[FCIC policies]
Department of Agriculture
Federal Crop Insurance Corporation
Area Risk Protection Insurance Policy
[Reinsured policies]
(Appropriate title for insurance provider)
(This is a continuous policy. Refer to Section 2.)
[FCIC policies]
Area Risk Protection Insurance (ARPI) provides protection against widespread loss of revenue or widespread loss of yield in a county. Individual farm revenues and yields are not considered under ARPI and it is possible that your individual farm may experience reduced revenue or reduced yield and you do not receive an indemnity under ARPI.
This is an insurance policy issued by FCIC, under the provisions of the Federal Crop Insurance Act (7 U.S.C. 1501 - 1524 ) (Act). All provisions of the policy and rights and responsibilities of the parties are specifically subject to the Act. The provisions of the policy may not be waived or modified in any way by us, your insurance agent, or any employee of USDA. FCIC procedures (handbooks, underwriting rules, manuals, memoranda, and bulletins), and published on the Risk Management Agency's (RMA) website at www.rma.usda.gov or a successor website, will be used in the administration of this policy, including the adjustment of any loss or claim submitted under this policy. Throughout this policy, "you" and "your" refer to the insured shown on the accepted application and "we," "us," and "our" refer to FCIC. Unless the context indicates otherwise, the use of the plural form of a word includes the singular and the singular form of the word includes the plural.
AGREEMENT TO INSURE: In return for the commitment to pay a premium, and subject to all of the provisions of this policy, we agree with you to provide the insurance as stated in this policy. If there is a conflict between the Act, the regulations in 7 CFR chapter IV, and FCIC procedures, the order of precedence is:
(1) The Act; (2) the regulations; and (3) FCIC procedures. If there is a conflict between the policy provisions in 7 CFR part 407 and the administrative regulations in 7 CFR part 400, the policy provisions published at 7 CFR part 407 apply. The order of precedence for the policy is:
(1) The Catastrophic Risk Protection Endorsement, as applicable; (2) Special Provisions; (3) actuarial documents; (4) the applicable Commodity Exchange Price Provisions; (5) the Crop Provisions; and (6) these Basic Provisions.
[Reinsured policies]
Area Risk Protection Insurance (ARPI) provides protection against widespread loss of revenue or widespread loss of yield in a county. Individual farm revenues and yields are not considered under ARPI and it is possible that your individual farm may experience reduced revenue or reduced yield and not receive an indemnity under ARPI.
This insurance policy is reinsured by FCIC under the provisions of Subtitle A of the Federal Crop Insurance Act (7 U.S.C. 1501 - 1524 ) (Act). All provisions of the policy and rights and responsibilities of the parties are specifically subject to the Act. The provisions of the policy may not be waived or varied in any way by us, our insurance agent or any other contractor or employee of ours, or any employee of USDA. We will use FCIC procedures (handbooks, underwriting rules, manuals, memoranda, and bulletins), published on the Risk Management Agency (RMA's) website at www.rma.usda.gov or a successor website, in the administration of this policy, including the adjustment of any loss or claim submitted under this policy. In the event that we cannot pay your loss because we are insolvent or are otherwise unable to perform our duties under our reinsurance agreement with FCIC, FCIC will become your insurer, make all decisions in accordance with the provisions of this policy, including any loss payments, and be responsible for any amounts owed. No state guarantee fund will be liable for your loss.
Throughout this policy, "you" and "your" refer to the insured shown on the accepted application and "we," "us," and "our" refer to the insurance provider providing insurance. Unless the context indicates otherwise, the use of the plural form of a word includes the singular and the singular form of the word includes the plural.
AGREEMENT TO INSURE: In return for the commitment to pay a premium, and subject to all of the provisions of this policy, we agree with you to provide the insurance as stated in this policy. If there is a conflict between the Act, the regulations in 7 CFR chapter IV, and FCIC procedures, the order of precedence is: (1) The Act; (2) the regulations; and (3) FCIC procedures. If there is a conflict between the policy provisions in 7 CFR part 407 and the administrative regulations in 7 CFR part 400, the policy provisions in 7 CFR part 407 apply. The order of precedence among the policy is: (1) The Catastrophic Risk Protection Endorsement, as applicable; (2) Special Provisions; (3) actuarial documents; (4) Commodity Exchange Price Provisions; (5) the Crop Provisions; and (6) these Basic Provisions.
