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April 2024
USDA RISK MANAGEMENT AGENCY
BEGINNER’S GUIDE
TO CROP INSURANCE
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DEFINING CROP INSURANCE
Crop insurance is a risk management strategy that farmers use to
protect their livelihoods. By purchasing a policy through a crop
insurance agent, farmers are financially protected if there are
losses due to a covered cause of loss. It’s not so different from car
or homeowners insurance.
When a farmer experiences an eligible loss to their insured crop
or livestock, they receive a payment to cover a portion of that
loss. Eligible causes of loss depend on the type of insurance policy.
Some of the common causes of loss covered by crop insurance
policies include:
• Adverse weather
• Fire
• Insects
• Plant disease
• Wildlife
• Price decline
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Why Purchase Crop Insurance?
There are many risk management strategies out there to help
protect your farm. Some farmers may manage risk by working
off-farm jobs and having a rainy-day fund. Others may
diversify the types of crops they grow to lower the chance of
losing an entire harvest. Some implement conservation
strategies to protect their land, animals, and crops.
Crop insurance is an important tool to ensure income in
years when there are eligible losses. In farming, losses are
unavoidable, so it is necessary to have a plan for how to
endure a bad year. By purchasing an insurance policy, you
can gain protection from a wide range of losses. In fact, most
policies are highly customizable allowing you to find risk
management that matches your needs.
How to Purchase Crop Insurance
Crop insurance is a public-private partnership between
insurance providers and the federal government.
To purchase a policy, you need to go through a crop
insurance agent who sells policies for one of the approved
insurance providers. The federal government subsidizes the
insurance premium. Insurance providers sell and administer
the insurance policies, making payments to farmers when
there are eligible losses.
An identical crop insurance policy will cost the same no
matter which agent you use because the prices are set by
the USDA Risk Management Agency (RMA). Therefore, your
relationship with the agent and their understanding of crop
insurance matters the most.
To find an agent, you might ask other farmers if they have an
agent who they can refer you to, or you can use RMA’s
Agent Locator Tool to find an agent near you.
Scan the QR code or visit: rma.usda.gov/
Information-Tools/Agent-Locator
Note, private insurance providers do
sometimes sell their own crop insurance products so
you should be aware that not all policies are subsidized or
regulated by the federal government.
Benefits Available for Beginning/
Veteran Farmers and Ranchers
For crop insurance, beginning farmers and ranchers are
defined as producers who have not operated and managed a
farm for more than 5 crop years (10 years for Whole-Farm
Revenue Protection (WFRP) and Micro Farm). You may be
eligible to exclude some crop years.
Similarly, veteran farmers and ranchers are defined as
producers who have not operated and managed a farm for
more than 5 crop years or first obtained status as a veteran
for service in the military, naval, air, or space service within
the last 5 years.
If you think you may qualify under either of these
denitions, you may be eligible for benets including:
• Lower cost of insurance policies through higher
subsidy and exemption from administrative fee
• Ability to use previous producer’s production history
• Higher substitute Yield Adjustment
To
apply for benefits, talk to your crop
insurance agent to review eligibility and
fill out an application.
To learn more, scan the QR code or visit:
rma.usda.gov/Topics/Beginning-or-
Veteran-Farmers-and-Ranchers
For new farmers, there are a lot of resources available
through USDA. Visit farmers.gov/newfarmers to learn more.
Cost of Crop Insurance?
The cost of a crop insurance policy varies based on several
different factors. In part, the cost reflects the types of risks
being covered, the likelihood of a loss occurring, and the
value of the crop. In fact, the cost of a crop insurance policy
will vary from county to county and field to field. For
example, insuring crops grown next to a river that floods
regularly will likely have a higher cost when compared to
crops that are grown outside of the flood plain.
A crop insurance agent can provide a quote that reflects the
needs of your farming operation.
Whole Farm Revenue
Protection and Micro Farm
Whole-Farm Revenue Protection (WFRP) and Micro Farm
are two of the most comprehensive risk management plans
available. These policies are particularly well suited for
specialty crop, organic, urban, and direct-market producers.
