While reviewing your coverage options this spring you may see more headlines about the increasingly-popular Enhanced Coverage Option (ECO). Supplemental to your MPCI policy, ECO can help increase expected revenue and reduce downside risk by adding a layer of county-level insurance. Though the option can cost a higher premium, farmers have found this risk management option beneficial to help fill coverage gaps at 90% to 95% coverage level options.
The farmdoc daily farm economics team led a simulation study to quantify if the benefits of ECO outweigh the added costs. Using a case farm and establishing cost basics similar to current land and input costs, the study found that while ECO premiums can reduce revenue in years in which crop insurance payments are limited, it does has several merits such as the potential to increase expected revenues and also reducing a farmer’s downside risk. In the end, it’s best for each farmer to weigh the benefits for their operation.
Looking to brush up more on this coverage option? We’ve broken down the basics on ECO for easy reference, as well as Added Individual Modifier (AIM) coverage, an exclusive ProAg private product that takes the enhanced protection of ECO a step further. These coverage options add additional security and peace of mind when producers need it most.
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