Terms and Conditions
Basic Provisions
Abandon. Failure to continue to care for the crop, or providing care so insignificant as to provide no benefit to the crop.
Acreage report. A report required by section 8 of these Basic Provisions that contains, in addition to other required information, your report of your share of all acreage of an insured crop in the county, whether insurable or not insurable.
Acreage reporting date. The date contained in the Special Provisions by which you are required to submit your acreage report.
Act. Subtitle A of the Federal Crop Insurance Act (7 U.S.C. 1501 - 1524 ).
Actual production. The harvested and/or appraised amount of an agricultural commodity in number of pounds, bushels, tons, cartons, or other units of measure as provided in the applicable Crop Provisions.
Actuarial documents. The part of the policy that contains information for the crop year which is available for public inspection in your agent's office and published on RMA's website and which shows available plans of insurance, coverage levels, information needed to determine amounts of insurance, prices, premium rates, premium adjustment percentages, type (commodity types, classes, subclasses, intended uses), practice (irrigated practices, cropping practices, organic practices, intervals), insurable acreage, and other related information regarding crop insurance in the county.
Additional coverage. A level of coverage greater than catastrophic risk protection.
Administrative fee. An amount you must pay for catastrophic risk protection, and additional coverage for each crop year as specified in section 7 of these provisions, the Catastrophic Risk Protection Endorsement, or the Special Provisions, as applicable.
Agricultural experts. Persons who are employed by the Cooperative Extension System or the agricultural departments of universities, or other persons approved by FCIC, whose research or occupation is related to the specific crop or practice for which such expertise is sought. Persons who have a personal or financial interest in you or the crop will not qualify as an agricultural expert. For example, contracting with a person for consulting would be considered to have a financial interest and a person who is a neighbor would be considered to have a personal interest.
Application. The form required to be completed by you and accepted by us before insurance coverage commences. This form must be completed and filed in your agent's office not later than the sales closing date of the initial insurance year for each crop for which insurance coverage is requested.
Area. The general geographical region in which the insured acreage is located, designated generally as a county but may be a smaller or larger geographical area as specified in the actuarial documents.
Area Revenue Protection. A plan of insurance that provides protection against loss of revenue due to a county level production loss, a price decline, or a combination of both. This plan also includes upside harvest price protection, which increases your policy protection at the end of the insurance period if the harvest price is greater than the projected price and if there is a production loss.
Area Revenue Protection with the Harvest Price Exclusion. A plan of insurance that provides protection against loss of revenue due to a county level production loss, price decline, or a combination of both. This plan does not provide upside harvest price protection.
Area Risk Protection Insurance (ARPI). Insurance coverage based on an area, not an individual, yield or revenue amount. There are three plans of insurance available under ARPI: Area Revenue Protection, Area Revenue Protection with the Harvest Price Exclusion, and Area Yield Protection.
Area Yield Protection. A plan of insurance that provides protection against loss of yield due to a county level production loss. This plan does not provide protection against loss of revenue or upside harvest price protection.
Assignment of indemnity. A transfer of policy rights, made on our form, and effective when approved by us in writing, whereby you assign your right to an indemnity payment for the crop year only to creditors or other persons to whom you have a financial debt or other pecuniary obligation.
Beginning farmer or rancher. An individual who has not actively operated and managed a farm or ranch in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than five crop years, as determined in accordance with FCIC procedures. Any crop year's insurable interest may, at your election, be excluded if earned while under the age of 18, while in full-time military service of the United States, or while in post-secondary education, in accordance with FCIC procedures. A person other than an individual may be eligible for beginning farmer or rancher benefits if there is at least one individual substantial beneficial interest holder and all individual substantial beneficial interest holders qualify as a beginning farmer or rancher.
Buffer zone. Acreage designated in your organic system plan that separates agricultural commodities grown under organic farming practices from those grown under non-organic farming practices. A buffer zone must be sufficient in size or other features, as stated in the National Organic Program published in 7 CFR part 205, to prevent or minimize the possibility of unintended contact by prohibited substances or organisms applied to adjacent land acres with an area that is part of the certified organic farming operation.