RMA developed WFRP and Micro Farm as a whole-farm
diversified risk management insurance plan that provides
protection against the loss of revenue.
These insurance products guarantee revenue, using your
farm tax records to document how much you have earned
from farming in recent years. One benefit of using revenue
is that you can insure almost any crop or animal produced
on your farm. In some cases, you can even include value
added products. These two crop insurance programs are
available nationwide.
Micro Farm is very similar to WFRP. It was designed as a
simplified version for smaller farms. As such, there is a lower
amount of revenue that is insurable with a Micro Farm policy.
Because these programs are newer, there are fewer agents
who are experienced in selling them. Agents that sell these
policies have self-identified, and a list is available on the RMA
Agent Locator Tool webpage to assist you in finding an agent.
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Key Terms in Crop Insurance
All denitions below may be simplied for educational
purposes. The documents provided when you purchase a
crop insurance policy contain all ofcial information.
Actuarial Soundness — The principle that for every dollar
paid out in insurance claims, a dollar should be collected
to cover those losses. Rates are set to ensure that enough
money is collected to pay for expected losses each year.
Addional Coverage — All coverage levels above the
catastrophic level (CAT). The higher the level of additional
coverage, the more expensive the policy. For additional
coverage policies, you pay an administrative fee and
premium.
Catastrophic Risk Protecon (CAT) — The lowest level of
coverage available. It will only pay when the current year’s
production is lower than 50% of your approved yield at 55%
of the price elected of the farm’s recent average. Because it
offers the lowest level of coverage, these policies are often the
least expensive because you only pay an administrative fee.
Claim for Indemnity — The process and forms necessary to
determine if there was a loss and whether an indemnity
should be paid to the farmer, including the amount of that
payment.
Coverage — Can refer to the types of causes of loss that an
insurance policy protects against and/or the percent of
expected crop value (liability) that is protected by insurance.
Deductible — The amount of the expected crop value
that is not covered by insurance. By choosing (electing) a
specific coverage level, the farmer can control the size of
the deductible.
Eligible Cause of Loss — Each policy will only provide
coverage against specific perils. Some examples include
price decline, adverse weather, disease, and failure of
irrigation water supply. Whenever you buy crop insurance,
it’s important to know what causes of loss are covered.
Endorsements and Options — Optional additions to your
crop insurance policy that expand the type or amount of
coverage available. For example, the Hurricane Insurance
Protection — Wind Index is an endorsement that adds
hurricanes as an eligible cause of loss. These will add
additional cost to your policy due to the expanded coverage.
Guarantee — The maximum amount of yield or revenue
protected by a crop insurance policy. It is typically
determined by multiplying the coverage level by the
average yield or revenue earned in recent years.
Indemnity — The amount of money paid to the farmer when
an eligible cause of loss results in sufficient loss to their
insured crop.
Insurable Interest — The farmer’s percentage share of the
insured crop.
Liability — The dollar amount that the insurance company
will pay to the insured when there is zero yield or revenue.
Loss Adjustment — When an insurance company visits the
farm to collect information about a loss experienced by a
farmer so that a claim can be processed.
Mul-peril — A crop insurance policy that covers more than
one cause of loss. Insurance providers will often sell single
peril policies covering hail damage. Federal crop insurance
policies are typically multi-peril policies.
Noce of Damage or Loss of Producon or Revenue —
How a farmer noties a crop insurance provider that
there was a loss. A farmer typically must inform the crop
insurance provider soon after they become aware of a loss.
Plan of Insurance — Determines how the guarantee
is calculated. This selection will determine whether yields,
revenue, or other criteria are used when making a
guarantee. Some common plans of insurance are listed
below.
• Actual Production History
• Actual Revenue History
• Yield Protection
• Revenue Protection
• Area Plans
• Rainfall Index
• Whole Farm Revenue Protection
Policy — A contract between an insurance provider and a
farmer in which the insurance provider promises to pay the
farmer if there are losses resulting from eligible causes.
Premium — Money paid by the farmer to obtain a crop
insurance policy after the premium subsidy is deducted.
Each policy also comes with an administrative fee unless
waived.
Premium Subsidy — Money paid by the government for
a portion of the farmer’s crop insurance policy premium.
