Crop Insurance Terms

Crop Insurance Documents

 Catastrophic Risk Protection Endorsement – The part of the crop

insurance policy that contains provisions specific to catastrophic risk

protection.

 Crop Provisions – The part of the policy that contains the specific

provisions of insurance for each insured crop.

 Insured Crop – The crop in the county for which coverage is available

under the policy as shown on the application accepted by the insurance

company.

 Policy – The agreement between the insured and the insurer to insure an

agricultural commodity. It consists of the accepted application, the Basic

Provisions, the Crop Provisions, the Special Provisions, other applicable

endorsements or options, the actuarial documents for the insured

agricultural commodity, and the applicable regulations published in the

Federal Register. Insurance for each agricultural commodity in each

county will constitute a separate policy.

Crop Insurance Documents cont.

 Special Provisions – The part of the policy that contains specific provisions

of insurance for each insured crop that may vary by geographic area.

 Summary of Coverage – The insurance company’s statement to the

insured, based upon the acreage report, specifying the insured crop and

the guarantee or amount of insurance coverage provided, by unit.

 Written Agreement – A document that alters designated terms of a policy

as authorized under the Basic Provisions, the Crop Provisions, or the

Special Provisions for the insured crop.

Coverage Levels and Price Elections

 Actual Production History (APH) – A process used to determine

production guarantees.

 Additional Coverage – A level of coverage greater than catastrophic risk

protection.

 Administrative Fee – An amount the insured must pay for catastrophic risk

protection and additional coverage for each crop year and the

Catastrophic Risk Protection Endorsement.

 Approved Yield – The actual production history (APH) yield, calculated and

approved by the verifier, which is used to determine the production

guarantee. The approved yield is calculated by summing the yearly actual,

assigned, adjusted or unadjusted transitional yields and dividing the sum

by the number of yields in the database, which will always contain at least

four and as many as ten consecutive crop years of actual or assigned

yields. The approved yield may have yield adjustments elected under the

Basic Provisions or other limitations according to FCIC-approved

procedures applied when calculating the approved yield.

Coverage Levels and Price Elections cont.

 Coverage – The insurance provided by a policy against loss of production

or value, by unit, as shown on the summary of coverage.

 Catastrophic Risk Protection – The minimum level of coverage offered by

the FCIC that is required to qualify for certain other USDA program

benefits unless the insured waives eligibility for emergency crop loss

assistance in connection with the crop.

 Deductible – The amount of loss incurred before insurance coverage

begins, determined by subtracting the coverage level percentage the

insured chose from 100 percent. For example, if the insured elected a 65

percent coverage level, the deductible would be 35 percent (100% - 65% =

35%).

Coverage Levels and Price Elections cont.

 Economic Significance – The value of a crop, or of a type or variety of a crop (if

the applicable crop policy allows the insured the option to separately insure

individual crop types or varieties), equal to 10 percent or more of the total

value of the share of all crops grown in the county the previous crop year, or

that the insured expects to grow in the current crop year. However, an

amount is not considered economically significant if the expected liability

under the Catastrophic Risk Protection Endorsement is equal to or less than

the administrative fee required for the crop or the crop type or variety.

 Price Election – The amount contained in the Special Provision, or an

addendum thereto, that is the value per pound, bushel, ton, carton or other

applicable unit of measure for the purposes of determining premium and

indemnity under the policy.

 Production Guarantee (per acre) – The number of pounds, bushels, tons,

cartons or other applicable units of measure determined by multiplying the

approved yield per acre by the coverage level percentage the insured elects.

Farming Terms Used in Crop Insurance

 Abandon – Failure to continue to care for the crop, providing care so

insignificant as to provide no benefit to the crop, or failure to harvest in a

timely manner, unless an insured cause of loss prevents the insured from

properly caring for or harvesting the crop or damages it to the extent that

most producers of the crop on acreage with similar characteristics in the area

would not normally further care for or harvest it.

 Actual Yield – The yield per acre for a crop year, calculated from the

production records or claims for indemnities. The actual yield is determined

by dividing total production (which includes harvested and appraised

production) by planted acres.

 Agricultural Commodity – Any crop or other commodity produced, whether

or not it is insurable.

 Agricultural Experts – Persons who are employed by the Cooperative State

Research, Education and Extension Service or the agricultural departments of

universities, or other person approved by the FCIC, whose research or

occupation is related to the specific crop or practice for which such expertise is

sought.

Farming Terms Used in Crop Insurance cont.

 Annual Crop – An agricultural commodity that normally must be planted

each year.

 Cover Crop – A crop generally recognized by agricultural experts as

agronomically sound for the area for erosion control or other purposes

related to soil conservation or improvement. A cover crop may be

considered to be a second crop.