Cancellation date. The calendar date specified in the Crop Provisions on which coverage for the crop will automatically renew unless canceled in writing by either you or us or terminated in accordance with the policy terms.
Catastrophic risk protection (CAT). Coverage equivalent to 65 percent of yield coverage and 45 percent of price coverage, unless otherwise specified in the Special Provisions, and is the minimum level of coverage offered by FCIC, as specified in the actuarial documents for the crop, type, and practice. CAT is not available with Area Revenue Protection or Area Revenue Protection with the Harvest Price Exclusion.
Catastrophic Risk Protection Endorsement. The part of the crop insurance policy that contains provisions of insurance that are specific to CAT.
Certified organic acreage. Acreage in the certified organic farming operation that has been certified by a certifying agent as conforming to organic standards in accordance with the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.) and 7 CFR part 205.
Certifying agent. A private or governmental entity accredited by the USDA Secretary of Agriculture for the purpose of certifying a production, processing or handling operation as organic.
Class. A specific subgroup of commodity type.
Code of Federal Regulations (CFR). The codification of general rules published in the FEDERAL REGISTER by the Executive departments and agencies of the Federal Government. Rules published in the FEDERAL REGISTER by FCIC are contained in 7 CFR chapter IV. The full text of the CFR is available in electronic format at https://www.ecfr.gov/.
Commodity. An agricultural good or product that has economic value.
Commodity Exchange Price Provisions (CEPP). A part of the policy that is used for crops for which ARPI is available, unless otherwise specified. This document includes the information necessary to derive the projected and harvest price for the insured crop, as applicable.
Commodity type. A specific subgroup of a commodity having a characteristic or set of characteristics distinguishable from other subgroups of the same commodity.
Consent. Approval in writing by us allowing you to take a specific action.
Contract. (See definition of "policy.")
Contract change date. The calendar date, as specified in the Crop Provisions, by which changes to the policy, if any, will be made available in accordance with section 3 of these Basic Provisions.
Conventional farming practice. A system or process that is necessary to produce a commodity, excluding organic farming practices.
Cooperative Extension System. A nationwide network consisting of a state office located at each state's land-grant university, and local or regional offices. These offices are staffed by one or more agricultural experts who work in cooperation with the National Institute of Food and Agriculture, and who provide information to agricultural producers and others.
County. Any county, parish, political subdivision of a state, or other area specified on the actuarial documents shown on your accepted application, including acreage in a field that extends into an adjoining county if the county boundary is not readily discernible.
Cover crop. A crop generally recognized by agricultural experts as agronomically sound for the area for erosion control or other purposes related to conservation or soil improvement, unless otherwise specified in the Special Provisions. A cover crop may be considered a second crop (see definition of "second crop").
Credible data. Data of sufficient quality and quantity to be representative of the county.
Crop. The insurable commodity as defined in the Crop Provisions.
Cropping practice. A method of using a combination of inputs such as fertilizer, herbicide, and pesticide, and operations such as planting, cultivation, etc. to produce the insured crop. The insurable cropping practices are specified in the actuarial documents.
Crop Provisions. The part of the policy that contains the specific provisions of insurance for each insured crop.
Crop year. The period within which the insured crop is normally grown and designated by the calendar year in which the crop is normally harvested.
Days. Calendar days.
Delinquent debt. Has the same meaning as the term defined in 7 CFR part 400, subpart U.
Dollar amount of insurance per acre. The guarantee calculated by multiplying the expected county yield by the projected price and by the protection factor. Your dollar amount of insurance per acre is shown on your Summary of Protection. Following release of the harvest price, your dollar amount of insurance may increase if Area Revenue Protection was purchased and the harvest price is greater than the projected price.
Double crop. Producing two or more crops for harvest on the same acreage in the same crop year.
Expected county revenue. The expected county yield multiplied by the projected price.
Expected county yield. The yield, established in accordance with section 15, contained in the actuarial documents on which your coverage for the crop year is based.
Farm management record. A contemporaneous record provided by you that documents your actual production recorded at the time of harvest, storing of the crop, or use of the crop for feed, and can be used to substantiate your actual production reported on the production report.
