In an environment with changing climates crop insurance certainly is one of the most common ways of hedging climatic risks. In the past the crop insurance industry underwent various changes, but the core of insurance remains to ensure that the farmer is offered the opportunity to hedge his crops so that he has another opportunity to plant again in the following season.
Crop insurance premiums on certain crops are high, which leads to the question whether it is worth your while to pay the high premiums. The payable premium, together with the choice of compensation that the insured is taking out, is known to the insured before the season starts. The possible damage that may occur during the season, which is unknown to the insured and over which the insured has no control, forms the unknown part of crop insurance. The challenge regarding the known and the unknown must determine whether the insured wants to insure or not.
Each year VKB Brokers evaluate the insurers that are used to ensure that the necessary products will be available to ensure that the insured gets the most comprehensive products from VKB.
In this article we emphasize the extended hail insurance and the different types of cover supplied under this insurance.
Hail products
- Insure the crops. Cover commences seven days after signing of the insurance policy. The premium needs to be paid as stipulated on the policy schedule.
- Insure the total land-use planning and ensure that coverage commences within seven days after signing of the insurance policy. Alterations can be made in the land-use planning, but if the farm, field and crops are insured, the field will be covered should there be any changes on the above-mentioned. Thereby the risk is reduced that a field could possibly not be insured or that the field is insured incorrectly.
Important points
- Wheat
Wheat is still produced in parts of the VKB/NTK region. Wheat is mainly insured against hail, fires and transit, but the insured also has the opportunity to insure against frost at an additional premium. Should insurance against frost be included, the following is assessed by the insurer:
- Culm damage – frost rings that appear on the ears; and
- Damage to the wheat kernels – kernels that did not pollinate due to frost.
Should none of these symptoms be identified during the assessment, the damage will not be considered frost damage. The following are prerequisites for insuring wheat against frost:
- All fields/farms must be insured.
- Growth points must be below the soil level.
- Only acknowledged cultivars with emergence dates according to the guidelines of the ARC for a specific area will be considered.
- Frost coverage must be included in the first policy.
- Coverage commences within seven days after signing for the insurance policy.
- Excess payment for frost varies between irrigation and dry land and is stipulated in the policy schedule. The excess payment is per field.
- Maize
There is a common perception that maize does not get damaged, but according to research maize is the only crop that has a 100% yield loss if the plant gets 100% leaf damage at a certain growth stage. Maize’s premium is also very low, which is an indication that the risk is accordingly lower than other crops.
When maize is insured, the following insured risks are also covered by the policy: hail, fire, frost and transit. Sasria can also be taken out additionally.
It is also important to insure maize at the correct value per hectare, since it is taken into consideration in case of a fire claim.
Some insurers also distinguish between different growing length classes. Maize growing classes is thus classified as ultra-short, short, medium and long. Ask your broker what benefits there will be amongst the different policies.
- Soya
The premium on soy beans is very high. The reason for this is that they sprout when it generally hails. There are several examples of where soy is severely damaged while the maize next to the soy has no damage at an early stage.
It is also important that soy is assessed at an early stage before the V3 growing stage to correctly assess the damage to the cotyledon, because after this growing stage the soy plant becomes woody and the insurer will have to postpone the soy assessment in order to execute the assessment correctly.
Currently there is no distinction between determinate and indeterminate soy growers.
- Dry beans
When quotes are requested, it’s very important that the broker is informed of the cultivar before the policy is issued. The cultivar is used to determine under what kind of grower the dry beans must be insured. The insurers distinguish between three groups, namely poor, moderate and strong creepers. Should the cultivar be insured incorrectly, it can influence the appraisal of the percentage of damage.
- Potatoes
The premiums on potatoes are relatively low in comparison to soy and dry beans. Potatoes can never have 100% yield loss, since there is already a yield underground that needs to be harvested and sold. When potatoes are insured, it is important that details of the plant/emergence dates, cultivar and dry land and irrigation is provided to the broker. According to the cultivar the potatoes will be insured as either short growers (90 days) or medium growers (115 days).
What are the most import points to remember?
- Insure the complete land planning and be certain that the policies are issued before the crops are being planted. Thereby coverage will already have commenced once the crops emerge.
- Report any damage on the insured fields within three days.
- Supply clear farm maps that stipulate the planted areas. If the planted area is 10% smaller than the insured area, you are paying 10% too much for your insurance.
- Ensure that the cultivars are specified when necessary.
- Make sure you know what agreement was reached with the insurers regarding the payment of premiums and when claims will be paid out should any claims arise.
For any queries, contact your VKB Brokers broker and ensure that your crops are insured correctly.
