What is crop insurance and why is it important?

Crop insurance helps protect farmers against financial losses due to perils such as drought, hail and excessive rain or market-related losses. There are two main types: yield protection, which insures against a drop in production; and revenue protection, which insures against a drop in income due to price or yield loss. It’s a vital tool for risk management and financial stability.

Is crop insurance the same in all states?

While the federal crop insurance program is administered nationally, coverage options and premiums can vary by state, county and crop based on risk and regional factors. There are also programs such as Annual Forage available in certain states that could be a huge benefit for producers wanting to insure forages that are planted and harvested within a year.

When should crop insurance be purchased?

Policies must be purchased prior to the crop’s sales closing date, usually in early spring or fall, depending on the crop. Spring crops have a sales closing date of March 15. Annual Forage applications need to be signed prior to July 15. Forage Production needs to be signed by Sept. 30, and Pasture, Rangeland, Forage (PRF) needs to be signed by Dec. 1.

What is the margin protection option?

Margin Protection (MP) provides area-based coverage that protects against a decrease in operating margin (revenue minus input costs). There are a lot of moving parts with this product that help make it a solid option. It looks at input costs along with price movement. When paired with revenue protection, you can guarantee protection from multiple potential perils. Forage is not typically included in MP, so this would be a product for operators who work with grain crops and livestock.

There is also a new product out this year called Margin Coverage Option. This option allows producers to capture a margin coverage band of insurance from 86% to 95%. This allows a low-deductible option. This provides a way to stack policies on top of each other for a more robust risk management package.

What are the benefits of crop insurance?

It provides risk management, financial stability, ensures continued operations after loss and may help in securing loans. Example: A farmer with revenue protection loses 40% of a corn crop due to drought. Insurance covers the income loss starting at the level of crop insurance elected, which helps the farmer by reducing potential losses and helps keep the operation up and going while only paying premiums for the risk they are willing to take on. Each operation is different, so having the ability to pick coverage options to best suit the operation is important. This is why it is important to make sure you have a knowledgeable crop insurance agent who can help advise you with the best options available.

How do you purchase crop insurance?

Through a certified crop insurance agent like those at Compeer Financial. Our team members guide you through selecting plans tailored to your operation and risk appetite.

How much does crop insurance cost?

Costs vary by crop, location, coverage level and historical yields. The federal government subsidizes a portion of premiums, making it more affordable. The rates for multiperil insurance are overseen by the USDA Risk Management Agency (RMA) and are the same no matter which insurance provider you choose to work with. Depending on additional needs, other options are available that can tailor an insurance coverage package specific to the operator’s needs.

What’s the difference between Whole-Farm Revenue Protection (WFRP) and Micro Farm plans?

Whole-Farm Revenue Protection (WFRP) provides coverage for the entire farm's revenue and is well-suited for diverse agricultural operations. Eligibility requires at least two distinct commodity sources of income, as well as submitting appropriate tax documentation. Micro Farm is a streamlined version designed for smaller operations with gross revenue less than $350,000.

To understand these programs better, please reach out to your crop insurance agent to see if these could be beneficial to you.

What’s most important when signing up?

Maintaining precise records of production history and planting intentions is essential. This will assist the agent in ensuring eligibility and establishing the appropriate coverage. Additionally, it is important to set up the policy under the entity name to which you sell your crop, as this information may be required by adjusters to verify production details in the event of a loss.

How is crop loss calculated?

Based on your actual production history (APH) compared to your insured yield and price guarantees. Indemnity losses are the difference between the producer's guarantee and the actual harvested crop. With a program like PRF or Annual Forage, it is paid based on weather station reporting due to lack of rainfall on an interval basis. Forage Production is paid based on lack of tonnage due to multiple perils. Forage seeding is based on a percent of adequate stand of the newly seeded alfalfa once it emerges from the ground.

What if a farmer didn’t purchase insurance but had a loss?

They may qualify for disaster relief programs, but those are not guaranteed or as timely. Crop insurance offers more predictable and faster support. It also seems that more of the disaster relief programs are paying based on if the insured had a loss or not on their crop insurance policy. Crop insurance helps with this determination since they report to the RMA.

For example: The soon-to-be-released Supplemental Disaster Relief Program, which is a part of the American Relief Act of 2025, has dates for farmers with crop insurance versus those without crop insurance. Sign-up for producers with crop insurance would be around July 7, and sign-up for noninsured farmers would start around Sept. 15. We have also seen a payment with the Emergency Commodity Assistance Program (ECAP), which needs to have the application completed at the USDA Farm Service Agency (FSA) by Aug. 15. This payment was determined on a crop-by-crop basis with what was reported to the FSA office.

Changes to forage crop insurance in 2026?

At this time, there haven’t been any major changes to any of the forage programs. The USDA has proposed updates to improve accuracy and participation, such as revising indexing methods and expanding data sources. Details will be finalized closer to rollout.

Additional comments

Crop insurance is a cornerstone of a sound risk management strategy. It works alongside other tools such as marketing plans, grain storage, diversification and forward contracting to help protect a farm’s financial stability. By covering yield and revenue losses, crop insurance reduces exposure to unpredictable weather and market swings, allowing farmers to make more confident, long-term decisions.

At Compeer Financial, we help farmers integrate crop insurance into a customized plan that aligns with their operational and financial goals.