Learning more about your options can help guide crop insurance decisions
Harvest is complete, winter is upon us in full force and, before we know it, planters will be back in the field for the next crop year. Though most growers have purchased some—if not all—their inputs for the 2024 season, it is best not to forget a crucial component: your crop insurance policy.
Crop insurance policies can be adjusted by three factors. These are the percentage of coverage, percentage of price to be elected, and unit structure. Unit structure is often overlooked due to the changes in premium between each structure, but it is one of the most important choices producers will make when purchasing their policy. Unit structures options are:
Enterprise Units (EU): acres are broken down per county and crop.
Basic Units (BU): acres are broken down per county, crop AND share.
Optional Units (OU): acres are broken down per county, crop, share AND section.
Enterprise Units are the most commonly used unit for growers, mainly because it has the lowest premium. Coincidentally, EU also have the most minimal amount of coverage when compared to
Basic or Optional Units. All crop acres in the county of the policy will be lumped together in claims situations. Here’s an example. If you had two fields of soybeans, one field doing above average and the other doing poorly, production from both fields would be combined, more than likely depleting the chance of a claim.
The golden rule of Enterprise Units is you need to have at least 20 acres or 20% of your acres in another section within a county to qualify. If you do not meet those qualifications, your acres will revert to Basic Units. BU most commonly occur when growers farm very few acres in a county and fail to realize their intended acres do not qualify for EU. Growers do have greater coverage through BU, but in the interest of being cost-conscious, it is best to discuss your planting intentions with your crop insurance agent to avoid the reversion.
Finally, Optional Units are the top tier of unit structure. Though often confused as the unit structure that breaks down acres “by farm,” OU actually break acres down per section basis in addition to crop, county and share of the acres. So, using our Enterprise Unit example of those two fields—one doing poorly and one doing above average—each farm (assuming they are in different sections) would keep separate production and claims would be worked separately.
With this basic understanding, here are a few other facts about unit structure:
a. You do not have to elect the same unit structure for multiple crops. You can elect OU on your corn and EU on your soybeans, for example. This can be altered every year before your state’s sales closing date.
b. If you farm in one county but have a field in a bordering county that will revert to BU, you can elect Multi-County Enterprise Units to bring that single field into your main county. This avoids a larger premium on those acres.
c. The replant guidelines for your policy follow the same EU rule, which means 20 acres or 20% (the lesser of the two) of your acres must be replanted to qualify for a replant claim.
Ultimately, the most important tip is to make sure that you sit down for a 20- to 30-minute annual consultation with your crop insurance agent on your policy. The MFA Crop Insurance team is happy to help ensure you are in the best possible position for 2024. Reach out to your nearest MFA location to be put in contact with one of our agents.
Read more of the Feb. 2024 Today's Farmer Magazine Issue HERE.
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