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Explained: Crop Insurance Part 2

OU vs. EU

If you tuned in last week, you now understand the basics of these crop insurance policies, and it’s essential to know how they can be applied.

Specifically, whether they will be applied on a section-by-section or county basis when you insure fields on a section basis, known as an optional section, this means that each section will stand independently regardless of how another section does. If you have a loss on one section, it will not impact the loss on another section. For example, if a hailstorm comes through and takes out a field of corn in one section, but a field in a different section does fine, then the hailed field will have loss resulting in a payable claim even though the other corn still produced above its guarantee.

If you wish to insure on a county basis, that is known as an enterprise unit. This means that all the crop acres in one county are all put together for loss purposes. When using enterprise units, all of your planted acres in the county have to average below your guarantee for you to have a loss. This means you are less likely to have a loss resulting in a payable claim each year, but this is offset because the coverage is less expensive than optional unit coverage. Because of the lower rate, you can purchase a higher coverage level for enterprise units for the exact cost you would pay for optional units.

Enterprise units might be a good option if you have fields that typically have similar products. On the other hand, optional units might be a better option if you have sporadic production from field to field.

If you would like to compare how an optional unit vs. an enterprise unit policy would have performed in past years with your crops and yields, we can do that for you. This can give you a better idea of what approach is best for you in the future.

Contact us if you have any questions. We would love to serve you!

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