Farmer Ted’s Coverage
Farmer Ted has $800,000 in crop value on his farm.
He elects the 75% coverage level, giving him a 25% deductible ($600,000 insurable value).
Since Farmer Ted lost half of his crop, he will receive an indemnity payment of $300,000 (over the $250,000 arbitrary cap on direct payments).
Other farm programs with arbitrary caps would limit Ted’s payment to a pre-determined amount, regardless of his farm’s value.
With crop insurance, producers are compensated for the value of their loss. They are not over or underpaid.
Half of Farmer Ted’s corn crop was destroyed in a storm. But thanks to crop insurance, Ted received an indemnity payment which accurately met his needs and kept his farm flourishing, despite Mother Nature.
Benefits of Crop Insurance: