Schnitkey’s recommendation is that, “It is likely that maintaining high coverage levels is a prudent financial move, particularly for farmers with high levels of cash rent or high debt-to-asset positions. Crop insurance premiums are federally subsidized, causing crop insurance to be an efficient way of providing downside revenue protection.”
Crop insurance premiums for 2014 will be considerably less than the past several years because commodity prices are lower and there is less value to protect. But with lower premiums and less value to protect, crop insurance guarantees, whether the spring guarantee or the harvest guarantee will be considerably less than what most farmers have become used to getting. Subsequently, many producers will debate whether to continue the trend of getting the higher coverage, or opt for lower-priced coverage in a budget cutting move due to expected low profit margins. Because guarantees are lower, farmers may want to get the higher guarantees to cover as much of their production cost as possible. Lower levels of coverage with lower premiums may fall well short of covering input costs, much less any land costs.
Source: FarmGate blog