FCIC. The Federal Crop Insurance Corporation, a wholly owned corporation within USDA.
Final county revenue. The revenue determined by multiplying the final county yield by the harvest price with the result used to determine whether an indemnity will be due for Area Revenue Protection and Area Revenue Protection with the Harvest Price Exclusion, and released by FCIC at a time specified in the Crop Provisions.
Final county yield. The yield, established in accordance with section 15, for each insured crop, type, and practice, used to determine whether an indemnity will be due for Area Yield Protection, and released by FCIC at a time specified in the Crop Provisions.
Final planting date. The date contained in the Special Provisions for the insured crop by which the crop must be planted in order to be insured.
Final policy protection. For Area Revenue Protection only, the amount calculated in accordance with section 12(e).
First insured crop. With respect to a single crop year and any specific crop acreage, the first instance that a commodity is planted for harvest or prevented from being planted and is insured under the authority of the Act. 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.
FSA. The Farm Service Agency, an agency of the USDA, or a successor agency.
FSA farm number. The number assigned to the farm by the local FSA office.
Generally recognized. When agricultural experts or organic agricultural experts, 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.
Good farming practices. The production methods utilized to produce the insured crop, type, and practice and allow it to make normal progress toward maturity, which are those generally recognized by agricultural experts or organic agricultural experts, depending on the practice, for the area. We may, or you may request us to, contact FCIC to determine if production methods will be considered "good farming practices."
Harvest price. A price determined in accordance with the CEPP and used to determine the final county revenue.
Household. A domestic establishment including the members of a family (parents, brothers, sisters, children, spouse, grandchildren, aunts, uncles, nieces, nephews, first cousins, or grandparents, related by blood, adoption or marriage, are considered to be family members) and others who live under the same roof.
Insurable interest. Your percentage of the insured crop that is at financial risk.
Insurable loss. Damage for which coverage is provided under the terms of your policy, and for which you accept an indemnity payment.
Insurance provider. A private insurance company that has been approved by FCIC to provide insurance coverage to producers participating in programs authorized by the Act.
Insured. The named person as shown on the application accepted by us. This term does not extend to any other person having an insurable interest in the crop (e.g., a partnership, landlord, or any other person) unless specifically indicated on the accepted application.
Insured crop. The crop in the county for which coverage is available under your policy as shown on the application accepted by us.
Intended use. The expected end use or disposition of the commodity at the time the commodity is reported.
Interval. A period of time designated in the actuarial documents.
Irrigated practice. A method of producing a crop by which water, from an adequate water source, is artificially applied in sufficient amounts by appropriate and adequate irrigation equipment and facilities and at the proper times necessary to produce at least the (1) yield expected for the area; (2) yield used to establish the production guarantee or amount of insurance/coverage on the irrigated acreage planted to the commodity; or (3) producer's established approved yield, as applicable. Acreage adjacent to water, such as but not limited to a pond, lake, river, stream, creek or brook, shall not be considered irrigated based solely on the proximity to the water. The insurable irrigation practices are specified in the actuarial documents.
Liability. (See definition of "policy protection.")
Limited resource farmer. Has the same meaning as the term defined by USDA at http://lrftool.sc.egov.usda.gov/LRP_Definition.aspx.
Loss limit factor. Unless otherwise specified in the Special Provisions a factor of .18 is used to calculate the payment factor. This factor represents the percentage of the expected county yield or expected county revenue at which no additional indemnity amount is payable. For example, if the expected county yield is 100 bushels and the final county yield is 18 bushels, then no additional indemnity is due even if the yield falls below 18 bushels. The total indemnity will never be more than 100 percent of the final policy protection.
NAP. Noninsured Crop Disaster Assistance Program published in 7 CFR part 1437, administered by FSA.
Native sod. Acreage that has no record of being tilled (determined in accordance with information collected and maintained by an agency of the USDA or other verifiable records that you provide and are acceptable to us) for the production of an annual crop on or before February 7, 2014, and on which the plant cover is composed principally of native grasses, grass-like plants, forbs, or shrubs suitable for grazing and browsing.