Subsidies make it so that crop insurance is affordable for
farmers.
Provisions — The rules that govern how your crop insurance
policy function. These are available for review on the RMA
website or from your crop insurance agent. The Basic
Provisions, Crop Provisions, and Special Provisions all
work together to determine the specics of how a policy
functions in each county.
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Key Dates in Crop Insurance
The specic dates vary by policy type and county. Dates
may not be used for some policies. The documents provided
when you purchase a crop insurance policy contain all
official information.
Acreage Reporting Date — Farmers must report all their
acreage of an insured crop in a county and insurable share
of that acreage by this date. This information is used to
determine your guarantee and the cost of your insurance.
Cancellation Date — The last day that you can cancel a
policy before it automatically renews.
Contract Change Date — The last day that changes to a
policy can be made by RMA for the upcoming year.
End of Insurance Date — Crop insurance coverage ceases
on this date. Any losses experienced after this date are not
covered by the policy.
Planting Dates — Dates governing when you can plant.
There are three important dates in this category.
Earliest Planng Date — Planting before this date
makes the planted crop ineligible for replanting
payments when replant is allowed by the policy.
Final Planng Date — Crop must be planted before
this date to receive the full guarantee. Typically, there
is a 1% reduction in the guarantee for every day after
this date until the crop is planted.
End of Late Planting Period Date — If a crop is
planted after this date, then it is no longer eligible for
crop insurance.
Premium Billing Date — The earliest date when a farmer
will be billed for their insurance coverage.
Producon Reporng Date — The insured farmer is
required to report the amount of crop they produced. This
information is used to determine the guarantee for the next
year.
Sales Closing Date — The last day that you can apply to
purchase a new policy or make changes to an existing
policy each year.
Termination Date — A policy's coverage ceases on this
date if the farmer does not pay any amount due, including
the premium.
Connecting with RMA
Have questions? Contact one of the 10 RMA Regional
Ofces near you.
What can Regional Ofces do for you?
• Answer questions about crop insurance
• Provide subject matter experts
for
trainings and events
• Receive suggestions used to
improve crop insurance
Scan the QR code or visit:
rma.usda.gov/en/RMALocal/Field-
Offices/Regional-Offices
Other USDA Resources
Visiting a USDA Service Center is one of the best ways for
farmers to connect with USDA resources. The USDA Farm
Service Agency (FSA) and Natural Resource Conservation
Service (NRCS) have ofces at these centers. From farm
loans to conservation programs, they provide a wide
variety of resources for farmers.
It is important to visit your local service center at least
yearly to report your acreage. This reporting is worth doing
because it can help streamline your crop records across
USDA. In addition, other USDA program eligibility relies on
your timely reported crop acreage. Further, when the
federal government enacts disaster programs, your
eligibility can depend on whether you
reported your production.
Scan the QR code or visit:
farmers.gov/your-business/beginning-
farmers/visit-center
If crop insurance is not available for your crop in your
county, an alternative is the Non-Insured Crop Disaster
Assistance Program, which is administered by FSA.
You can learn more by visiting your local USDA Service
Center or visiting the webpage.
Scan the QR code or visit:
fsa.usda.gov/programs-and-services/
disaster-assistance-program/noninsured-
crop-disaster-assistance/index
More Information
For more information about USDA assistance visit:
farmers.gov
USDA Service Centers are locations where you can
connect with Farm Service Agency and Natural
Resources Conservation Service.
To find yours, visit:
farmers.gov/service-center-locator
This document should not be used to determine eligibility for programs. Requirements can be complex.
Please check with each agency to determine if you or your organization are eligible for these programs.
USDA is an equal opportunity provider, employer, and lender.
Version 1
See Something, Say Something
To report fraud, waste, and abuse in crop insurance
programs, contact the OIG Hotline or a Regional
Compliance Ofce by scanning the QR code or using the
links below.
OIG Hotline
usda.gov/oig/hotline
rma.usda.gov/RMALocal/
Field-Offices/Regional-
Compliance-Offices
Regional
Compliance Ofce
Beginner’s Guide
to Crop Insurance
