Federal Crop Insurance Options and 5 Things to Know About ECO + AIM

Looking for ways to enhance existing multiple-peril crop insurance (MPCI) coverage? It might be time to combine the Enhanced Coverage Option (ECO) and the Added Individual Modifier (AIM).

How are ECO and AIM different?

ECO is an area-based federal crop insurance policy that covers a portion of your underlying MPCI policy deductible. Coverage trigger levels are available at 90% or 95%, making ECO the highest subsidized MPCI coverage available.

AIM is an individualized private* policy option designed to enhance ECO coverage for corn and soybeans, available exclusively from ProAg in eligible states. It is triggered by farm-level results, not area-based reports. As a private policy, AIM is not subsidized or reinsured by the Federal Crop Insurance Corporation.

How do ECO and AIM work together to extend coverage?

Together, ECO and AIM are an industry-leading one-two punch for covering any eligible corn and soybean crop losses from both area-wide and farm-specific covered perils. Since the ECO program is area-based, insurance indemnities are triggered and paid on that basis. But AIM indemnities are based specifically on conditions on your farm.

So, while ECO will provide coverage for area-wide issues like drought or flooding, AIM looks at how those issues affect your specific acres and also provides farm-level coverage for localized issues like hail and windstorms.

How are ECO and AIM indemnities calculated?

At harvest time, ECO uses county-average yields released by RMA to determine any possible indemnities. The AIM policy uses your individual harvested production to determine any possible indemnities.

The AIM indemnity (if any) then subtracts the ECO indemnity (if any) for a final AIM indemnity. It is possible to receive an ECO indemnity and no AIM indemnity or vice versa. It is also possible to get a partial ECO indemnity and a partial AIM indemnity, depending upon RMA’s determined area yield and individual-based harvested production.

This formula exists to ensure indemnities paid out do not exceed the total expected value of your crop. That means the combined value of the supplemental coverages provided by the AIM policy and the ECO endorsement along with the underlying MPCI policy coverage and any resulting indemnities may not exceed the value of the Approved Yield multiplied by the MPCI price election.

What payment window do ECO and AIM follow?

Both the ECO crop insurance option and AIM pay indemnities the following March or April.  RMA must release the prior year’s final average harvested county yields and revenues before indemnities can be paid.

When is ECO + AIM a good fit for a farm?

Farmers in regions where both area-wide issues, as well as individual-based coverages, are of importance would be likely candidates for ECO + AIM. Farmers in areas that have localized disasters, like damaging wind or hailstorms, also stand to benefit from both ECO and AIM.

Ready to add the ECO and AIM policy option, contact a trusted ProAg agent.

*Not all coverage or products may be available in all jurisdictions. The description of coverage in this article is for informational purposes only. Actual coverage will vary based on the terms and conditions of the policy issued. The information described herein does not amend, or otherwise affect, the terms and conditions of any insurance policy issued by any of ProAg’s affiliated insurance companies.