New breaking acreage. Acreage which has not been planted and harvested, or insured within the 4 previous crop years, in accordance with section 5(a).
Offset. The act of deducting one amount from another amount.
Organic agricultural experts. Persons who are employed by the following organizations: Appropriate Technology Transfer for Rural Areas, Sustainable Agriculture Research and Education or the Cooperative Extension System, the agricultural departments of universities, or other persons approved by FCIC, whose research or occupation is related to the specific organic crop or practice for which such expertise is sought.
Organic crop. A commodity that is organically produced consistent with section 2103 of the Organic Foods Act of 1990 (7 U.S.C. 6502 ).
Organic farming practice. A system of plant production practices used on organic acreage and transitional acreage to produce an organic crop that is approved by a certifying agent in accordance with 7 CFR part 205 .
Organic practice. The insurable organic farming practices specified in the actuarial documents.
Organic standards. Standards in accordance with the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.) and 7 CFR part 205.
Organic system plan. A written plan, in accordance with the National Organic Program published in 7 CFR part 205, that describes the organic farming practices that you and a certifying agent agree upon annually or at such other times as prescribed by the certifying agent.
Payment factor. A factor no greater than 1.0 used to determine the amount of indemnity to be paid in accordance with section 12(g).
Perennial crop. A plant, bush, tree or vine crop that has a life span of more than one year.
Person. An individual, partnership, association, corporation, estate, trust, or other legal entity, and wherever applicable, a State or a political subdivision or agency of a State. "Person" does not include the United States Government or any agency thereof.
Planted acreage. Except as otherwise specified in the Special Provisions, 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 in accordance with good farming practices for the area.
Policy. The agreement between you and us to insure a commodity and consisting of the accepted application, these Basic Provisions, the Crop Provisions, the Special Provisions, the CEPP, other applicable endorsements or options, the actuarial documents for the insured commodity, the CAT Endorsement, if applicable, and the applicable regulations published in 7 CFR chapter IV. Insurance for each commodity in each county will constitute a separate policy.
Policy protection. The liability amount calculated in accordance with section 6(f) unless otherwise specified in the Special Provisions.
Practice. Production methodologies used to produce the insured crop consisting of unique combinations of irrigated practice, cropping practice, organic practice, and interval as shown on the actuarial documents as insurable.
Premium billing date. The earliest date upon which you will be billed for insurance coverage based on your acreage report. The premium billing date is contained in the Special Provisions.
Production record. A written record that documents your actual production reported on the production report. The record must be an acceptable verifiable record or an acceptable farm management record as authorized by FCIC procedures.
Production report. A written report provided by you in accordance with section 8 showing your annual production. The report contains yield information for the current year, including planted acreage and production. This report must be supported by acceptable production records.
Production reporting date. The date contained in the actuarial documents by which you are required to submit your production report.
Prohibited substance. Any biological, chemical, or other agent that is prohibited from use or is not included in the organic standards for use on any certified organic, transitional or buffer zone acreage. Lists of such substances are contained at 7 CFR part 205.
Projected price. A price for each crop, type, and practice as shown in the actuarial documents, as applicable, determined in accordance with the CEPP, Special Provisions or the Crop Provisions, as applicable.
Protection factor (PF). The percentage you choose that is used to calculate the dollar amount of insurance per acre and policy protection.
Replanted crop. The same commodity replanted on the same acreage as the first insured crop for harvest in the same crop year. ARPI does not have a replant provision, therefore, it is only used for first and second crop determinations.
RMA. Risk Management Agency, an agency within USDA.
RMA's website. A website hosted by RMA and located at www.rma.usda.gov or a successor website.
Sales closing date. The date contained in the Special Provisions by which an application must be filed and the last date by which you may change your crop insurance coverage for a crop year.
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 or a different agricultural commodity as the first insured crop, except the term does not include a replanted crop. If following a first insured crop, a cover crop that is planted on the same acreage and harvested for grain or seed, is considered a second crop. A crop that is covered by NAP or receives other USDA benefits associated with forage crops is considered a second crop. A crop meeting the conditions in this definition is considered a second crop regardless of whether it is insured.
Share. Your insurable interest in the insured crop as an owner, operator, or tenant.
