Guidelines Crop Insurance Alternatives Divisions of Insurance Products A Comparison of Yield and Revenue Insurance Choosing Between the Products

Divisions of Insurance Products

These products can be divided into types based on whether they insure yields (CAT, GRP, and APH) or revenue (GRIP, IP, CRC, and RA).Revenue insurance products are further divided into two types depending on whether the revenue guarantee can increase.The increasing guarantee is useful for farmers who hedge production prior to harvest.The disadvantage of the increasing guarantee is that per acre premiums are higher.Figure 1 shows these divisions.

Besides being yield or revenue insurance, another factor differing between the insurance product is what they insure (see Figure 1).GRP and GRIP provide insurance for county yield and county revenue, respectively.The other insurance products (CAT, APH, IP, CRC, and RA) insure individual farm yields or revenue.A major advantage of products insuring county results is that they generally provide more risk reduction for a given cost.The major disadvantage of county products is that they do not insure an individual farm's results.Sometimes, county results will not match individual farmer results.For example, a farmer could have a poor year while the county does not.In these cases, indemnity payments will not be received.