you planted of each crop and where. If you do not file an acreage report, you have no coverage.

Your insurance company or agent will send you notices with these dates. If you work with a crop insurance agent, they track these important date for you. If you buy directly from a company, you are responsible for knowing the dates. Missing either important date means no coverage for that crop, so mark these dates on your calendar or ask your lender to remind you.

How Claims Work When Crops Fail

When you suffer a loss — a hailstorm destroys your field, drought stunts your yield, or prices collapse — you must notify your insurance company within a set time frame, usually 72 hours. The company will assign an adjuster to inspect your crop and measure the damage.

The adjuster visits your field and takes measurements: they may count plants per acre, measure plant height, dig up roots to check for disease, or take samples to send to a lab. They compare what they find to your expected yield (which you declared when you bought the policy). If your actual yield is lower than your insured yield, the difference is your loss.

For revenue insurance, the adjuster also notes the date of loss, because the insurance company will use the price on that date (or an average price around that date) to calculate your payout. If you harvested the crop, the company may require you to bring in a sample so they can verify the quality and yield themselves.

After the adjuster files their report, the insurance company calculates your payment and sends you a check. This usually takes several weeks to a few months, depending on how busy the company is and whether there are questions about the loss. If you disagree with the adjuster's measurement, you can request a re-inspection or file a dispute.

Who Sells Crop Insurance and How to Find a Policy

Crop insurance is sold only by approved insurance companies — there are roughly 15 companies authorized by the USDA to sell crop insurance policies. The major ones include Nationwide, State Farm, Farmers & Traders, and Harvest. You cannot buy crop insurance from a general insurance agent; you must work with an agent licensed specifically for crop insurance or buy directly from a crop insurance company.

To find an agent, search the USDA RMA website for "crop insurance agent" in your county or state. You can also call your local Farm Service Agency (FSA) office — they do not sell insurance, but they can point you to agents in your area. Many crop insurance agents are also grain elevator employees or work for agricultural cooperatives, so if you have a relationship with a local elevator, ask if they have an agent on staff.

When you contact an agent, have your farm records ready: your acreage by crop, your yield history for the past several years, and your expected revenue or yield for the coming year. The agent will help you choose a coverage level and type, calculate your premium, and file your policy before the sales closing date.

Special Situations and Limits

If you are a beginning farmer (you have farmed for fewer than five years), you may may have access to for a premium subsidy increase — the government pays a higher percentage of your premium to help you get your free guide. Ask your crop insurance agent whether you may have access to.

If you have no yield history for a crop or field, the insurance company will assign you a transitional yield based on county averages or your performance on similar land. As you build a history, your insured yield adjusts upward or downward based on your actual results. This prevents new farmers from being locked into low yields forever.

Crop insurance does not cover losses from poor farming practices, neglect, or failure to follow label directions on pesticides or herbicides. If an adjuster determines you did not manage your crop reasonably, they can deny your claim. It also does not cover losses from war, civil unrest, or nuclear hazard — though these are rare on farms.

Frequently Asked Questions

Do I have to buy crop insurance?

Crop insurance is voluntary unless your lender requires it. Most USDA lenders and some conventional lenders require it as a condition of the loan. Even if it is not required, most farmers carry it because a total crop loss can be financially devastating. Check your loan documents or ask your lender whether they require it.

What if I plant a different crop than I insured for?

You must report any change in acreage or crop to your insurance company before the acreage reporting important date. If you plant a different crop without notifying them, you have no coverage on that acreage. Some policies allow you to change crops if you notify the company in time, but the premium may change.

Can I buy crop insurance after I see a weather forecast?

No. You must buy your policy before the sales closing date, which is set months in advance. You cannot buy coverage after you know a storm is coming or after a loss has already happened. The sales closing date exists to prevent this kind of adverse selection.

What happens if I do not harvest my crop?

If you abandon your crop without harvesting it, you must notify your insurance company and allow an adjuster to inspect it. The adjuster will measure what the yield would have been if you had harvested it, and you will be paid based on that measurement. You cannot straightforward leave a crop standing and claim a total loss without documentation.

How long does it take to get paid after I file a claim?

Most claims are paid within 30 to 90 days, but it can take longer if the company is handling many claims at once (such as after a widespread hailstorm) or if there are questions about the loss. Ask your adjuster for an estimate when they file their report. You can also contact the insurance company to check the status of your claim.