Special Provisions. The part of the policy that contains specific provisions of insurance for each insured crop that may vary by geographic area, and is available for public inspection in your agent's office and published on RMA's website.
State. The state shown on your accepted application.
Subclass. A specific subgroup of class.
Subsidy. The portion of the total premium that FCIC will pay in accordance with the Act.
Subsidy factor. The percentage of the total premium paid by FCIC as a subsidy.
Substantial beneficial interest. An interest held by any person of at least 10 percent in you (e.g., there are two partnerships that each have a 50 percent interest in you and each partnership is made up of two individuals, each with a 50 percent share in the partnership. In this case, each individual would be considered to have a 25 percent interest in you, and both the partnerships and the individuals would have a substantial beneficial interest in you. The spouses of the individuals would not be considered to have a substantial beneficial interest unless the spouse was one of the individuals that made up the partnership. However, if each partnership is made up of six individuals with equal interests, then each would only have an 8.33 percent interest in you and although the partnership would still have a substantial beneficial interest in you, the individuals would not for the purposes of reporting in section 2). The spouse of any individual applicant or individual insured will be presumed to have a substantial beneficial interest in the applicant or insured unless the spouses can prove they are legally separated or otherwise legally separate under the applicable state dissolution of marriage laws. Any child of an individual applicant or individual insured will not be considered to have a substantial beneficial interest in the applicant or insured unless the child has a separate legal interest in such person.
Summary of protection. Our statement to you specifying the insured crop, dollar amount of insurance per acre, policy protection, premium and other information obtained from your accepted application, acreage report, and the actuarial documents.
Sustainable farming practice. A system or process for producing a commodity, excluding organic farming practices, that is necessary to produce the crop and is generally recognized by agricultural experts for the area to conserve or enhance natural resources and the environment.
Tenant. A person who rents land from another person for a share of the crop or a share of the proceeds of the crop (see definition of "share").
Termination date. The calendar date contained in the Crop Provisions upon which your insurance ceases to be in effect because of nonpayment of any amount due us under the policy.
Tilled. The termination of existing plants by plowing, disking, burning, application of chemicals, or by other means to prepare acreage for the production of a crop.
Total premium. The amount of premium before subsidy, calculated in accordance with section 7(d)(1).
Transitional acreage. Acreage in transition to organic where organic farming practices are being followed, but the acreage does not yet qualify as certified organic acreage.
Trigger revenue. The revenue amount calculated in accordance with section 12(b).
Trigger yield. The yield amount calculated in accordance with section 12(c).
Type. Categories of the insured crop consisting of unique combinations of commodity type, class, subclass, and intended use as shown on the actuarial documents as insurable.
Upside harvest price protection. Coverage provided automatically under the Area Revenue Protection plan of insurance. This coverage increases your final policy protection when the harvest price is greater than the projected price. This coverage is not available under either the Area Revenue Protection with the Harvest Price Exclusion or the Area Yield Protection plans of insurance.
USDA. United States Department of Agriculture.
Verifiable record. A contemporaneous record from a disinterested third party that substantiates your actual production reported on the production report. The record must be a document or evidence from a disinterested third party that is accurate and can be validated or verified by us.
Veteran farmer or rancher.
Void. When the policy is considered not to have existed for a crop year.
Volatility factor. A measure of variation of price over time found in the actuarial documents.
Volunteer crop. A crop that was planted in a previous crop year on the applicable acreage or drifted from other acreage, successfully self-seeded, and is growing this crop year on the applicable acreage without being intentionally sown or managed.
The insurable acreage is all the acreage planted to the insured crop in the county in which you have a share, except as provided in section 5(d). New breaking acreage may be subject to a reduced protection factor in accordance with section 5(b) and native sod acreage may be subject to reduced premium subsidy and protection factor in accordance with section 5(c). The dollar amount of insurance per acre, amount of premium, and indemnity will be calculated separately for each crop, type, and practice shown on the actuarial documents.
Unless specified otherwise in the Crop Provisions, coverage begins at the later of:
If you transfer any part of your share during the crop year, you may transfer your coverage rights, if the transferee is eligible for crop insurance.
You must not abandon any crop to us. We will not accept any crop as compensation for payments due us.
