It is important for producers to be prepared and financially secure with their crop insurance coverage choice in the event they need to rely on that insurance policy. It is a bad day for a farmer when the yield they’ve worked so hard for is not there, combined with low insurance coverage that doesn’t meet their needs.
With today’s volatile markets, the policy that producers have had in place over the years may not always cover the higher risks they are currently facing, so being open to looking at other avenues is necessary. Two products to consider, both of which are highly subsidized and can take coverage up to 95%, are Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO). Both products are county-based with SCO riding on top of your Revenue Protection (RP) policy all the way up to 86%, while ECO sits on the top end starting at 86% and going as high as 95%.
For an indemnity to occur, the expected county yield and/or revenue must fall below the elected percentage of coverage purchased. These indemnities are calculated after the April 29 production reporting deadline the year following the year of coverage, meaning if you took out coverage for 2023, you would have to wait until after April 2024. The delay allows the county to gather all yields reported through crop insurance. Losses can occur on the RP policy and be paid as soon as the claim is settled, but one should not expect an SCO or ECO payment until June of the following year.
The 2022 crop year county yields were recently announced, so let us look and see how the county yields did and how SCO/ECO paid out.
(Percentage of counties in the state with indemnity also noted)
| Corn Non-Irrigated | Soybeans Non-Irrigated | Spring Wheat Non-Irrigated |
| Minnesota - 3 (3.6%) | Minnesota - 4 (4.8%) | Minnesota - 7 (8.5%) |
| North Dakota - 13 (26%) | North Dakota - 13 (26.5%) | North Dakota - 2 (3.8%) |
| Wisconsin - 0 | Wisconsin - 0 | Wisconsin - 0 |
2022 SCO Indemnities
Number of Counties with Indemnities from Highest ECO Coverage
(Percentage of counties in the state with indemnity also noted)
| Corn Non-Irrigated | Soybeans Non-Irrigated | Spring Wheat Non-Irrigated |
| Minnesota - 11 (13.1%) | Minnesota - 23 (27.7%) | Minnesota - 26 (31.7%) |
| North Dakota - 22 (44%) | North Dakota - 22 (44.9%) | North Dakota - 7 (13.2%) |
| Wisconsin - 1 (1.4%) | Wisconsin - 5 (7.7%) | Wisconsin - 0 |
2022 ECO Indemnities
Looking at the indemnities between SCO and ECO, ECO is going to impact more counties since the policy pays out sooner. That is an important piece to consider when evaluating choices as a producer. Producers can expect a higher premium with ECO due to the higher level of coverage provided, but as shown above, the policy provides benefits sooner.
ECO or SCO coverage is by county whereas RP is based on a producer’s operation. So, it’s important to look at all options when deciding on what coverage provides the best risk protection. RP provides more individualized coverage, whereas ECO/SCO provides a higher coverage level for a lower premium than what it would typically cost you to go to a higher RP coverage level. SCO/ECO is a great option to consider when looking at adding value to a plan.
As always, there are pros and cons to every option available so it is important to discuss these options with an AgCountry insurance specialist who can help evaluate where an operation is vulnerable, and where additional coverage is needed.
