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Group Policies

 
ARPI- AREA REVENUE PROTECTION INSURANCE 
 
Benefits
ARPI requires less paperwork.  Production reporta are due February 15th. Then only an acreage report by July 15th.
Coverage levels are 70% - 90% of county expected yields.
No notice of loss required payments are based on entire county.

Restrictions
ARPI has NO prevented planting or replant provisions. Prevented Planting at $150.00/acre an be added to a hail policy. It is possible that a producer would suffer a yield on their acreage and still not have any indemnity payment due.
Lenders may not accept ARP as adequate protection for loan collateral.
The producer must sign a Disclaimer.
The federal government can adjust the final yield.
Final county yields are not published until the following March and indemnities are paid in April of the following year.
Not available in all counties on all crops.


Area Revenue Protection Insurance (ARPI) 
 
The Area Revenue Protection (ARP) policy functions similar to a County Based RA policy.  The difference is that ARPI focuses on COUNTY revenue.  There is limited availability in some states and counties.  ARPI is designed to insure against widespread loss of revenue from the insured crop in a county.  It is intended for those producers whose yields highly correlate to those of other producers in the county.


ARPI Example:
Mr. Farmer has elected to insure his 100 acres of corn with 90% ARPI.  The county expected yield is 122 bu/ac (from NASS) and the maximum protection per acre is $439.20 (From NASS).

Scenario 1
100 acres x $439.20/ac = $43,920 total protection
122 bu/ac yield x $2.93/bu expected county price = $357.46 expected county revenue
$357.46 x 150% max protection = $536.19 max. protection per acre
$536.19 x 100 acres = $53,619 max. coverage
$357.46 x 90% = 321.71 trigger revenue
NASS announces county yield at 130 bu/ac
The final harvest price is set at $2.00/bu

Payment Factor = Trigger Revenue - Actual Revenue - Trigger Revenue
$321.71 - $260.00 - $321.71 = .192 Factor
$53,619.00 Total Coverage x .192 Factor = $10,295 Loss Payment


Scenario 2
100 acres x $439.20/ac = $44,920 total protection
122 bu/ac yield x $2.93 expected harvest price = $357.46 expected county revenue
$357.46 x 150% max. protection = $536.19 max. protection per acre
$536.19 x 100 acres = $53,619.00 max. coverage
$357.46 x 90% = $321.71 trigger revenue
NASS announces a county yield of 95 bu/ac
The final harvest price is set at $3.40/bu

95 bu/ac x $3.40 = $323.00/ac actual revenue
Trigger revenue is $321.71.  Under a standard ARPI policy there would be no loss.  Due to HRO endorsement, the policy will increase the Trigger Revenue.

$3.40 x 122 bu X 90% = $373.32 Trigger Revenue
$374.00 - $323.00 = $51 - $374.00 = .136 Factor
Since the Harvest Price was higher than the expected Harvest Price, increase in coverage also.
$3.40 - 2.93 = 1.16
$53,619 x 1.16 = $62,220 x .136 factor = $8,462 Loss Payment