[FCIC POLICIES]
[REINSURED POLICIES]
[FCIC POLICIES]
[REINSURED POLICIES]
We will pay simple interest computed on the net indemnity ultimately found to be due by us or by a final judgment of a court of competent jurisdiction, from and including the 61st day after the final county yield or final county revenue release date as specified in the applicable Crop Provision.
The descriptive headings of the various policy provisions are formulated for convenience only and are not intended to affect the construction or meaning of any of the policy provisions.
Although your violation of a number of Federal statutes, including the Act, may cause cancellation, termination, or voidance of your insurance contract, you should be specifically aware that your policy will be canceled if you are determined to be ineligible to receive benefits under the Act due to violation of the controlled substance provisions (title XVII) of the Food Security Act of 1985 (Pub. L. 99-198) and the regulations promulgated under the Act by USDA.
If the provisions of this policy conflict with statutes of the State or locality in which this policy is issued, the policy provisions will prevail. State and local laws and regulations in conflict with Federal statutes, this policy, and the applicable regulations do not apply to this policy.
The following are examples of the calculation of the premium, amount of insurance and indemnity for each of the three plans of insurance under ARPI. Your information will likely be different and you should consult the actuarial documents in your county and the policy information. The following facts are for illustration purposes only and apply to each of the examples.
Producer A farms 100 acres in county X and has a 100 percent share, or 1.000, in those acres. From the actuarial documents in county X, Producer A elects the 75 percent coverage level and a protection factor of 110 percent or 1.10. The actuarial documents in county X also show that the expected county yield is 141.4 bushels per acre, the projected price is $4.00, and the expected county revenue is $565.60. The subsidy factor for the 75 percent coverage level is .55 for revenue coverage and .59 for yield coverage. The loss limit factor is 18 percent or .18. At the end of the insurance period, for county X, FCIC releases a harvest price of $4.57 and a final county yield for county X of 75.0 bushels.
The premium rate is based on the published volatility factor and for this example is .0166 for Area Revenue Protection, .0146 for Area Revenue Protection with Harvest Price Exclusion, and .0116 for Area Yield Protection.
Area Revenue Protection example:
STEP 1: CALCULATE THE DOLLAR AMOUNT OF INSURANCE PER ACRE
Formula: Expected county yield times projected price times protection factor equals dollar amount of insurance
141. 4 bushels * $4.00 * 1.1 = $622.16 dollar amount of insurance per acre
STEP 2: CALCULATE THE POLICY PROTECTION
Formula: Dollar amount of insurance per acre times acres times share equals policy protection
$622.16 * 100.0 * 1.000 = $62,216 policy protection
STEP 3: CALCULATE THE TOTAL PREMIUM
Formula: Policy protection times premium rate equals total premium
$62,216 * .0166 = $1,033 total premium
STEP 4: CALCULATE THE SUBSIDY AMOUNT
Formula: Total premium times subsidy factor equals subsidy
$1,033 * .55 = $568 subsidy
STEP 5: CALCULATE THE PRODUCER PREMIUM
Formula: Total premium minus subsidy equals producer premium
$1,033 - $568 = $465 producer premium
STEP 6: CALCULATE THE FINAL POLICY PROTECTION
Formula: Expected county yield times (greater of projected price or harvest price) times protection factor times acres times share equals Final Policy Protection
141. 4 bushels * $4.57 * 1.10 * 100.0 * 1.000 = $71,082 final policy protection
STEP 7: CALCULATE THE FINAL COUNTY REVENUE
Formula: Final county yield times harvest price equals final county revenue
75. 0 bushels * $4.57 = $342.75 final county revenue
STEP 8: CALCULATE THE TRIGGER REVENUE
