Plant Payment Insurance: Crop Claims

Crop insurance is a crucial consideration for farmers, offering financial protection in the event of adverse circumstances. One such circumstance is prevented planting, where farmers are unable to plant their crops by the final planting date or during the late planting period due to insured causes of loss, such as adverse weather, floods, hurricanes, or excess precipitation. In these situations, crop insurance policies provide prevented planting coverage, compensating farmers for their pre-planting costs. The amount of coverage is calculated as a percentage of the insurance guarantee and varies based on the crop type. For instance, coverage factors for corn are typically 55%, while for soybeans, wheat, and grain sorghum, they are 60%. This coverage is designed to safeguard farmers from financial losses when faced with challenges beyond their control.

Prevented planting coverage is part of revenue protection and yield protection plans but not of area-based plans

Prevented planting coverage is a feature of many crop insurance plans that provides a payment to cover certain pre-plant costs for a crop that was prevented from being planted due to an insured cause of loss. The payment is intended to assist in covering the normal costs associated with preparing the land up to the point of the seed going into the ground. These pre-plant costs can include seed, purchase of machinery, land rent, fertilizer, actions taken to ready the field, pesticide, labour, and repairs.

The amount of prevented planting coverage is calculated as a percentage of the insurance guarantee the insured would have had for a timely planted crop. For example, if a producer's insurance guarantee is $100 an acre, and they insure a crop with a 60% prevented planting coverage factor, the prevented planting payment would be $60 (60% of the guarantee). The prevented planting factor varies by crop, based on an estimate of pre-planting costs.

In the case of revenue protection, prevented planting payments are calculated by multiplying the coverage level by the projected price and the Actual Production History (APH) yield. For example, a corn revenue protection policy with 80% coverage and a 180 bu. APH yield would have a prevented planting payment of $519 per acre (60% x 80% coverage level x $6.01 base price x 180 bu. APH yield).

In the case of yield protection, prevented planting payments are based on the projected price. There is no prevented planting coverage available for area risk protection policies.

Farmers can choose to take a prevented planting payment, plant corn or plant soybeans/another crop

If farmers are unable to plant their crops by the final planting date, they can choose to take a prevented planting payment, plant corn, or plant soybeans/another crop. This is a difficult decision, and farmers should consult their crop insurance agent to review their policy and options before making a choice.

Take a Prevented Planting Payment

If farmers choose to take a prevented planting payment, they will receive compensation for the pre-planting costs generally incurred in preparation for planting the crop. The amount of prevented planting coverage is calculated as a percentage of the insurance guarantee the insured would have had for a timely planted crop. For example, if a farmer's insurance guarantee is $100 an acre, and they insure a crop with a 60% prevented planting coverage factor, the prevented planting payment would be $60 per acre.

Plant Corn

Farmers can choose to plant corn during the late planting period, which is generally 25 days after the final planting date, but this varies by crop and area. However, it is important to note that the timely planted production guarantee is reduced by 1% per day for each day planting is delayed after the final planting date. Additionally, planting corn late in the season may result in reduced yield potential and higher drying costs and lower test weights.

Plant Soybeans/Another Crop

Farmers also have the option to plant soybeans or another crop. They can plant during the late planting period, but the production guarantee will be reduced by 1% per day for each day planting is delayed. If farmers plant after the late planting period, the insurance guarantee will be the same as the guarantee provided for prevented planting coverage.

It is important to note that regardless of the option chosen, farmers must notify their crop insurance company within 72 hours if they are prevented from planting an insured crop.

To be eligible for a prevented planting payment, the area that was prevented from being planted must be at least 20 acres or 20% of the insurable crop acres

For example, if a farmer has a unit of 400 acres, with 250 acres of corn planted and 150 acres with nothing planted, once the final planting date has been reached, prevented planting can be claimed on 150 acres. The remaining 250 planted acres will have the corn policy in place. The potential insurance payments on the 250 planted acres will be influenced by production from those 250 acres. There will be a guarantee based on 250 planted acres. The prevented planting payment on the other 150 acres will not impact the payment on the 250 planted acres.

The minimum prevented planting requirement also applies to enterprise units. Enterprise units have significantly lower premiums than basic or optional units. To be eligible for an enterprise unit, a farmer must plant the lower number of 20 acres or 20% of insured acres in at least two sections. If no planting occurs, the farm will receive prevented planting payments but will not be eligible for enterprise unit premiums, instead paying the higher basic or optional unit premiums.

The minimum prevented planting requirement also applies to whole-farm units. In this case, the 20 acres or 20% requirement will be applied separately to each crop in the whole-farm unit.

It is important to note that the acreage that was prevented from being planted does not need to be contiguous.

If a farmer is prevented from planting by the final planting date, they may plant the insured crop during the late planting period

If a farmer is prevented from planting their crop by the final planting date, they may still be able to plant the insured crop during the late planting period. The late planting period typically lasts for 25 days after the final planting date, but this can vary by crop and area.

It's important to note that the timely planted production guarantee will be reduced for each day planting is delayed after the final planting date. This reduction is usually around one percent per day. Additionally, planting certain crops, such as corn, after a certain date is not recommended due to the potential for frost before harvest.

To be eligible for a prevented planting payment, farmers must meet specific criteria, including providing notice to their insurance agent within 72 hours of the final planting date if they do not intend to plant during the late planting period. The specific options available to farmers who are prevented from planting by the final planting date will depend on the details of their insurance policy.

In some cases, farmers may be able to plant a different crop before the end of the late planting period, but this will require the field to be released by the insurance provider. The second crop will then receive full insurance coverage as if it were the original crop, and coverage for the first crop will be terminated.

If a farmer is prevented from planting, they may leave the acreage idle and receive a full prevented planting payment

If a farmer is prevented from planting their crop by the final planting date, they have several options, including leaving the acreage idle and receiving a full prevented planting payment. This payment is designed to cover pre-planting costs incurred by the farmer, such as the purchase of machinery, land rent, and fertilizer. The amount of the payment is calculated as a percentage of the insurance guarantee the insured would have received for a timely planted crop. For example, if a farmer has a $100/acre insurance guarantee and is unable to plant their crop, they may receive a prevented planting payment of $60/acre (60% of the guarantee). It's important to note that the farmer must provide notice to their insurance agent within 72 hours of the final planting date if they do not intend to plant the crop.

In addition to leaving the acreage idle, farmers may also have the option to plant a cover crop during the late planting period and still receive the full prevented planting payment, as long as the cover crop is not harvested for grain or seed. Alternatively, they can choose to plant a second crop after the late planting period, but this will typically result in a reduced prevented planting payment, such as 35% of the original payment.

It's worth mentioning that prevented planting coverage is available for most crops and covers various insured causes of loss, such as floods, hurricanes, or excess precipitation. However, eligibility for a prevented planting payment is determined on a case-by-case basis, and certain requirements must be met, such as having eligible acres that are normally physically available for planting.

Farmers should carefully review their insurance policies and consult with their crop insurance agents to understand their specific options and requirements for receiving a prevented planting payment.

Frequently asked questions