Purchasing extra protection within your regular insurance coverage might not always make the priority list. But think about the last time having extra protection really came in handy, on or off your farming operation. For example, adding that rental car coverage to your main auto policy might have seemed unnecessary until you found yourself in a jam and were thankful to have it.
Adding endorsements to your multi-peril crop insurance (MPCI) coverage works the same. While MPCI is your main coverage, MPCI endorsements are supplemental options available for specific crops, situations and areas of the United States.
While many endorsements exist to fill in the gaps on your coverage, we’re breaking down the details behind four popular endorsement options — Enhanced Coverage Option (ECO), Supplemental Coverage Option (SCO), Hurricane Insurance Protection – Wind Index (HIP-WI) and Stacked Income Protection (STAX).
Click below to learn more about each endorsement option.
Available on: 30+ crops from canola to wheat
Federal subsidies available:
ECO: 44% (when combined with revenue coverage), 51% (when combined with yield coverage)
ECO and SCO exist to provide producers with expanded coverage options. Close to 9 million acres were enrolled in SCO protection in 2022, and more than 5 million acres in ECO. Both options have seen significant growth in total acres enrolled since their beginnings in the 2014 Farm Bill.
“The most important thing to know about ECO and SCO is that they are both area-based products,” says Whitney Redig, district sales manager for ProAg. “If you’re in an area impacted by widespread drought, an extreme weather event such as the 2020 Iowa derecho, or there is a fluctuation in prices, these options could benefit you.”
Redig says that SCO and ECO liability is dependent on a producer’s underlying MPCI policy. This liability factor, as well as the coverage percentage that is chosen, allows producers to tailor their coverage uniquely to their needs. Based on yields in your area, producers receiving indemnity payments are then paid the following year.
“Do the research, talk with your agent and don’t be turned off due to the payment lag,” says Redig. “If there is another disaster that comes through, or prices fluctuate, consider how this benefit can keep the lights on in the shop and keep that family farm operation going.”
Redig, who witnessed the financial crisis of the 1980s impact her family farm, knows firsthand how critical the right elections are in overall coverage. She says filling in the gap of what your MPCI may not cover in full could make the difference between the success of your operation and being one disaster away from extremely tough decisions.
Available on: 70 crops in counties within the Gulf of Mexico and the Atlantic + Hawaii
Federal subsidies available: 65%
Hurricane Insurance Protection – Wind Index Endorsement is a risk-management option for those exposed to hurricane-force winds. For those in hurricane areas, HIP-WI is a “win-win tool”, according to Jordan Denning, a ProAg senior district sales manager.
“There is no acreage reporting or notice of loss which makes this endorsement especially attractive,” says Denning. “The further inland you go, the cheaper it gets too. It makes sense to have it as the worst-case scenario is you don’t get impacted by a hurricane.”
Producers in hurricane-prone locations can go to USDA’s Risk Management Agency public database to see how their county has been triggered by hurricanes in the past. Leveraging this data, producers can make informed, cost-effective decisions for this MPCI endorsement that comes with the 65% premium subsidy.
However, Denning says one major HIP-WI misconception is worth noting.
“As soon as major wind happens, farmers think a payment is automatically coming,” says Denning. “But one 75 mph wind gust doesn’t necessarily make the cut. The National Oceanic and Atmospheric Administration (NOAA) data must show your area had sustained hurricane-force winds for at least three minutes before an indemnity payment is triggered.”
Available on: Upland cotton
Federal subsidies available: 80%
The Stacked Income Protection Plan is a cotton-only product that provides coverage for a portion of the expected county revenue. Sometimes the revenue can be based on multiple counties if more data is needed to establish expected yield and premium.
Texas-based Mike Williams, ProAg district sales manager, knows two things better than anyone – where the best fishing is in the state and how critical STAX is for cotton producers.
“Most cotton farmers purchase STAX for themselves and their landowners,” says Williams. “When you add a STAX payment to a year where breaking even is the best you can do, a bad year suddenly turns into a good year.”
With ongoing fluctuations in cotton prices and weather volatility, STAX provides peace of mind to ensure your operation is covered. Additionally, STAX is not subject to a cap.
“You can do your irrigated cotton one way and your dry land another way,” Williams says. “STAX can be purchased on its own or in addition to your regular MPCI policy.”
Work with your agent
At the end of the day, adding endorsements to your MPCI insurance is not a one-size-fits-all conversation. Working with your agent or a trusted crop insurance provider is the best way to ensure you’re choosing the right endorsements for your operation.
ProAg is proud to offer these endorsement options and more. See what options are available in your state here.
Iowa Finishes Corn and Soybean Harvest With Optimistic Yield ResultsDecember 1, 2023
U.S. Commodity Exports Higher on the Grains, Lower on Meat in NovemberDecember 1, 2023
USDA Increases Net Farm Income Projections, Still Lower in 2024December 1, 2023
Illinois Cover Crop Program Now Accepting ApplicationsDecember 5, 2023
Early Prevention, Treatment Key to Managing Pinkeye in Dairy HerdsNovember 30, 2023