Formula: Expected county yield times (greater of projected price or harvest price) times coverage level equals trigger revenue
141. 4 bushels * $4.57 * .75 = $484.65 trigger revenue
STEP 9: CALCULATE THE PAYMENT FACTOR
Formula: (Trigger revenue minus final county revenue) divided by (trigger revenue minus (expected county yield times the greater of projected or harvest price times loss limit factor)) equals payment factor
($484.65 - $342.75) ÷ ($484.65-(141.4 * $4.57 * .18)) = .385 payment factor
STEP 10: CALCULATE THE INDEMNITY
Formula: Final policy protection times payment factor equals indemnity
$71,082 * .385 = $27,367 indemnity
Area Revenue Protection with Harvest Price Exclusion example:
STEP 1: CALCULATE THE DOLLAR AMOUNT OF INSURANCE PER ACRE
Formula: Expected county yield times projected price times protection factor equals dollar amount of insurance
141. 4 bushels * $4.00 * 1.10 = $622.16 dollar amount of insurance per acre
STEP 2: CALCULATE THE POLICY PROTECTION
Formula: Dollar amount of insurance per acre times acres times share equals policy protection
$622.16 * 100.0 * 1.000 = $62,216 policy protection
STEP 3: CALCULATE THE TOTAL PREMIUM
Formula: Policy protection times rate equals total premium
$62,216 * .0146 rate = $908 total premium
STEP 4: CALCULATE THE SUBSIDY AMOUNT
Formula: Total premium times subsidy factor equals subsidy
$908 * .55 = $499 subsidy
STEP 5: CALCULATE THE PRODUCER PREMIUM
Formula: Total premium minus subsidy equals producer premium
$908 - $499 = $409 producer premium
STEP 6: CALCULATE THE FINAL POLICY PROTECTION
Use the policy protection amount calculated at the beginning of the insurance period in Step 2
$62,216 policy protection
STEP 7: CALCULATE THE FINAL COUNTY REVENUE
Formula: Final county yield times harvest price equals final county revenue
75. 0 bushels * $4.57 = $342.75 final county revenue
STEP 8: CALCULATE THE TRIGGER REVENUE
Formula: Expected county yield times projected price times coverage level equals trigger revenue
141. 4 bushels * $4.00 * .75 = $424.20 trigger revenue
STEP 9: CALCULATE THE PAYMENT FACTOR
Formula: (Trigger revenue minus final county revenue) divided by (trigger revenue minus (expected county yield times projected price times loss limit factor)) equals payment factor
($424.20 - $342.75) ÷ ($424.20 - (141.4 * $4.00 * .18)) = .253
STEP 10: CALCULATE THE INDEMNITY
Formula: Final policy protection times payment factor equals indemnity
$62,216 * .253 = $15741 indemnity
Area Yield Protection example:
STEP 1: CALCULATE THE DOLLAR AMOUNT OF INSURANCE PER ACRE
Formula: Expected county yield times projected price times protection factor equals dollar amount of insurance
141. 4 bushels * $4.00 * 1.10 = $622.16 dollar amount of insurance per acre
STEP 2: CALCULATE THE POLICY PROTECTION
Formula: Dollar amount of insurance per acre times acres times share = policy protection
$622.16 * 100.0 * 1.000 = $62,216 policy protection
STEP 3: CALCULATE THE TOTAL PREMIUM
Formula: policy protection times premium rate equals total premium
$62,216 * .0116 rate = $722 total premium
STEP 4: CALCULATE THE SUBSIDY AMOUNT
Formula: Total premium times subsidy factor equals subsidy
$722 * .59 subsidy factor = $426 subsidy
STEP 5: CALCULATE THE PRODUCER PREMIUM
Formula: Total premium minus subsidy equals producer premium
$722 - $426 = $296 producer premium
STEP 6: CALCULATE THE FINAL POLICY PROTECTION
Use the policy protection amount calculated at the beginning of the insurance period in Step 2
$62,216 policy protection
STEP 7: CALCULATE THE TRIGGER YIELD
Formula: Expected county yield times coverage level equals trigger yield
141. 4 bushels times .75 = 106.1 bushels
STEP 8: CALCULATE THE PAYMENT FACTOR
Formula: (Trigger yield minus final county yield) divided by (trigger yield minus (expected county yield times loss limit factor)) equals payment factor
106. 1 bushels - 75.0 bushels) ÷ (106.1 bushels - (141.4 bushels * .18)) = .386
STEP 9: CALCULATE THE INDEMNITY
Formula: Final policy protection times payment factor equals indemnity
$62,216 times .386 = $24,015 Indemnity
7 C.F.R. §407.9