 Crop Year – The period within which the insured crop is normally grown,

whether or not it is actually grown, an designated by the calendar year in

which the insured crop is normally harvested, unless otherwise specified

in the Crop Provisions.

 Damage – Injury, deterioration or loss of production of the insured crop

from insured or uninsured causes.

 Double Crop – Producing two or more crops for harvest on the same

acreage in the same crop year.

Farming Terms Used in Crop Insurance cont.

 First Insured Crop – With respect to a single crop year and any specific

crop acreage, the first instance that an agricultural commodity is planted

for harvest or prevented from being planted and is insured. For example,

if winter wheat that is not insured is planted on acreage that is later

planted to soybeans that are insured, the first insured crop would be

soybeans. If the winter wheat was insured, it would be the first insured

crop.

 Generally Recognized – When agricultural experts or the organic

agricultural industry, as applicable, are aware of the production method or

practice and there is no genuine dispute regarding whether the

production method or practice allows the crop to make normal progress

toward maturity and produce at least the yield used to determine the

production guarantee or amount of insurance.

Farming Terms Used in Crop Insurance cont.

 Good Farming Practices – The production methods used to produce the

insured crop and allow it to make normal progress toward maturity and

produce at least the yield used to determine the production guarantee or

amount of insurance, including any adjustments for late-planted acreage,

which are: 1) for conventional or sustainable farming practices, those

generally recognized by agricultural experts for the area; or 2) for organic

farming practices, those generally recognized by the organic agricultural

industry for the area or contained in the organic plan. Either the insured

or the insurer may contact the FCIC to determine whether or not

production methods will be considered “good farming practices”.

 Interplanted – Acreage on which two or more crops are planted in a

manner that does not permit separate agronomic maintenance or harvest

of the insured crop.

Farming Terms Used in Crop Insurance cont.

 Irrigated Practice – A method of producing a crop by which water is

artificially applied during the growing season by appropriate systems and

at the proper times, with the intention of providing the quantity of water

needed to produce at least the yield used to establish the irrigated

production guarantee or the amount for which the irrigated acreage

planted to the insured crop is insured.

 Late Planted – Acreage initially planted to the insured crop after the final

planting date.

 Negligence – The failure to use such care as a reasonably prudent and

careful person would use under similar circumstances.

 Perennial Crop – A plant, bush, tree or vine crop that has a life span of

more than 1 year.

 Planted Acreage – Land in which seed, plants or trees have been placed,

appropriate for the insured crop and planting method, at the correct

depth, into a seedbed that has been properly prepared for the planting

method and production practice.

Farming Terms Used in Crop Insurance cont.

 Practical to Replant – The insurance company’s determination, after loss

or damage to the insured crop, based on all factors (including, but not

limited to, moisture availability, marketing window, condition of the field,

and time to crop maturity), that replanting the insured crop will allow the

crop to attain maturity before the calendar date for the end of the

insurance period. The determination that it is practical to replant may be

made regardless of the availability of seed or plants or the input costs

necessary to produce the insured crop, such as those that would be

incurred for seed or plants, irrigation water, etc.

 Prevented Planting – Inability to plant the insured crop with proper

equipment by the final planting date designated in the Special Provisions

for the insured crop in the county. The insured may also be eligible for a

prevented planting payment if the insured failed to plant the insured crop

with the proper equipment within the late planting period. The insured

must have been prevented from planting the insured crop by an insured

cause of loss that is general in the surrounding area and that prevents

other producers from planting acreage with similar characteristics.

Farming Terms Used in Crop Insurance cont.

 Replanted Crop – The same agricultural commodity replanted on the

same acreage as the first insured crop for harvest in the same crop year, if

the replanting is specifically made optional by the policy and the insured

elects to replant the crop and insure it under the policy covering the first

insured crop, or if replanting is required by the policy.

 Replanting – Performing the cultural practices necessary to prepare the

land to replace the seed or plants of the damaged or destroyed insured

crop and then replacing the seed or plants of the same crop does not

necessarily mean the same type or variety of the crop unless different

types or varieties constitute separate crops or it is otherwise specified in

the policy.

 Representative Sample – Portions of the insured crop that must remain in

the field for examination and review by the insurance company’s loss

adjuster when making a crop appraisal, as specified in the Crop Provisions.

In certain instances, the insurance company may allow the insured to

harvest the crop and require only that samples of the crop residue be left

in the field.

Farming Terms Used in Crop Insurance cont.

 Second Crop – With respect to a single crop year, the next occurrence of

planting any agricultural commodity for harvest following a first insured crop

on the same acreage. The second crop may be the same agricultural

commodity as the first insured crop, or a different commodity, except that the

term does not include a replanted crop. A cover crop planted after a first

insured crop for the purpose of haying, grazing or otherwise harvesting in any

manner, or that is hayed, grazed or otherwise harvested during the crop year,

is considered to be a second crop. A cover crop that is covered by FSA’s

noninsured crop disaster assistance program or receives other USDA benefits

associated with forage crops will be considered as planted for the purpose of

haying, grazing or otherwise harvesting. A crop meeting the conditions stated

herein will be considered a second crop whether or not it is insured.

