The Revenue Protection Plan provides protection against a loss of revenue caused by price increase or decrease, loss of production, or a combination of both.
The Revenue Protection (RP) plan of crop insurance uses the Commodity Exchange Price Provisions (CEPP) to establish the pricing, however it is a different from the Yield Protection (YP) plan since it uses two different price discovery periods. The projected price is determined in the same manner as YP and is used to calculate the premium, replant and Prevented Planting payments. The harvest price is released near harvest time. This price is used to calculate an indemnity.
The revenue protection guarantee is established by: Average Yield X Coverage Level X Insured’s Share Percentage X Projected Price.
An indemnity may be due when the calculated revenue (insured’s production X harvest price) is less than the revenue protection guarantee for the crop acreage.
Note: When the harvest price is released, if it is greater than the projected price, the revenue guarantee will be recalculated using the harvest price as well.
While the revenue guarantee is increased, the insured is not charged any additional premium for this increase. If the harvest price is less than the projected price, the policy guarantee remains at the projected price.