This spring's weather should serve as a reminder to you to review your current crop insurance policies and reconsider future coverage.
The deadline to buy insurance for this year's crops passed, but you should begin to consider different options for next year, notes George Patrick, a Purdue University extension agricultural economist who specializes in risk management.
"Just as you have to place your bet before the roulette wheel starts spinning, you have to place your bet and buy insurance before the spring weather happens," he says.
The most basic forms of crop insurance are Yield Protection and Actual Production History (APH). Based on at least four years of past farm yield data, these types of insurance pay growers for crop losses and cover 50-85 percent of the average yield.
Revenue Protection (RP) guarantees a certain value of the commodity.
"Rather than just talking bushels, it's protecting what the crop is worth as opposed to the physical quantity," Patrick explains. "If there was a really big crop and the price decreased from spring to harvest-time, it could trigger an indemnity, or payment."
In addition to crop insurance plans based on individual farm data, there are plans based on the county's yield and revenue data. County or group insurance can be advantageous for individual farmers who don't have records or cannot prove past yields.
The group data is based on trends, so as yields go up because of technology and plant breeding advancements, so does the guaranteed coverage.
"The downside is when you are the only farmer to experience low yields," says Patrick. "You might not be compensated if everybody else did well."
Replanting coverage is an option for farmers with more than 20 acres or 20 percent of the crop destroyed from flooding. According to Patrick, this year's heavy rains might cause many farmers to use replanting insurance.
"Many times, people wonder whether crop insurance is worth it," Patrick says. "It costs, because they are carrying the risk you're not carrying. But usually, you are better off to do something rather than nothing."