Notwithstanding the references to haying and grazing as harvesting in these

Basic Provisions, for the purpose of determining the end of the insurance

period, harvest of the crop will be as defined in the applicable Crop Provisions.

Farming Terms Used in Crop Insurance cont.

 Sustainable Farming Practice – A system or process for producing an

agricultural commodity, excluding organic farming practices, that is

necessary to produce the crop and is generally recognized by agricultural

experts in the area to conserve or enhance natural resources and the

environment.

 Timely Planted – Planted on or before the final planting date designated

in the Special Provisions for the insured crop in the county.

Organic Production

 Buffer Zone – A parcel of land, as designated in an organic plan, that separates

agricultural commodities grown under organic practices from agricultural

commodities grown under nonorganic practices. It is used to minimize the

possibility of unintended contact by the organic crop with prohibited

substances or organisms.

 Certified Organic Acreage – Acreage in the certified organic farming operation

that has been certified by a certifying agent as conforming to USDA organic

standards.

 Certifying Agent – A private or governmental entity accredited by the U.S.

Secretary of Agriculture to certify a production, processing or handling

operation as organic.

 Conventional Farming Practice – A system or process for producing an

agricultural commodity, excluding organic farming practices, that is necessary

to produce the crop. A conventional farming practice may be, but is not

required to be, generally recognized by agricultural experts in the area as a

means of conserving natural resources or enhancing the environment.

Organic Production cont.

 Organic Agricultural Industry – Persons who are employed by the following

organizations: Appropriate Technology Transfer for Rural Areas, Sustainable

Agriculture Research and Education, the Cooperative State Research,

Education and Extension Service, the agricultural departments of universities,

or other persons approved by the FCIC, whose research or occupation is

related to the specific organic crop or practice for which such expertise is

sought.

 Organic Farming Practice – A system of plant production practices approved

by a certifying agent.

 Organic Plan – A written plan, in accordance with the National Organic

Program, that describes the organic farming practices that the insured and a

certifying agent agree upon annually or at such other times as prescribed by

the certifying agent.

 Organic Standards – Standards in accordance with the Organic Foods

Production Act of 1990.

 Transitional Acreage – Acreage on which organic farming practices are being

followed that does not yet qualify to be designated as organic acreage.

Reports

 Acreage Report – A report required by the Basic Provisions that contains, in

addition to other information, the report of the insured’s share of all acreage

of an insured crop in the county, whether insurable or not insurable.

 Claim for Indemnity – A claim made on the insurance company’s form by the

insured for damage or loss to an insured crop and submitted to the insurance

company not later than 60 days after the end of the insurance period.

 Consent – Approval in writing by the insurance company for the insured to

take a specific action.

 Insurable Loss – Damage for which coverage is provided under the terms of a

policy, and for which the insured accepts an indemnity payment.

 Production Report – A written record showing the insured’s annual

production. The insurance company uses it to determine the insured’s yield

for insurance purposes. The report contains yield information for previous

years, including planted acreage and harvested production. This report must

be supported by written, verifiable records from a warehouseman or buyer of

the insured crop, by the measurement of farmstored production, or by other

records of production approved by the insurance company on an individual

basis.

Units

 Basic Unit – All insurable acreage of the insured crop in the county on the date

coverage begins for the crop year: 1) In which the insured has a 100 percent

crop share; or 2) Which is owned by one person and operated by another

person on a share basis. Land that would otherwise be one unit may, in

certain instances, be divided according to guidelines contained in the Basic

Provisions and in the applicable Crop Provisions.

 Optional Unit – For an additional premium, growers may subdivide their basic

units by practice, section or section equivalents.

 Enterprise Unit – All insurable acreage of the insured crop in the county in

which the insured has a share of the date coverage begins for the crop year.

To qualify, an enterprise unit must contain all of the insurable acreage of the

same insured crop in: 1) One or more basic units that are located in two or

more separate sections, section equivalents, FSA farm serial numbers, or units

established by written agreement, with at least some planted acreage in two

or more separate sections, section equivalents, FSA serial numbers, or two or

more separate units as established by written agreement; or 2) Two or more

optional units established by separate sections, section equivalents, FSA farm

serial numbers, or as established by written agreement, with at least two

optional units containing some planted acreage.

Units cont.

