Agricultural Economics Department
Cornhusker Economics
Date of this Version
9-2-2020
Document Type
Article
Abstract
The Federal crop insurance corporation (FCIC) https://www.rma.usda.gov/Federal-Crop-Insurance-Corporation and https://www.everycrsreport.com/reports/R45193.html offers three types and eight levels of taxpayer subsidized multi-peril crop insurance (MPCI) policies, sold for four different unit types. The unit types are designed to define the nature of the farm area being insured. There are four types of insurable units, optional, basic, enterprise and whole farm. Each of these units has differences in costs per acre and is likely to create variations in indemnities. For example, a highly localized severe hail storm on a single field covered using basic units would likely have an indemnity, versus not likely to have an indemnity for the same storm on the same field when this is field is 1 of 20 other fields covered with enterprise units. Iowa State University Extension has published a brief description of the different unit types and provides some limited examples of how unit differences might affect indemnities. The link to that description is: https://www.extension.iastate.edu/sites/www.extension. iastate.edu/files/polk/100202FebruaryUpdate.pdf . It is advisable to talk with your crop insurance agent about which unit type fits the circumstances and operation for which the insurance is being sought. The distance between fields, crop type being grown, inclusion with-in the same county, land tenure, production history and other factors each play a role in what unit classification may be best for a particular operation or situation.
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