Federal crop insurance dates back to the 1930s, and in 1938, the Federal Crop Insurance Corporation (FCIC) was established by Congress to oversee the initiative. Crop insurance was designed as a means to help farmers recover after the Great Depression and Dust Bowl, and was generally used for large crops grown in large volumes until the passage of the Federal Crop Insurance Act in 1980. By 1998, federal crop insurance covered over 180 million acres of farmland across the United States, and close to two-thirds of the nation’s acres of planted field crops, excluding hay, were insured. A local independent business insurance agent, familiar with the history of crop insurance and applicable federal and state regulations, can assist farmers and ranchers interested in learning more about supplementing their crop insurance coverage, or buying a new policy.
The Federal Crop Insurance Act of 1980 helped to expand the previously limited crop insurance program across the country, and made it apply to a wider variety of crops. To entice farmers to take advantage of the program, the 1980 Act offered a subsidy of thirty percent of a producer’s crop insurance premium at 65% coverage. Subsequently, after a number of droughts and cool growing seasons during the late 1980s and early 1990s, Congress enacted a number of ad hoc disaster bills to help farmers in need of assistance secure relief. After many of these emergency bills were passed, and since farmers were still hesitant to participate in the federal program, Congress passed to Federal Crop Insurance Reform Act of 1994.
A local independent commercial insurance agent can explain to farmers looking to learn more about federal crop insurance how the 1994 Act mandated that farmers participate in the program. If they did not, they would not be eligible for various federal benefits, including loans and price support programs. Around this same time, catastrophic coverage (CAT) was also created to compensate farmers in the event of a loss that amounted to more than half of their average yield. With CAT, farmers could pay an annual rate for each crop they grew in a certain county, and CAT allowed a payment of 50% of a crop at 60% for a failing year. The premium farmers paid for CAT coverage was federally subsidized. An independent insurance agent may mention that participation in the federal crop insurance program grew substantially among farmers after the 1994 Act became law.
A knowledgeable independent business insurance agent will be quick to note that the 1994 Act’s requirement that farmers participate in the federal crop insurance program was repealed by Congress in 1996. Still, for farmers receiving other federal benefits, crop insurance remained compulsory, unless they waived their eligibility for disaster benefits that might become available for a particular year. An independent insurance professional will also explain that the provisions enacted in 1996 remain effective today, and that in 1996, the Federal Risk Management Agency (RMA) was created to oversee the FCIC.
In the year 2000, private entities became eligible to conduct research and develop new kinds of insurance coverage under the federal crop insurance program. As an independent commercial insurance agent can describe in greater detail, the federal RMA can now contract with private companies to develop business insurance products tailored to crop producers. And, if insurance products developed by a company are approved by the RMA board, they can receive reimbursement for research and development costs, reinsurance, and premium subsidies.
A licensed independent insurance agent may advise farmers and ranchers that Congress has removed restrictions on developing new kinds of insurance coverage for livestock, and that subsidies through the federal crop insurance program have been increased to inspire farmers to buy higher levels of coverage, and to attract more producers. For farmers seeking to expand their knowledge of the federal crop insurance program, or to buy commercial insurance coverage for their business, a local independent insurance agent will serve as a valuable resource to ensure they can find quality coverage they need to keep their production going and maximize the value of their annual yield.
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