 Whole Farm Unit – All insurable acreage of two or more insured crops

planted in the county in which the insured has a share on the date

coverage begins for each crop for the crop year. All crops for which the

whole farm unit structure is available must be included in the whole farm

unit. At least two of the insured crops must each constitute at least 10

percent of the total liability of all insured crops in the whole farm unit, and

all crops in the unit must be insured under the same plan of insurance and

with the same insurance provider.

Other Terms

 Area – Land surrounding the insured acreage with geographic characteristics,

topography, soil types, and climatic conditions similar to the insured acreage.

 County – Any county, parish or other political subdivision of a state shown on

the insured’s accepted application, including acreage in a field that extends

into an adjoining county if the county boundary is not readily discernible.

 Field – All acreage of tillable land within a natural or artificial boundary. Using

different planting patterns or planting different crops does not create separate

fields.

 FSA Farm Serial Numbers – The number assigned to the farm by the local

Farm Service Agency office.

 Noncontiguous – Acreage of an insured crop that is separated from other

acreage of the same insured crop by land that is neither owned by the insured

nor rented by the insured for cash or a crop share. However, acreage

separated by only a public or private right-of-way, waterway or irrigation canal

will be considered as contiguous.

Other Terms cont.

 Section – A unit of measure under a rectangular survey system describing

a tract of land usually 1 mile square and usually containing approximately

640 acres.

 State – The state shown on the insured’s accepted application.

Parties to Crop Insurance Contract

 Assignment of Indemnity – A transfer of policy rights, made on the

insurance company’s form, that is effective when approved by the

insurance company. It is the arrangement whereby the insured assigns his

right to an indemnity payment to any party of his choice for the crop year.

 Person – An individual, partnership, association, corporation, estate, trust

or other legal entity, and, whenever applicable, a state or a political

subdivision or agency of a state. “Person” does not include the United

States government or any agency thereof.

 Insured – The named person as shown on the application accepted by the

insurance company. This term does not extend to any other person having

a share or interest in the crop (for example, a partnership, landlord or any

other person) unless specifically indicated on the accepted application.

Parties to Crop Insurance Contract cont.

 Limited Resource Farmer – A person with: 1) Direct or indirect gross farm

sales of not more than $100,000 in each of the previous 2 years (to be

increased starting in fiscal year 2004 to adjust for inflation using the Prices

Paid by Farmer Index as compiled by the National Agricultural Statistics

Service); and 2) A total household income at or below the national poverty

level for a family of four, or less than 50 percent of the county median

household income in each of the previous 2 years.

 Share – The insured’s percentage of interest in the insured crop as an

owner, operator, or tenant at the time insurance attaches. However, for

the purpose of determining the amount of indemnity, the insured’s share

will not exceed his share at the earlier of the time of loss or the beginning

of harvest.

 Tenant – A person who rents land from another person for a share of the

crop or a share of the proceeds of the crop.

 Substantial Beneficial Interest – An interest of at least 10 percent in the

insured crop.

Dates and their Definitions

 Acreage Reporting Date – The date contained in the Special Provisions, or

as provided in the Basic Provisions, by which the insured is required to

submit the acreage report.

 Cancellation Date – The calendar date specified in the Crop Provisions on

which coverage for the crop will automatically renew unless cancelled in

writing by either the insured or the insurance company or terminated in

accordance with the policy terms.

 Contract Change Date – The calendar date by which changes to the policy,

if any, will be made available in accordance with the Basic Provisions.

 Coverage Begins Date – The calendar date insurance begins on the

insured crop, as contained in the Crop Provisions, or the date planting

begins on the unit.

 Days – Calendar days.

Dates and their Definitions cont.

 Delinquent Debt – Any account in which the administrative fee, premiums

and interest on those amounts is not paid by the termination date

specified in the Crop Provisions.

 Earliest Planting Date – The initial planting date contained in the Special

Provisions, which is the earliest date the insured may plant an insured

agricultural commodity and qualify for a replanting payment if such

payments are authorized by the Crop Provisions.

 End of Insurance Period Date – The date upon which the crop insurance

coverage ceases for the crop year.

 Final Planting Date – The date contained in the Special Provisions for the

insured crop by which the crop must initially by planted in order to be

insured for the full production guarantee or amount of insurance per acre.

 Late Planting Period – The period that begins the day after the final

planting date for the insured crop and ends 25 days after the final planting

date, unless otherwise specified in the Crop Provisions or Special

Provisions.

Dates and their Definitions cont.

 Premium Billing Date – The earliest date upon which the insured will be

billed for insurance coverage based on the acreage report. The premium

billing date is in the Special Provisions.

 Sales Closing Date – A date contained in the Special Provisions by which

an application must be filed. Also, the last date the insured may change

the crop insurance coverage for a crop.

 Termination Date – The calendar date, contained in the Crop Provisions,

upon which insurance ceases to be in effect because of nonpayment of

any amount due the insurance company under the policy.